How to Price in Your Small Business
If you are a service provider, your first thought is to offer pricing per hour, but is that the best way for you to price your products and be profitable?
Moving Away from Hourly/Daily Pricing
Pricing is a sticky topic and accountant Sally Farrant gives this advice
1) When you are pricing hourly or daily, you are pricing exactly the number of hours you are working (and that usually does not include all the back and forth emails with clients and other admin tasks), therefore hourly/daily pricing doesn't really help you achieve a profitable business
2) It is best to move to 'value pricing', meaning the value to your customers for the expertise that you are providing.
3) When you move to 'value pricing' the client is paying for your expert knowledge, ie filing a complicated tax return, representing a client in court or negotiating a wage settlement and other services such as social media management. Remember you have the expertise that your client is willing to pay for.
Clarifying Your Pricing in Your Customer Quote
The clearer you are in the quotation process, the easier the pricing conversation will be.
The quotation process should clearly state:
1) Exactly what is included in your pricing
2) What is not included in your pricing
Have a Clear Path When Pricing Packages
At the outset, know where you are going in your sales funnel process. It doesn't make sense to go from $25.00 item and then leap to a $5,000 package. The gap between is too large for the customer to make that stretch.
In this case you might want to go from
with clear differentiation, exclusivity and results with each package. This path will help your clients move up in smaller steps as they work with you and love working with you. If they are getting the results they expect, then you will keep moving up to your next package once you have established the know, like and trust factor.
To listen to the full episode on "Pricing in Your Small Business", with Sally Farrant, click here
Pricing in Your Small Business