How do you price your services?
How do you price your services? As a consultant we all know one hour is really about 10, but we still charge an hourly rate. What are some great methods for pricing your services without out-pricing or under-pricing yourself?
I know how much it cost me to run a thorough screening, add to pay for my time. Since we are about the only company that preforms REAL vendor screening, I could not compare with the competition. So far, clients have been happy.
I'm a business / Elevator Pitch coach.
I started off charging hourly per call.
Then I started selling calls as packages of either 4 or 12 calls.
I also created some flat rate coaching packages (Check out my Elevator Pitch Tune Up in the mosaicHUB marketplace).
Now my most popular program is unlimited coaching. It's like a retainer. Monthly recurring charge for unlimited access to my time. When I mention this approach to other coaches, they assume that people take advantage of my time. But I'll only suggest unlimited coaching to people who have been with me for a while, and I've found that once people are on unlimited coaching, they are more respectful of time. If they only need 30 minutes on a call, that's all they take rather than dragging it out to the full 45. Plus, I don't mind so much about rescheduled calls (I'm getting paid anyway), and clients don't slow down their coaching schedule as they approach the need to pay for a new package of calls. And it gives me a strong base of consistent, recurring cash flow.
I'm not suggesting you jump right into the unlimited pricing model (it's a tough upfront sell if people don't know you yet), but hopefully my series of steps will give you ideas for what to do now and help set goals for where you want to get to in the future.
Select your pricing based on the value you can bring to the organization you are consulting with. Great value is when you are paid well, and the client got a great deal for the service or advice you provided. Most people that are really good under value their services and but others over value their service and the client either doesn't hire you, or is disappointed with the value they received.
Hi there. Some great answers to this as usual. Difficult to add anything else except to say remember you can price yourself in many ways especially for the target market you are looking to work with: hourly,daily, project basis. I get the feeling that you work with a combination of micro and small businesses. The micro and small businesses more often than not undercost their marketing budget, that's if they have one at all, so you need to be mindful of this and demonstrate clearly how their added investment (which by the way they see as a cost) will add £££££ or $$$$$$$ or indeed €€€€€ or ¥¥¥¥¥ to their bottom line. So for SME's flexibility is required. It's not very comfortable but it's true, one size price does not fit all. However if you have a policy of 'if you can't afford me then go somewhere else' then u r targeting the wrong market. Best. Remi
We were doing some research for business phone services lately. One company sent us a quote that was slighlty higher than the budget. The Sales Rep then explained that we should continue to search for other quotes and if someone quotes a better price, we should forward it to them so they can match it.
From a customer point of view, this pricing policy didnt make us much comfortable. Instead of giving us their best price possible - which is what we would have expected - they asked to check the competitors and get quotes from them. Of course we checked with competition and signed up with a different company at the end.
So when it comes to how to price a service, it is important to know what the competitors are offering. If competition offers better pricing, the main priority should be to point out the differences to these competitors and explain the added values that cause the increased price in advance before the customer is going on.
I once was assigned a division to enhance sales and profits. I found the sales people were all about selling price instead of the attributes of our products. The sales people were so focused on beating competitive pricing they over looked the value to all parties within the transaction. Once we improved our sales proposition to include our products values and attributes.
Services fit into the same mode. There has to be a value relationship of time and value to both the delivery person and the the receiving person.
I believe we start on the wrong end of the equation every time..... We should begin with the perception of the client... engaged in a conversation to establish how to serve.... not how to price. Build as much confidence as possible in your deliverable. If one delivers the cost is not an issue.... if one does not deliver cost is the problem!
Such a great question. We have struggled with this over the years, and as I suspect with other consultants, we err on the side of writing off hours to preserve and retain the client relationship.
For example, our franchise consulting service requires a minimum 50 hours to help a client franchise their company concept. We have also realized that our clients almost always want a flat fee so they can budget. So, we determine what we think is the minimum amount of hours required, and then build packages.
Generally, our franchise consulting package requires our clients to commit to six months of franchise consulting at $2,500/month. Our clients receive 10 hours of consulting per month for six months. If they do not utilize the hours, those unused hours rollover to the next month.
If the client uses more than 10 hours, we charge $300/hour.
This has worked very well, and now we can at an early stage estimate the amount of hours required to help a client franchise their business.
If you would like to have a quick call to discuss more detail, please let me know.
Thanks, and best of luck with what you are trying to accomplish!
Hi Lashonda, I found this post very interesting. Looking at what I've charged clients I'm way underpriced. Thank you for posing the question.
Lashondra, There is an old story which goes like this. Henry Ford, had a problem on his production line, Their maintenance people did not know how to fix it. Henry asked a friend and this friend had someone who could fix the problem. So Henry asked this guy to come and fix it. he came 1/2 hr later the plant was working. Henry got the bill. In today's $ it was lets say $1,000. Henry complained and asked the guy back and asked him to adjust his bill. He did. The bill adjusted said 1) Replacement part ...........................$. 100.00 2) Time to fit part................................ $ . 50.00 3) Knowing which to part to replace... $.. 850.00 Total ..................................................$.1000 Henry happily paid the bill. The point is you have to know your worth. a) Know your value to your customers. B) Don't take advantage of the situation. (The guy could off charged $2,000.) C) Know you costs, define what is your actual cost. (That's a separate question) D) Understand that every business is in business to survive which means they have to make a profit. E) I have never been shy in bringing this point to the discussion, always as a positive point, As in we can help you maintain or increase your bottom line by...
I think its not a question of How you price your services , Its not a matter of price ,its a matter of price is to be paid against mature value , calculating some a mount . you feel ok with it .
The best way to price your services is to identify all of your "whats". Meaning what do you specifically provide. If your services are customized and specialty then your premium should reflect such. If you are offering services that are generic to a marketplace then they should probably be commensurate with the industry. A good way to gauge is to research other professionals in your arena and compare and contrast from there.
My services are for executive search and they are based upon the actual accepted, total compensation representing all taxable income. My rate is 30% of total income for any candidate we refer and is hired by our clients. We base our fee on the compensation that our clients pre-determine as a fair and reasonable compensation for the contribution an individual gives in their professional accomplishments. To insure full client cooperation and urgency to fill key positions we also receive a retainer equal to 40% of our projected fee as it is calculated above.
A tough question, often we perceive our worth as more than others are willing to pay!.....I pitch my offering against its expected outcome, so, if I can generate an increase in profits by 10%, ......are you then happy to pay me half?
it depends on the subject and the local and national market prices
The price of my services are a function of the time necessary to prepare and deliver the services (including travel), potential related benefits for society, potential benefits for disadvantaged groups, potential physical risks, contract terms, and competing demands for services.
I charge clients on a project basis but only after conducing a needs assessment so that I understand the full scope of the client's project as well as the budget they have alloted for the project. Lashondra, I suggest conducting a pricing analysis in your market to see how you stack up against the competition.
If you don't know what your expertice is worth in your niche and geo-location you are at a great disadvantage - you'd best find out!
And you're not going to find out here...
Skip the philisophical roundabout and go into the marketplace directly and make some call to people who have used such services, call current successful consultants but above all, be specific.
If I'm advising someone on how to improve their website - maybe "no charge." If I'm giving them a detailed SEO and backlinking plan - their paying. I can find that going rate by calling local SEO companies and asking for specific services and pricing info.
People in Spokane don't pay like Chicago - if you know what I mean.
I look to add value in my pricing and to serve a need of the client. I believe in the pricing I set, because of the value I can add. I never propose anything to a client, unless they have described a specific need and they attach value to that need. My hourly rate may be less or more than others, but it ends up coming back to relationship and value adding and not discounting the service.
I have an extensive page on our pricing at http://authorservices.org/rates-and-conditions.shtml and it is based on the 2010 National Freelance Rates approved by the Media, Entertainment and Arts Alliance.
Any rate should include all the work required, including any research and back of house work. Some jobs I do not charge by the hour but with a flat fee for the job. Each job is assessed individually.