Effective pricing is an art. An art that so many entrepreneurs overlook. So eager to sign up a new client or customer, we often under-price our services and so under-sell ourselves over the longer term. This behaviour can gnaw away at your profits and therefore, ultimately, your business.
Here are some tips on effective pricing:
- Never bill by the hour - you can't scale hourly billing and it will (almost always) sound comparatively expensive
- Try to value bill - what is the value of the outcome that your service will deliver to your client? Set your pricing accordingly
- Menu pricing can work great - apply the 'Rule of 3' as clients will invariably choose the middle (second) option (so make sure this middle option is profitable and covers your sweet spot!)
- Lead with 'risk aversion' strategies - i.e. people are more likely to move towards solutions that remove (potential) pain than those that lead to a better outcome
- Package your services well e.g. glossy brochures and smartly delivered proposals will work hand-in-hand with your premium prices (think Apple packaging = premium product)
- Break it down into instalments to take attention away from the hard 'overall' price
- Don't worry that you can't service everyone - you may well end up working less for more profits once you get your pricing structure right
- Bonus: Remember to ensure that your payment terms are nailed on - direct debits and advance cash collections. Don't be left hanging waiting for the cash...
Posted from my blog with SteemPress : https://businessn2k.com/the-art-of-pricing-is-your-current-pricing-strategy-killing-your-business/