Updated: Jan 30
Are you tired of not making enough money?
Use these tips to make as much as you deserve.
There are so many things to look at before pricing your services. That’s why business owners often make mistakes in that area.
To be specific, two of the most common mistakes they make when pricing their services are undervaluing and overestimating.
Some take the conservative approach to undercut competitors in hopes of generating higher sales. Others think that premium pricing always implies high-end value and try to bait by being expensive.
For your business to thrive in the long run, it’s important that you price your services correctly. Otherwise, the reviews might damage your credibility.
Here are six tips to ensure you’ll come up with the right price.
Tip #1 – Identify the Right Pricing Scheme
There are really only two staple pricing models:
The cost-plus model adds a markup to the cost. In contrast, the value-based scheme takes into account the value that customers place on the services.
Depending on your business and niche, one of the two may offer a significant advantage.
What’s important is to pick one pricing scheme and stick with it to avoid confusion.
Tip #2 – Learn Everything About Your Market
Some business owners simply try to match prices, thinking - or perhaps hoping - that it will be enough.
But you have to learn everything about the marketplace to price your services correctly.
What price ranges are customers most comfortable with and how much are they willing to pay for premium services or added benefits?
Tip #3 – Calculate Your Costs
Whatever the pricing scheme, your costs always matter. Don’t forget your overheads!
All too often business owners think only about their teams' salaries to work out a cost per hour, forgetting to include ALL costs that need to be incurred to offer the services. So don't forget to include things like staff holiday, HR expenses, accounting fees, training and development costs,etc
Tip #4 – Familiarize Yourself with the Current Environment and Future Shifts
Again, this comes down to understanding the marketplace.
You may have one price in mind for your services. But what if the market is to move in a new direction?
Perhaps you have to change your price in order to meet new customer demands.
Tip #5 – Work in Your Upgrades
Many businesses offer standard and premium packages. So how do you price your services correctly in this case?
Once again, you work out either the costs or value of each upgrade.
It’s also common practice to offer discounts on larger packages. Figure out if that’s something that you can offer without unacceptable effects on your margin(more on this in a later blog).
Tip #6 – Consider the State of Your Business
Another way to approach pricing is from a business position point of view.
For example, your services may warrant an increase if you’re in a perfect spot to expand and grow your business.
Remember that your pricing doesn’t just affect your revenue. In the long run, it affects everything else about your business, including its viability and scalability.
You don’t have to compromise either just to undercut the competition or to make short-term sales.
Priced to Succeed
There’s no one approach to pricing. Every business is different and segments of consumers have unique expectations.
With these tips, you can develop a more compelling offer that works for you and your customers.