5 Things To Think About When Setting Your Price

5 Things To Think About When Setting Your Price

I recently spoke with a group of upcoming marketing students who were in the process of setting up some marketing plans for real clients. We discussed the usual things about ideas to use and the need to ensure that everything is linked together etc. The question that came up the most though, was the question of what to charge clients and how to win clients that will value their service.

When making purchasing decisions, everybody is interested in price. Obviously, it is a major factor in determining whether a sale takes place. What is less obvious, however, is that not all consumers or clients are looking for the lowest possible price every time. Businesses that always aim to be the cheapest option are not doing themselves any favours. While earning the dubious honour of ‘cheapest’, they are losing revenue, and probably great clients as well.

People will pay more for quality

As much as everyone likes a bargain or a good deal, it is fairly universally understood that you get what you pay for. Setting prices unrealistically low in order to compete with larger operations or other VA’s is also indicating that your product is somehow worth less than theirs. This is probably the opposite of the message you really want to put out there. By setting price a little higher, you indicate your product or service is superior in some way. Countless customer surveys have proven a higher price tag shifts the perception of quality, even when the items presented are identical.

A narrower market means more effective marketing

If you worry that raising prices will mean you are making yourself less available to a certain market, it might not be an altogether bad thing. You will find your marketing efforts are more effective if they are aimed at a more specific market. By raising your game out of the reach of some, you will be better able to provide services to those who can pay for the extra care and make an income that is equivalent of the time you work.

Higher prices allow for higher quality

If you are giving low rates to clients, you are likely cutting corners left and right or in the worst case working around the clock to make a decent income. Eventually, your reputation will reflect the customer’s experience of you as a ‘budget’ option. By charging a little more, you can ensure that you can maintain the quality of what you are offering, and over time be able to raise it. The better service you you can provide and the more value you can give is going to lead to higher customer/client satisfaction, and a more successful business overall.

Think pricing and sustainability

If you are relying on lower prices to pull clients into the business, that might work for you in the short term. It’s nice to see the days being filled with jobs. But what happens in a month or 12 months’ time? How long can you afford to work for the same low prices? What impact is it having on your business profitability? And not to mention your life?

Ask yourself, how sustainable is your business at the rate you are charging? If you start with low prices, you have nowhere left to go but out of business. Think long term and price your services at what they are worth. I also can’t go past pointing out make sure you factor in things super and tax.

Correct pricing is crucial in managing a successful business, so don’t be tempted to sell yourself short.

If you need some help to work out what you need to charge to make being a VA viable or want to cut the time in half for your calculations,  I highly recommend Rosie Shilo’s fee calculator spreadsheet and for $3.99 it’s a bargain! http://www.virtuallyyours.com.au/shop/fee-calculator-spreadsheet

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