How do I determine pricing for my services?
Hi, I have created a company to provide various computer services, including the following:
- Create blog, online gallery or website (free domain)
- Design ads, catalog, and business Cards
- Make simple financial system on Excel
- Presentations (PowerPoint)
- Design infographic
- Make a video
What is the best way to go about determining the right pricing for my services?
I like to present what I will deliver and ask the question, "what is all of this worth to you?" to my client. Since each of the tasks you perform would vary in time and effort from client to client, getting a 'read' on the client's view of your value proposition as you discuss it can provide insight in pricing based on the perceived value you offer to the client. It's a simple question to open the conversation about fees as a way to check the 'temperature' of the client.
Hi Ms. Lasheen,
Every company has opportunities (or problems needing solutions): They have what I term as "Undesirable 3Ds:"
a - Defects in their process/products.
b - Delays in their services relating to products/transactions.
c - Deviations (inconsistencies in line items "a" and "b."
By taking time to identify and quantify such benefits for your customer (s), you can convince them to get them to the Desirable 3Ds, via your web based solutions:
a) Deliverables to Customers
b) Delighted Customers, and
c) Dollars in Return for them through sales or less internal costs.
I would guess they would respond favorably.. Good luck!
Dr. Shree Nanguneri
First you need to understand your target market. Who are you selling to, small businesses, large businesses and where are they located. A small business in India is going to spend a different price than one in Europe and will be different for North America.
Are you planning to charge by job (fixed priced) based on parameters or by an hourly rate. You have varied services and there are a lot of businesses offering this and get emails daily from India and China for people doing this for pennies on the dollar. Do you want to be a 'me too" or do you provide something (experience/expertise...etc) that makes your services more valuable.
I would never advise my clients to buy from those doing this cheaply as there is no way to check their credentials and they never have websites with references for most part. Cheap isn't better unless that is the type of client you want (one time). If you want to build a relationship with your clients and continue to do business with them, you need to market your services to appeal to those where price is NOT the only criteria.
If you are offering globally you will want to establish one currency as well. You can create packages : such as Presentation with up to 25 slides, Website with 5 pages, 10 pages with criteria and fix price it. Most businesses want to know what they will pay and it not be a surprise, so if you offer packages so they can choose what they want for a price then that we find works best. Though we work by the hour as consultants/coaches, we provide our clients fixed not to exceed pricing and they very much appreciate that versus not knowing what they will eventually pay. If you do not have set packages, to do fixed pricing means you need to really understand your clients requirements.
You have some choices and people like choice when buying. Just do not undercut your worth for doing your services as you have a skill and are offering a service and people should pay for it. Sometimes not every client will be your target client. Set your target market first and speak to them in your marketing messages.
All of my peers has shared with you mostly all of the points.
But few things are always important to determine the price of each service or product.
1. Always separate your Recurring cost and variable cost.
2. If you know the cost than you can adopt any pricing method.
3 below variable cost we can not sell our services and product.
4. Recurring cost loss we still can bear because those are fixed expenses.
5 you will be thinking I am talking to bear a loss but not really. Reason If you are selling your services on variable cost atleast you will have Cash flows.
A business not only needs profit it needs Cash Flows also.
Without profit a business can exist but without cash flows never.
So costing and Pricing are two crucial part of the business. Pricing can't be done without costing.
Look online at freelance job bids to get an idea of initial pricing. Most clients tend to ask for additional services over time thereby increasing contract fees.
get quotes from your competitors in market and charge less then the overall market rate as you are in startup
1. What are the cost of providing these services?
2. What are the prices of competitors?
3. What is your proposed profit margin?
4. Who are your target customers and their income level?
Answers to the above will give you the right price.
Always ask! Ask how much your client is willing to spend. Ask what is important. Ask if your client has received any offers. Look in the eyes and build your story, describe what you are going to do for the client. If what he is willing to pay is lower than what you need to get, say it directly and explain why. When selling services, you do not generally use the cost+ approach to pricing. And a painting is worth how much the buyer wants to pay for it. So, go and talk to your clients. Tell them that you have low price and high quality and ask which of the two they want. Good luck!
When I started my company I simply asked quotes from competitors until I had a clear picture what I wanted my own prices to be.
I'm the first to admit I approach marketing challenges a little differently than a lot of my peers. Also you have been given some good advice the previous answers BUT, I'd like to suggest a different approach.
first, answer a very basic questions. What do you want from this business, I may be as simple as just wanting to increase your income by a couple of hundred bucks a month to something as grandiose as wanting to build a Fortune 500 company.
Once you know what you want, you can get a pretty good idea of how much money you need to make to reach that goal.
then learn how to do basic cash flow studies. It's a pretty simple process and even though it is just a "made up" set of numbers what it can do is give you a way to set milest ones to tell you if you're winning or losing in terms of reaching your financial goals. You can run at 1 to 5 year cash flow study using different pricing to determine basic costs (as in how much resources you need to pay for to provide the product or service), like taxes, fixed costs such as rent and salaries, and how much profit you could expect from x number of clients you need paying what rate to make the money you need to get what you want.
I know conventional wisdom is all about giving the customer what they want and usually charging less than your competitors for the same type of service BUT in my opinion, do you really want to make LESS than others in your industry for the same type of service? In my experience, the happiness of pleased clients wears off pretty quickly if you find that you are always struggling to keep your head above water without the new car, new boat, new home or growing business. Happiness usually comes from success and that means you getting what you when you give clients what they want.
My advice is decide first what the reason is for you're willingness to take on more responsibility, more work, longer hours and dramatically increased expenses. Then learn how to estimate expenses and profit margins using cash flow studies to give yourself a guideline to ensure that you succeed. THEN set your prices and then find ways to provide value in what you offer.
Ever heard the old adage, "pay yourself first" ?.
If you adopt price scheming - charge a price lower than market rate.
If you are niche in service, you can ask for a premium over the market rate.
Thus you can use market rate as a reference point for you to do pricing.
When looking at market rate, you may take note which market you are competing.
Base on your kind of services, I believe the possible markets you will be in are your local market and international market (over the outsource model). I would suggest you need a price differentiation to make your services attractive, but do remember to make sure your published prices on the Internet should be the same to avoid double standard and misunderstanding.
Pricing model for your kind of business:
1. Standard pricing for standard package
2. Quoted one time project pricing and variation orders.
The best approach is to use time based model for your pricing, i.e. price per manday.
This helps you to match your cost per manday so that you can ensure your minimum costs being covered.
Consider you client's needs and the industry in your country. Do your research about what its worth to you for these services. an excellent resource is the AIGA as well as the Graphics Guild - These are american pricing sets, but you can certainly set the differential in Egypt.
Best of luck to you.