November 27, 2012

SHOW THE PRICES FOR YOUR SERVICES

calculate
Imagine going to a retailer’s website and not seeing prices. Would you bother to get an estimate or would you opt for a site that tells you?

You’re used to finding prices and details online. Your customers are too.

“Wait,” you say. You're selling a service. Each case is unique. You can’t simply show prices online. That’s the common thinking among accountants, lawyers, fee-only financial planners, web designers and many others. Here are three reasons given for withholding prices.
  1. too complicated
  2. hiding from competitors
  3. prices change
Put your calculator away. Let’s examine each point.

Too Complicated

Your pricing may vary with
  • the type of work: routine vs. customized
  • the hours: actual vs. estimated
  • the client: e.g., family vs. corporate, remarried vs. married
  • the scale: discounts for bigger projects
  • the urgency: ASAP vs. soon
  • the number of revisions: normal vs. excessive
You must have a formula of sorts, probably based on an underlying hourly rate. You could describe your process and give examples of typical cases. Yes, you can reserve the option to revise prices for unusual situations (ideally before the work starts).

If you develop standard packages for common situations, you clarify what you do, eliminate pricing surprises and help others refer you.

Hiding From Competitors

If you're competing on price, you may not want your competitors to know what you charge. That's also an excuse for refusing to put your process or samples of your work online. You may think that what you’re doing is special and prone to copying. Potential buyers may see what your industry does as generic and interchangeable — unless you help them understand and value the differences you bring.

Clear and meaningful positioning reduces your competition. Back in 2007, Hyundai was comparing the Sonata with the BMW 5-series. Really? The comparisons could become valid in the future, especially if BMW partners with Hyundai on new engine development (Digital Trends, May 2012).

When you hide from your competitors, you also hide from your market. Adding details like pricing helps your real audience choose you — your clients, prospects and collaborators.

Maybe you worry about being seen as pricey. You may have reasons for premium pricing, such as extra expertise or more quality assurance. Show why you provide better value.

Prices Change

In a service business, the cost of materials is often negligible. You have flexibility in setting prices.

Maybe you maximize profits by charging prospects different rates based on what you think they’ll pay. Personalized pricing (Six Pixels, Nov 23, 2012) is contentious, especially when we’re the buyers. Publishing prices would get in the way.

You might build more trust and earn more business by having uniform prices. Not everyone wants the lowest price. You might increase your revenue by having extra (published) charges for more scenarios/prototypes or faster results.

Think Like A Customer

Would your clients prefer clear pricing? Give it to them. You give them peace of mind. You differentiate yourself. You help them refer others to you. You put pressure on your competitors to follow your lead. You might get media attention and attract like-minded collaborators.

With fixed pricing, your profits on each client vary. You now have incentives to improve your efficiency to improve your margins. You might even charge a premium for a fixed prices with pay-as-you-go pricing as the other option.

If you don't show your prices, you raise doubts. Build trust and you build business.

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PS It's November. If you start now, in a couple of months you can say "since last year" :)

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