If you are in the business of offering services and not tangible products, you would understand that pricing service is trickier. To settle for the best price, you must weigh the time put in, expertise and customer perceptions.
There are various reasons that could influence your service prices – perhaps you have received an official accreditation, or your overhead costs have increased. Whatever the reason, you need to plan carefully and justify the price you attach to your offering.
While it is good to factor in your time, expertise and experience, the major element that you should consider when fixing your price is the benefit or value your service offers customers and attribute a value to each of those benefits.
Figure out your rivals
Conduct some simple market research. Search online to find out who you are competing with, and for how much.
Your prices should not be higher than that of your competitors so that you do not risk losing customers to your rivals. Also, be careful to make sure your prices are not too low because customers might translate this to mean that your service is substandard.
Calculate your costs
Calculate the costs of all that it would take you to produce, sell and deliver your services. Include labour, supplies, overheads, marketing, etc. You will need to decide to what extent these costs should be reflected in your pricing.
By the time you have grown to gain the trust of customers, consistently delivering top-notch services, you could fully tap into a value-based price model that reflects what a customer is willing to pay.
Review your prices
Communicate with your customers, and get feedback on what they think about your pricing and also about your service standards.
Get feedback on your service immediately after a transaction or service delivery. A simple questionnaire works well. You can also carry out simple surveys online. Customers may be more inclined to respond in an honest and open way to an online survey because of the anonymity it offers.
Fix a price
After you have assessed the value of your offer, you can put a price on it. Customers are less likely to tolerate a price rise if it seems to come out of the blue and has no justification.
You could review your pricing every six months. That way you can keep on top of market changes and amend prices to reflect your costs and changes within your marketplace. This will help avoid the need to make sudden, large price hikes because your prices haven’t been reviewed for ages – which will hinder customer retention.
It’s important to pay attention to the prices you set for your services as they can determine the success of your business. Pricing services can be a difficult task because it’s different from pricing a product. For services, prices are much more subjective since you’re attempting to pinpoint the exact cost of your experience, time and any education and value that goes into offering that service.