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How to Price Your Service to Sell

Written by: Bill Tamminga

Article Overview: Finding the right price for your service is one of the keys to revenue growth. Pricing isn't the only consideration used by prospects, but it can be an immediate deterrent if the price is unreasonably high or so low that your services are perceived as lacking value. What can be done to avoid those two extremes?

How to Price Your Service to Sell

Finding the right price for your service is one of the keys to revenue growth. Pricing isn't the only consideration used by prospects, but it can be an immediate deterrent if the price is unreasonably high or so low that your services are perceived as lacking value. What can be done to avoid those two extremes?

Consider Pricing a Marketing Objective

Once you have identified your target market (and I'm sure you have done this by now!) you can begin to establish a pricing strategy to attract specific prospects. Let's consider a couple of brands for a moment: Porsche and WalMart. Porsche uses their pricing to attract upper-class, high net-worth consumers. WalMart prices its items to attract the masses of lower and middle-class individuals. Pricing says something about who you want to bring into your business and what kind of margins you expect to earn.

Estimate Demand for Your Services

Find the answers to the following questions: 1) How big is my target market? 2) How much money is spent on the services in my industry? 3) How much of the market can I expect to capture at different price points?

Many companies keep tabs on how consumers respond to different prices and they adjust their prices according to their desired level of demand. If you are a new service provider, estimates will have to do, but even a best-guess is better than no guess at all.

Perform a Cost Estimate

Regardless of where you price your service (high, low, or in the middle), you have to make a profit. Consider your fixed costs (rent, salaries, benefits, etc.) and variable costs (energy, supplies, etc.) and make sure they are covered at your selling price.

Find Out What the Competition is Charging

Perform a quick research project and find out what the "other guy" is charging. Based on how they are perceived and who they target, should your services be more or less expensive?

Select Your Price

If you have completed the tasks above, you've done enough homework to settle on a satisfactory price that will attract the right people to your business. Stick to it. There will be people outside of your target market who will ask you to bring your price down. It can be a tempting scenario in this economy, but you will end up dealing with clients who do not place enough value on you or your services. That is not a recipe for long-term, sustainable growth.

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Article Tags: best guess, class individuals, cost estimate, energy supplies, estimate demand, estimates, extremes, homework, margins, marketing objective, porsche, pricing strategy, prospects, salaries, sati, service provider, target market, variable costs, walmart, worth consumers



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Re: Service Or Product? - I agree with starting a Service-based Business in the economy. Here is what I think is critical: 1. Researching that your Service business has a market. 2. Marketing the Service with as much leverage as possible. 3. Product-izing the Service (aka Package Expert Knowledge). This will only help elevate you as "the" expert in your niche and make you accessible to people in different price points.
Re: Hi from Greenville, SC - [quote="Evan":39hn23oh]Welcome Philip - from my experience in working with different merchant service providers I've found the following criteria to be important: 1) Price - at the end of the day it's very competitive industry and you don't need to be the cheapest option but you can't be too far ahead of the other guys. Automatic volume discounts are also much appreciated. Ones I've been involved with in the past give you volume discounts only if you apply. 2) Service - are you available when I need you? If I call will you be available and help me right away? If I email will you get back to me quickly? People often don't need service from their merchant service provider. It's one of those things where as long as it's working we tend to forget about you running in the background. But when there's a problem it's usually a big problem because we can't get money so we need fast and good quality service. 3) Integration support. Help people get set up. Even offer to do it for them - now that's a great way you can stand out. The integration support from most merchant service providers is terrible. You're pretty much on your own to figure out how their APIs work. I hope that helps - good luck![/quote:39hn23oh] I find all of these to be true on a daily basis. I have a strong hold in my particular area. Fast service is imperative. If I can get a restaurant a new terminal in a couple of hours as compared to the fastest national company(at least overnight) then I win. Being local is huge in my industry. I have successfully managed accounts is other areas. Usually I give them a back-up terminal so if the other one breaks down they can switch out the two ship the broken one to me and have a new back-up the next day. I have done a few online accounts. It is not my specialty though. I have found it to not be too hard if you are using a CMS and your host is at least fair. We can integrate with almost every website. It is usually as easy as dropping a pem file in the correct folder in cpanel. For more difficult ones I have a webmaster that I consult with. Price is the last one. Price is always the biggest. You cant give it away or you have no way to give good service. How apt am I to give back-up terminals or make sure I have 24 hour customer service if the margins don't support it? At the same time I have to be very competitive especially when landing large accounts. I made things too easy on one of my large accounts one time I guess. They thought all providers were like me so when they got a quote for less they switched. 11 days later they called me to help them get their machines downloaded back to my companies settings and their website was completely messed-up. I had to delete everything in the file and reload a back-up I had.
Re: Hi from Greenville, SC - Welcome Philip - from my experience in working with different merchant service providers I've found the following criteria to be important: 1) Price - at the end of the day it's very competitive industry and you don't need to be the cheapest option but you can't be too far ahead of the other guys. Automatic volume discounts are also much appreciated. Ones I've been involved with in the past give you volume discounts only if you apply. 2) Service - are you available when I need you? If I call will you be available and help me right away? If I email will you get back to me quickly? People often don't need service from their merchant service provider. It's one of those things where as long as it's working we tend to forget about you running in the background. But when there's a problem it's usually a big problem because we can't get money so we need fast and good quality service. 3) Integration support. Help people get set up. Even offer to do it for them - now that's a great way you can stand out. The integration support from most merchant service providers is terrible. You're pretty much on your own to figure out how their APIs work. I hope that helps - good luck!
Re: How Not To Start A New Business - Well, these guys these guys will not succeed at all. they need to have a way of doing things. First thing first, which market segment are they targeting? Or are they in the same segment the previous magazine was. They also need to understand the trends, currently people read online magazines so they need a website. After that they need to develop the marketing mix, which will guide them in their marketing activities. This marketing mix will be made of 4 Ps, which are Product, Place,Price and Promotion. I will assume the magazine is the product, the first P, The Price is what is the role the price will play in the market, do they want premium price, or do they want to skim the market. The other P, they need to have, is the Place, this will help in having a strategy on where to place their magazines, this includes the websites, malls, newspaper stands etc. The final P they need to develop is the Promotion, this is the advertising , channels, websites, forums, blogs, name it. Once they have done that, they can sit down and wait for money to come but not without superior customer service, otherwise without all this, they are wasting their time and money.
LastMinute New Web Site (Draft) - Louis, I like it much better than the previous one. I like Topic, Location, Date, Discounted Price. That is what I need to know to get interested. I believe that you are moving in the right direction. Andreas


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