How To Price My Services?
EMMA BOWDLER
I’m a cheerleader for women and an accountant bursting with personality.
What is the best way to price my service-based business?
If you work in a service-based industry you need to introduce value-based billing; there’s no ifs and buts about it.
But let’s rewind for a second and breakdown what this clever pricing strategy actually involves, before we get into the importance of it.
There are four models of pricing. These are: cost-plus pricing, competitor-based pricing, demand-based pricing and last, but not least, value-based pricing. Traditional pricing models usually calculate production cost then up mark accordingly.
People are happy to pay for quality
Value-based billing revolves around perceived value. Clients are charged based on the value of the work, not by competitors’ rates or hours. By doing this, customer service is near-instantly improved.
It’s proven that people are happy to pay for quality. In fact, we know 86 per cent of buyers are willing to pay more for a great customer experience. And companies with superior customer experience make 5.7 times more revenue than competitors with poorer service.
Sounds pretty good, right?
“Value-Based pricing builds a loyal customer base and my customers know exactly what they are up for from day one”
EMMA BOWDLER
What value-based billing looks like in a business
When a firm adopts value-based billing, services are typically grouped together into packages, or bundles.
Usually, a customer knows what they’ll be charged upfront and payment is asked for once a job is completed; AFTER the client has seen the work.
While this method of billing is a bit more time-consuming in the beginning, I can’t sing its praises enough and introducing it was one of the smartest moves I’ve ever made for my business.
Why?
Customers know what to expect
This pricing strategy builds a loyal customer base and my customers know exactly what they are up for from day one.
The customer is put in the centre the moment a brief comes through. A business has to adopt a high-standard of service in order to properly understand a client’s industry, wants and needs and therefore meet the brief.
This pricing strategy also improves collaboration. I’ve found my clients are more receptive to questions and feedback if they know what they aren’t going to be sent a bill for every 10 minute phone call they make.
This brings me to my next point.
Transparency builds trust with your customers
By being transparent about pricing, a customer won’t get a nasty shock once an invoice is sent through. Trust grows and you will find invoices will be settled faster, improving cash flow.
Finally, value-based pricing will see a business constantly strive to design high quality services and packages – increasing perceived value.
With each job, a new customer-perspective will be adopted, and different solutions and products will be developed to help cater to their needs. This in turn creates room for supplementary services, which gives you wiggle room with your pricing.
Does your pricing strategy need some work? Book an appointment today to find out how we can help.
EMMA BOWDLER
I’m a cheerleader for women and an accountant bursting with personality.
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