How to Price Your Services | Entrepreneur Tips

The Entrepreneurial formula goes something like this.  Identify a need in the market, conceptualize the product or service to fill that need, price it to move, test the market interest in your product and either go back to the drawing board or launch.

The successful entrepreneur will research, test, price and market according to the results of his or her testing or will go straight to market on a concept that has little or no developmental costs.  For example, a business coach who already has a program that he or she does one on one with clients could easily take the program to webinars without much testing by recording it using any number of programs such as Keynote for Mac, Camtasia or ScreenFlow to name a few.

If the entrepreneur has a product or service that delivers value, has identified the likely end user or client and is ready to test the waters, pricing strategies now come into play.

The number one question I get from entrepreneurs is “what should I charge?”

I can’t tell you what to charge for your product or service.  That depends on your niche market, the product or service itself, perceived value, quality of delivery, what your competitors charge and many other variables.  What I can share with you is that most marketing professionals see a significant drop off in opt-ins or purchases when a consumer is given too many choices.  In other words, make your offer simple and increase the chances of consumers taking immediate action and purchasing your product.

There’s a theory that offering more than three choices to people decreases the likelihood of purchase. They become overwhelmed, feel confused and in some cases, suspect that they’ll make the wrong choice and not get the best deal.  Here’s the pricing formula I see most often in researching internet marketing guru sites.  We’ll use consulting services for our example.

The A, B, and C Concept for Consultants

Package A:  This package offers people the chance to consult with you for your highest hourly rate and for the lowest commitment.  For example:  Two sixty-minute calls per month for $500 with a one month commitment required.   In the Package A scenario, people can commit to just one month and pay you $500 to “sample” your services and if your consulting proves valuable, you can convert them to a longer term package.  In this scenario, it’s essential that the consultant bring their A game to Package A, and deliver such value and solution based advice that the client can’t image themselves without your assistance going forward.  In our example, Package A works out to $250 per hour for a total client commitment of $500.

Package B:  This package offers the best value and is the one you really want people to choose because you know that you can make a bigger difference in your client’s business or life if you have more time to do so.  So you make it significantly more desirable financially to choose Package B, BUT you require the client to commit to a longer package and thus a larger financial investment.   For example:  Two sixty-minute calls each month for a three month period would be priced at a discounted $225 per call.  Clients save $25 per hour by committing to a three-month package.  Package B offers the client a total of 6 consultations at $225 each for contractual agreement of $1,350 and a savings of $150 over your standard hourly consulting fee.

Package C:  This package is your high-end offer and requires the longest commitment but gives the highest value.  Here you are rewarding clients who are willing to invest in intensive committed work with you by giving them the steepest discount BUT making them commit to the highest out of pocket cost.  If clients choose this package, they’ll be saving $3,000 over your regularly hourly consulting rate.  This package would offer one 60-minute call per week for a total of three months or 12 calls at $200 for $2,400.

The thinking behind these package strategies is that the clients who choose Package A are exploring.  The clients who choose Package B want to invest in their business but are cautious and careful and want experiential proof that you can deliver what they need.  The clients who choose Package C are ready to move forward in their business, believe you are the one who can help them and want to take advantage of the maximum financial discount you’re offering.

Whatever package they choose, your job there is to over deliver to the point that they feel they truly desire to have more of your time and they’ll contract for more or if their needs have been met, they’ll give you a great reference you can use to attract other clients.

At the end of any Package contract, always ask the client if their needs were met.  If not, work to rectify that.  If so, ask if they will give you a testimonial quote that you can use on your website.  Most people will say yes.  Then you’ll be promoting your services with positive, real life case study quotes.