This morning I was talking to a good friend of mine about pricing his business services. I know him (and his work) very well and know that he’s highly under priced for what he offers.
Yet he’s torn about what to charge. On the one hand, he sees similar solopreneurs charging three and four times what he charges. On the other hand, he doesn’t want to price himself out of landing any business at all.
I’ve been through something similar when I was getting back into web design full time a few years ago. I had a ton of knowledge having done web design professionally years before. Yet I had very few clients.
What I decided to do was charge far less than I was worth just to land some business and create momentum. It was a conscious decision at the time – and one that worked. As I got busier, I raised my rates.
And while I’m still charging about 50% of what my direct competition/peers are for web-based business development, my business is healthy. I’ve chosen to keep my rates where they are so to not price myself out of the market of startup solopreneurs. But should I raise my rates as well? It is something I’m considering.
So back to my friend (I didn’t ask his permission to write about this, so I want to keep him under wraps)…How do you decide what you should charge?
My own thoughts have been charge for the value you give your clients. The, effort, then, comes in clearly communicating the value of what you offer. How can you help your client solve their problems (and make more money)? But what is that worth?
But what do you think? Do you charge what you’re worth? How did you decide what you’re worth?
It’s a lot easier to bring a price down than it is to take it up.
It’s better to charge a little more, but still be competitive. If you get the “vibe” that your potential client thinks it’s too high, THEN you just tell them there’s some “room to move”.
Dawud & Co.;
Most consultants wrestle with this one pretty much all the time. Here’s a great article from Dr. Alan Weiss (Summit Consulting) that echos something Dawud said earlier about ‘value’.
This particular article talks about value-based fees, and how to convince a client this is a fair and reasonable way to go.
I admit it’s good food for thought, but I’d be interested to hear any other thoughts on implementing the things he suggests, and on value-based fees in general.
Dawud – this is the question I struggle with daily. I have been fortunate to be aligned with a local PR firm for many years. The owner of the firm is very professional and wants to make sure we are compensated correctly. I am able to use that figure as a guide to determine my other rates. I am fairly comfortable with them now – and while many of my potential clients will say it is too high, there are just as many who consider it a bargain.
Since I have a backlog for work, it must be time to give myself a raise…
Shane,
I’ve used that tactic as well. I think it’s important to know the client a bit before pricing. Some clients need more help, more time, more ‘coaching.’ So it’s important to consider the amount of time AND effort that will go into a project when quoting a price.
Do you do consulting or deliver services? I think it makes a difference.
Char,
I’ve found it similar. Few people even pause at what I charge once I inform them of the value they’re getting working with me. The issues then just comes down to my fees fitting into their budget.
When you raise your fees, how will decide the timing and the amount?
Hi Dawud
Allow me to comment with (parts of) the best article I’ve ever read on this subject:
“”By being passionate about the work you do, you will deliver more in quality service than you expect to receive in payment as compensation. This, in effect, is a way to keep money or value chasing you, rather than you chasing it. By always doing more than expected, you’ll always be underpaid – which is how it should be.”
Dr Denis Waitley)
Last October I ‘published more of this article as on my blog.
Everytime me and my partner have a ‘pricing’ discussion this article ‘comes to the rescue’ 😉
Karin H. (Keep It Simple Sweetheart, specially in business)
Sorry, something went wrong the html code (been on a short holiday over the weekend and not really ‘back on track’ ;-))
Should be: Last October I ‘published more of this article as Chasinf money or happily underpaid on my blog.
Karin,
No worries.
I completely agree. The best word-of-mouth technique I’ve found is constantly exceed the expectations of my clients (when possible). That often makes them want to tell everyone they know. Not necessarily about how great your work is – but about that little extra meter you went to exceed their expectations.
Great point! Thanks. How do/did you initially decide on pricing – especially starting out?
Hi Dawud
Great question!
When we first ‘started’ (as managers, not owners or directors) the pricing was done on the base of competing with the market – any market around. Wrong practise (and one of the main reasons that venture ended badly – wrote a whole chapter of that in my ‘novel’).
When we had to make the decision to ‘go-it-alone’ after being made redundant we were already in contact with my dear friend and mentor Richard C. His concept of pricing reflects in the Waitley article.
It’s about ‘positioning’ yourself in the market: what value does your customer expect from you. Price a quality product too low and he will fear a fake.
Meaning: quality has its own price, otherwise it’s the quality that is doubted, not the price.
A simple concept that makes pricing – not just for start-ups – easier. (Won’t go into breakeven points, profit margins etc, this is not a lesson in accountancy 😉 )
Karin H.
Karin,
I started the same way. But soon I, too, decided to forget about what the competition was doing and really focus on what my needs were/are.
And I certainly agree with you about carefully pricing yourself so you’re not too expensive for your market while not being too low that the value of your offers is lost.
Fine line…
It’s definitely an interesting topic; I’ve been reading a lot of sources around value-based pricing, and interestingly enough, a number of them (if not all) say something to the tune of:
“Value based pricing is the way to go… unless you’re dealing with one-on-one face time consulting, in which case, bill hourly.”
And that just seems a bit empty, if you ask me. I understand the logic, but it still seems strange.
They tend to go on and say, ‘up your hourly prices’, but that’s about it.
This is a really interesting discussion and something I struggle with all the time. Like you, Dawud, I priced myself pretty low just to get some momentum going and because I really didn’t know what my work was worth. A kind friend told me I was undercharging and really gave me a better feel for where I should be. I’m still undercharging for certain services, but there are some parts of my portfolio that need beefing up.
The main thing that drives my fees now for the most part is supply and demand. I have only a limited number of hours per day/week available to work, and as demand goes up, I am able to raise my rates. This ensures that I don’t get overloaded and that the clients I do have are ones who understand that good design comes at a certain price, and that the investment will be well worth it. Those kinds of clients are the better ones to work with anyway.
Dawud,
I tend to give myself a raise when I take on a new project. If I have an existing client who has been at an older/lower rate for more than 2-3 years I will sometimes re-negotiate the rate, but depending on who it is, I may just keep them at the old rate – especially if they are a client that pays promptly and is easy to deal with.
Randa,
Sounds like we’ve had a similar path.
I feel it’s important to clearly illustrate the value you bring your clients. Often, price becomes a nonissue when I do that well.
BTW, I am a fan of your work.
Robert,
I just read that article a few days back. Thanks for bringing it up.
Most of the points Weiss makes have to do with non-fluctuating pricing. Clients can often relax when they know that their costs aren’t going to increase.
I’m currently working with a ‘business consultant’ (he doesn’t like the term consultant) who’s been responsible for hundreds of millions of dollars of sales increase for the companies he’s worked with. He suggests very clearly laying out the roadmap of the project for the client and structure the fees around how long a similar project would normally take.
The key, he suggests, however is to be clear that you’re billing for access to you and your knowledge – not for deliverables. Deliverables can be part of the project, but should not be the focus – only steps in the process to show progress.
Char,
I do similar things. Of course, my business goal is to help my client’s create successful businesses (not just websites) – which equals more money. So I have little problem bringing my past clients up to my latest fees. If they’re making more because of our work together, it only makes sense.
Adam,
I’m looking for great resources for how to create value-based pricing. I just order Alan Weiss’s Value Based Fees. I’ll let you know what I find.
I know for myself I’ve always followed delivery-based pricing. I know I want to shift from that.
Having two of Weiss’s books on my shelf, and his newsletter in my inbox once a month, I think you will find the information worthwhile. He’s as sharp as a tack (in both humor and smarts 🙂 ).
But, value-based is not a cure-all. Sometimes, your client may not be in a place to appropriately leverage your service (whether you would want to work for such a client, I will leave for another time). In this case, or in others where the work is more . . . speculative . . . fixed or hourly pricing is better.
I recommend to my clients to look at pricing as a facilitator of the relationship they want to have with their client (and less as a what-I-need-in-the-bank-account issue). Easier said, then done, when times are tough? Yes.
But, I assert that it puts the economic dynamic in its appropriate place: subordinate to the value of the relationship.
Jeff,
Great point. That’s why I think it’s important to know clearly what you’re capable of – and for whom. Knowing yourself and your audience can save headache and frustration.
And I like your recommendation: look at pricing as a facilitator of the relationship they want to have with their client.
Relationship, ultimately, is why most of us are in business (not all, but most). And it’s certainly why the client wants to work with you (most often). We really should put relationship at the front of the line. Do you suggest any resources for building the relationship as a business model? I’m doing some research not on business relationship, but what I’ve been looking at as relationship business…putting relationship before business.
Thank you for your great feedback.
I know what I’m capable but I always charging a price lower than the real price especially new clients.
What I think is that if you charge a price lower, people will come back often. If you charge more than it should, people would come once and gone forever.
[quote comment=”4830″]Do you suggest any resources for building the relationship as a business model? I’m doing some research not on business relationship, but what I’ve been looking at as relationship business…putting relationship before business.[/quote]
Dawud:
Excellent question! And it has a multi-headed answer. You can expect a trackback on this issue soon.
While I’m composing, take a look at the works of David Maister and Charles Green, who co-authored The Trusted Advisor.
They have an elegant formula for how trust is built in client relationships:
Trust = Credibility + Reliability + Intimacy / Self-Orientation
I have a little bit of a different take on this all. First of all, I think ‘value’ is a miserable way to try and set prices. Why?
The concept of ‘value’ brings in those dreaded evil twins: comparison and judgement. When you are talking about ‘value’ you are really talking about making a judgement. And, I believe the heart naturally rebels against judgement.
How can you ever ‘value’ something? I’ve never been successful with that approach.
A different approach that I’ve used successfully with hundreds of clients has to do with ‘resonant pricing.’ It’s trusting your heart to come up with a price that resonates for you and your best customers- and I’ve seen it work again, and again, really consistenly.
Here’s a free workbook I wrote that helps to explain the concept.
I do agree that packages work a lot better than hourly- how can you ever equate your precious minutes of life with some dollar amount? But even with packages, value is a difficult thing to assign, because the judgement and comparison. And, as is taught in Sufism, ‘comparison is from the devil.’ 😉
Try the resonant pricing approach, I bet you’ll be pleasantly surprised.
My canned response to people who say I’m too expensive is that I can cut the rate in half but it will take me twice as long to deliver.
🙂
Jeff,
This is great. And very timely for the shifts I’m making with my business. Thank you so much. And I’ll definitely look for that trackback.
Charge equal or a little less than your competition. Prove yourself and you won’t have any problems finding work.
Rammel,
Interesting idea. Do you consider what your pricing says about the quality of your services?
Mark,
Huh? Where to begin…
I don’t feel that value-based pricing necessarily means comparison and judgment. Instead, I see value in two ways…what’s the value to you, the business owner, and what’s the value to your patron – in their perspective.
Value to you can certain be based on any and all of the faculties you have at your disposal – including spiritual ones.
Value to your patron, I feel, has more to do with how they perceive what you offer, regardless of what ‘the market bares.’ As a business owner, I know I can’t control, ultimately, how people perceive my business – or whether they compare it to others. But I can be certain that it will be compared. How else do clients make decisions?
As for the point about Sufism…boy, using that term is quite strong. You know my background. I’ve studied Sufism for more than a decade. And I have not seen anything that quotes comparison as being from the devil. If anything, this idea leads to a great division and separation between people – something that both of us know is not part from the teachings of Sufism.
The point you make about the heart being the guide is a beautiful one. Though I feel it gets lost among this statement. Knowing you as well as I do, it’s difficult for me to imagine you holding this belief. Or is it that you’re trying to create a little controversy to get more downloads of your booklet?
I’d love it if you’d explain this statement more thoroughly. Moreover, since we study with the same teacher, I’d love to know where he has made this statement as you’ve quoted it – and in what context.
Thanks brother.
[quote comment=”4844″]I have a little bit of a different take on this all. First of all, I think ‘value’ is a miserable way to try and set prices. Why?
The concept of ‘value’ brings in those dreaded evil twins: comparison and judgement.
And, as is taught in Sufism, ‘comparison is from the devil.’ 😉
[/quote]
I can appreciate the value of the resonate approach. Agreeing on a price that you are at peace with can remove a significant barrier in the relationship.
But, my heart rebels against the concept of:
Value pricing – Comparison – Devil
🙁
I can appreciate that in a lot of instances, value may be a difficult concept to quantify, but I’ve broken bread, worked with, and been mentored by too many good people who have employed value pricing to the benefit of many clients to dismiss it from consideration of the options you have.
I humbly assert that the key is to find an approach that facilitates the relationship. If that approach is resonate pricing, by all means may healthy client relationships be with you. But, be open to other approaches.
*grouphug*
Dawud,
I don’t feel that you should make a drastic reduction at all, I just mean that sometimes you have to prove yourself when you’re just starting out. If you have to cut too much in order to get through their door, it’s not worth it. Once you prove yourself there is no one saying that prices can’t be raised to or above average depending on the quality of work you provide. I have no problem adjusting prices if need be.
[quote comment=”4854″]Rammel,
Interesting idea. Do you consider what your pricing says about the quality of your services?[/quote]
Let me put it this way,
2 renovators, R and F with 2 different prices.
R charges &1000, F charges $900
R does a sloppy job renovating the house
F does A great job.
Who would you choose to renovate your house again?
Price & Quality = Repeat Customers.
[quote comment=”4855″]
Doug,
I’ve used that one, actually. It’s not worked. What kind of reply have you gotten?[/quote]
The folks that recognize quality over price stay, Dawud. I simply do not want to work with people that can not recognize my value. They are usually the ones who argue every invoice, pay late, and continuously pressure for still cheaper.
I know I’m worth more so I don’t waste time there.
I know I made a provocative statement, but let me first address the concept of value as judgement.
If we call something ‘good,’ or something ‘bad,’ or something ‘exciting’ we are, at a very basic level, labelling something, making a judgment upon it.
‘Value’ or ‘worth’ is in the same category. Someone may ‘judge’ that something is ‘worth’ a certain amount to them, and someone else may judge that it isn’t.
I wrote this article about value versus appreciation. It applies to value pricing as well. I agree strongly with the concept of packaging your services, I’ve just seen a lot of people get into trouble and struggling trying to ‘value themselves’ and taking the time internally within one’s own heart to receive appreciation rather than ‘value’ works a lot more consistently, without the wavering and doubts your friend experienced, in my experience.
As for ‘comparison is from the devil’ – I feel some shame- I can’t find the reference in this moment, and so I withdraw it. If I can find the reference again, I’ll let you know. If I spoke hastily, or misquoted from memory, I really do apologize- it doesn’t do to not be careful with these things. Ugh.
I agree with you, Dawud- that if we don’t feel solid about our prices, it will cause problems.
I also agree with you 100%, Karin, the it’s rarely about the price. However, if you don’t feel solid about the price you are charging, whatever it is, you can literally unsell someone who has already, in their heart, said ‘Yes’- because they lose confidence in you.
I’ve found it’s far better to use the Your RIght Price exercise and have a price that is perhaps a little lower than you think you ideally want to charge, and build your confidence and ability to receive appreciation, until your confidence in a higher price sits in your bones.
I did the same thing you did, Dawud, in the beginning- I filled my practice with free or very low-paying clients, simply to feel what it was like to have a full practice. Now I charge fees that are higher than many people in my field, but I still have a waiting list.
It’s not about value, and it’s not about worth. It’s about listening to the resonance in my own heart about the price that feels right to me, and it’s about my ability to receive appreciation.
Jeff,
From my own perspective, resonant pricing is effective. Yet I’d argue that it’s still based on value – an internal value of what you’re being feels you’re worth.
And I second your assertion that pricing – and business in general – is about creating relationship. Every effort needs to move in that direction.
Doug,
I’ve used that one, actually. It’s not worked. What kind of reply have you gotten?
Business Blogger,
True, I think. But you’ll also find two things happening. Eventually you’ll have some internal struggle with not charging what your feel is right. Second, you’ll work harder for less – which means you can’t service as many people.
This is another great discussion Dawud! A lot of times I think it really comes down to knowing your client, knowing yourself and knowing your competition.
I have pretty much gone to a “standard” hourly rate I charge and then I estimate the hours the project will take – barring too many rounds of edits. This seems to be working best for me.
[quote comment=”4857″]
I don’t feel that you should make a drastic reduction at all, I just mean that sometimes you have to prove yourself when you’re just starting out. [/quote]
Hope you don’t mind I don’t agree with this Business Blogger?
(Have to re-type from memory – forgot the spam protection and the ‘back-button’ didn’t remember my typing)
Does your customer care that you just stared? Does he/she even know? So why charge less to get ‘a foot in the door’? It’s about positioning yourself from day one on, a different mind-set I know for most start-ups, but why wait till a year down the road to charge ‘normally’ for the quality of service/products you deliver?
I know, been there – done that myself, until my dear mentor told me to think big. Straightaway, not later. If you’re worth it – charge for it. Doesn’t sound blunt, if so it is not meant to be, it’s about value – the value you place on yourself and your products/services. Portray that the correct way and your customer will follow.
Karin H.
[quote comment=”4858″][
Let me put it this way,
2 renovators, R and F with 2 different prices.
R charges &1000, F charges $900
R does a sloppy job renovating the house
F does A great job.
Who would you choose to renovate your house again?
Price & Quality = Repeat Customers.[/quote]
I agree with Price + quality = repeat customers, but what if the lower price had delivered the worst job? Or what if both were of the same quality of work? Or that F did a great job, but took forever to finish?
Not so simple as a simple price comparison.
Karin H.
Char,
I really think something you said is the key…”what works best for me.” Personally, I don’t think how you set your rates matter all that much, as long as you’ve found the what works best for you. Great point.
Business Blogger,
Ah…I get it. And it makes sense to me. Really, it’s how I got started. But I’m not sure I’d begin that way again. Instead, I’d put my focus on establishing my business as having a great value in solving the client’s problems. That way, price is less an issue.
Rammel,
Oh, I totally agree. And I think the answer’s obvious. But what about this situation…
In your example, what if R charges the same $1000 for the same shotty work? But F charges $1500 for a much better job, is kind, friendly and cares about you and your home. Would you pat the higher fees?
Karin,
You have some great points – as usual.
Price is a tricky thing. And money certainly brings up interesting issues for all of us – business owners and patrons. So when setting price, don’t you feel it’s important to look at these issues both for ourselves and for our prospects?
Doug,
Oh, I totally hear you, Doug. I feel the same way. And have done similar things to find the ‘right’ clients.
I was just mentioning that I’ve actually used that line on a client I wasn’t sure I wanted to work with and they walked. And I was fine that they did.
We need to charge what we feel we’re worth. My good friend Mark, from above, has a nice exercise on this. And there are other ways. But the bottom line is we need to feel right about our fees. Otherwise our businesses will suffer in some way. It’s something that many solopreneurs don’t get.
Do you know that in the ‘decision cycle’ price isn’t the most important issue for 9 out of 10 customers?
Pricing is indeed tricky, but if you study the statistics of customer questionnaires on this subject the truth is that most customers choose a company on many other items, price being the lowest nominator.
That’s another wise thing my mentor showed me and we have followed his advice. Like I said in one of my other comments: it’s about positioning yourself from day one on. If you want customers coming for the lowest price only, that’s the customer you get.
(Sorry if I have very strong opinions on this, our first venture – where we had to manage someone else’s business – went horribly wrong because of this pricing – wrongly pricing – subject.)
Karin H.
Thanks for your understanding. I’m still looking for that attribution- if I can find it, I’ll let you know.
As for your comment;
“Yet it should be obvious that how the consumer perceives the value of our offers vs. cost is a vital part of our business success. Isn’t that why we spend so much time writing marketing copy?”
Actually, no. My experience is that our hearts know what course to take. We meet someone’s business, and we know what feels right. That’s the attraction in our hearts.
Marketing copy isn’t about value versus cost- marketing copy is about safety. It’s about helping the ego of the person considering feel safe enough to trust the attraction in their heart.
It’s not about convincing someone that the value is there- their heart already knows if it’s right for them or not.
However, that attraction in the heart is sometimes hard to heart, and definitely hard for the ego to trust. Marketing copy is about helping the ego feel safe. And that safety is created far more strongly through empathy and witnessing than through trying to convince someone of the value.
Since I’ve abandoned trying to convince people of the value, and spent more time in connection, witnessing, and empathy, and being as transparent about what I’m offering as possible, my enrollments and sales have continued to grow and climb.
And since I’ve been listening to my resonant price in my heart, my business has become increasingly profitable.
There are structures and strategies that support the regular actions I take, but those are the core.
Karin,
No worries at all Karin. Here we’re about the conversation. And conversation isn’t always easy. I appreciate your comments and your perspectives.
And I happen to agree that price isn’t the biggest motivator for decision making. It seems to only be when price is what’s marketed (think WalMart in the States).
Mark,
I think it’s inevitable that our services/offerings and pricing will be compared by people looking to use them. It’s human nature.
But that may not be the perspective you’re talking about. It seems that you’re comments are focused on how we decide to price ourselves. And I’ve been moving between that and how our pricing is perceived by others.
Certainly if we’re comparing our pricing to other businesses, that can be a dangerous slope. One that can lead to inner turmoil and uncertainly about our business.
We do need to feel solid in what we charge. And if we tether ourselves to what we ‘value’ in ourselves, it can lead to uncertainty.
Yet it should be obvious that how the consumer perceives the value of our offers vs. cost is a vital part of our business success. Isn’t that why we spend so much time writing marketing copy?
Mark,
On the point of your quote from Sufi teachings…now worries. Since I know you so well, I was just surprised. Personally I know that you don’t hold things that way. But others are not so fortunate to have a long-standing relationship with you and may misconstrue the point you’re trying to make.
So thanks for the apology. No harm, no foul.
I think this discussion is so valuable! (You should charge us for it, Dawud, hehe) Thank you for all the links to articles about pricing. They are very informative and thought provoking. And thanks to everyone participating in the conversation; I’m learning a lot from you. I find it interesting that those of you with considerable experience still struggle with the same things that newbies like me do.
The way I figure out base pricing for my services is with a worksheet that helps me figure out the amount of money I need to live (make rent, pay bills, etc). Then I look at what the hourly rate it calculates is, glance around at other people with my experience and skills and see what they’re charging (just to make sure my price isn’t too outrageous) and then I look at what the client wants. Sometimes what the client is asking for is worth more or less than my average rate, so I adjust accordingly.
I also have to know whether or not a job is worth my time. If it’s not, maybe I’ll charge a little more than usual to discourage the client without flat out telling them “no,” because then if I get it, the amount of money I’m making is worth it.
After reading most of the comments here, my way seems a bit… immature, a lot of looking around at what other’s are doing and copying it. But that’s one of the best ways to learn, right? You have to start somewhere!
LaurenMarie,
Thank you…I was waiting for someone to talk about that. We can’t just have a business based in ‘created’ pricing. We also need to consider the necessity of making an amount to take care of our living needs. In an overall business model, income needs should be foundational.
I don’t think the basis of what you’re offering is immature at all. I think starting with the question how much do I need to make each month to pay my bills, feed my family, save a bit and have something left over for leisure is very important.
Since the teachings of Sufism were brought up earlier in this post, we have a saying: Trust in God, and tether your camel. Translation: trust your own inner knowing about what to charge. AND, remember that you’ve been given the faculties to make sound desicions (or not). So trust AND take correct action.
Mark,
I have to respectively disagree with you on this point of value.
Sure marketing copy is about creating safety. No doubt, will not debate.
AND, purchases are most often about whether ‘it’s worth it to me.’ That’s part of how your patrons will read your marketing copy – regardless of your intentions.
You know me well, I’m not going to debate the importance of the heart connection. In essence, it’s what I do for a living.
Yet most people don’t understand ‘listening to their hearts.’ and so many more factors come into play than just heart resonance. Remember nafs (ego)? You have to travel through nafs to get to heart. That’s a pretty deep state of being.
No doubt. But don’t you think that has far more to do with how you’re, personally, in alignment with your business, your heart, your soul’s purpose then anything else? I’d say that your clarity for yourself and your alignment with that clarity is what makes your business successful. The heart connection with your prospective patrons comes after that.
Because I know you well, I can already hear your answer. Yet consider what I’m saying in relation to the teachings you base your work on. Think of it as faqir – the awakened goal of someone studying Sufism. Just an offering…
I love your work – even the pieces we see differently. And I certainly recommend people checking out what you do.
This is a topic that demands a real stretch of your comfort zone! Most of us charge far less than we should be for one main reason: lack of self esteem.
Perhaps a good exercise might be the following: The next time you are quoting a medium-sized, fiscally healthy client, ask them what they expect to pay. Please try not to keel over when you hear their answer, one most likely far higher than what you were thinking of charging!
Clients expect to pay for quality work. Price is never an objection when they fully understand and appreciate the value you are offering them. The services they are buying reflect directly upon their company’s public image. They will never skimp on that.
Be confident and stretch!
I agree with you completely Dawud. I was thinking of this as more of a selling tactic to get through the door of small businesses. Selling your service or product as a solution should leave price off the table.
Karin H – I find myself struggling with a similar situation. I have a business directory under development and I want to find a good price point. I can’t charge what the yahoo directory charges, I would have no customers, but I can still have a solid price point (professional quality directory) and not cut myself short.
[quote]I agree with Price + quality = repeat customers, but what if the lower price had delivered the worst job? Or what if both were of the same quality of work? Or that F did a great job, but took forever to finish?
Not so simple as a simple price comparison…..[/quote]
You have a point there Karin. If you are the client, you might want to choose the fastest and the highest quality while maintaining a fair price.
While if you where the service provider, you might want to give a qood experience to the client. Finish on time, quality work and a happy client/customer.
[quote]In your example, what if R charges the same $1000 for the same shotty work? But F charges $1500 for a much better job, is kind, friendly and cares about you and your home. Would you pat the higher fees?…..[/quote]
Like I said, If I were the client/customer, I would want the fastest and the highest quality while maintaining a fair price.
But,
Say that I had experience both R and F services. R price is maintained at $1000, F was $900 at first, then change to $1500 later, I would choose F. Why? because I was satisfy with his previous work.
“First Impression last forever”
correct me if I’m wrong.
Daniel,
I agree with you completely. That’s why I’m announcing, today, that I’m doubling my rates…just kidding.
For many of my clients (though not all) I ask about budget. Do they have a budget for the project we’ll do together? Combining their budget with their needs/expectations has often gotten me clearer on what I need to charge for a specific project.
Business Blogger,
I feel that’s where value comes in. Not how I value myself. But how well I communicate the value I can bring to my clients and their businesses. To me, that’s key. That with honesty, integrity and a desire to be in a relationship with the clients I work with. Often, then, the price is more about whether they can afford the service based on their budget.
Rammel,
First impressions certainly last a long, long time.
Personally, I don’t like to make it about price at all. When I interview a potential client (yes, the interview goes both ways) we talk about them and their needs, wants and expectations. We talk about their business and the problems their business faces. Then I offer solutions and examples of how I can help solve those problems in our work together. The focus is almost completely on the client and their needs. Only after that discussion do we talk about price.
Reason? I want to give. So even in my free 25-minute phone consultation people will often leave with a few solutions to their business issues. I want them to take that with them and so I focus the meeting on that instead of price and then justifications of price.
My motto…Serve First
You are quite right.
Rammel,
Right? Wrong? I don’t care. I only want to do what I do well. But thanks.
I think confidence and self-esteem are big players.. I don’t charge nearly what I would like, and sometimes get depressed or unmotivated when i start the job.. but your right.. clients expect quality, and stretching out and asking for what your worth can’t hurt.. they will probably come back once the cheap guy drops the ball anyway.. and I am going to raise my rates at the end of the year.. I try to do it every new year.. so my clients see a gradual progression in experience, overhead, and growth..
I work from home, so I do beat out other designers fees, but my friend has 20,000 in monthy overhead and charges much more obviously… more money is always a good thing..