I’m sure you’ve seen various pricing models used in your industry, however how do you create the perfect pricing for your business?
This ultimately depends on who you are selling to, what their needs are and the value they see in their needs being fulfilled. Your overall aim is to create a win-win for both you and the client, which means working out which pricing model to use.
To give you some ideas, here are some of the most popular pricing models that are used for selling services:
Time for money: a rate agreed for a set amount of time such as hourly, daily, weekly etc
Time for money open-ended – the same as above but with no fixed time but typically hourly that is ongoing.
Fixed fee – a set price for a completed project or package.
Retainer fee – monthly or quarterly fees agreed for a certain amount of work completed
Bundle pricing – offering a combination of services together in a single package.
Loss leader pricing – offering a very low price point to get clients to sample your services with an aim of them buying further services at higher price points.
Premium pricing – higher priced services that delivers high value to your client, meaning fewer clients and increased profitability.
Penetration pricing – offering very low prices to break into a market. Once established, you then raise your prices
Economy pricing – low pricing for all of your services, so it becomes part of your brand. This makes your services available and affordable to many more people. It may also be perceived as low value.
With the exception of ‘economy pricing’ I have used all of the above pricing models in my business over the past ten years and you’re likely to use more than one too.
Your perfect pricing strategy will depend on your target market, your short and long term business goals, your cashflow, your experience and often times your levels of confidence.
For example many of my clients have been in business for a while, because of this they are ready to introduce premium pricing to their clients. They tend to be over booked and are confident in the value they deliver, because of their results and experience. Those who are starting out in business often use ‘penetration pricing’ as a way of gaining experience, client results and testimonials and to quickly build up their business.
Even if you’re a seasoned business owner, you may also decide to apply the ‘penetration pricing’ model to launch your new services. For example ‘beta-trial pricing’ is a low price offer, usually to trial a new service in exchange for regular client feedback and/or testimonials. This is typically made available to a select number of people. Once the trial is over the service is then sold as a fully launched service at at higher price.
By outlining the various pricing options I hope you can see that there is no rule book. You can use one or several of these pricing strategies depending on your where you are in your business journey and where you’re aiming to get to.
Here’s to your success!