The problem with low prices…. 
When you price yourself considerably lower than your competitors, your services/products are viewed as being “cheap,” regardless of their true value. This leads to three significant problems:

1. Customers often equate a discounted service with low quality.
2. You’re unable to invest money in your business (i.e., administrative staff, equipment, new services) that would provide new services and more value to your customers.
3. You may miss out on highly profitable clients.

How can low prices drive clients away? If you need a dentist, would you look for the cheapest dentist? Probably not. But, to get the best level of service, you pay the high-end of the range. In a professional service business or in fact, in any business, you’re sought after because of your knowledge or talent in a certain area. Your prices should, and must, reflect that talent at the outset of every relationship with each client.

 

Here are some things to consider when setting your prices, be it now or from the beginning.

1. Do your research. Check out your competition, especially those who are most successful. What do they charge and why are you different? Be prepared to answer that question for your customers and potential customers.
2. Know your costs. You need to set prices in such a way that you make the profit you want and need. Proper pricing can help you ensure the long-term health of your business.
3. Don’t discount. If the value of your services is $5,000, why would you offer it for $4,000? Is it less valuable to this client than it is to others? If so, let’s find more of those clients who find it more valuable. After all, you’re a professional, not a discount shop. 

4. Don’t bill by the hour or by the individual unit. There are few professions or manufacturing sectors in which hours provide a good measure of value. Additionally, with hourly billing the more experienced you become within your  niche, the more efficient you are, the less money you make! The client doesn’t care if it took you 50 hours or 50 minutes to design their marketing piece or produce their widget. As long as they receive a terrific design/product, it holds the same value to them. 

      Working with you.            

Chris Wilkinson

Certified Business Behaviour & Attitudes Analyst.  

Business Coach.