Startup Corner

HOW TO PRICE YOUR SERVICE

Marketing Donut

Pricing a service can be trickier than pricing a product.

Getting it right means valuing your time and expertise and accurately weighing up customer perceptions.

Whatever the reason, you’ll need to plan carefully before you fix a new price for your offering.

You should start by identifying the benefits your service offers customers and attribute a value to each of those benefits.

Find affordable properties

You should start by identifying the benefits your service offers customers and attribute a value to each of those benefits.

Research your market

The next step is to conduct some simple market research. Look online to find out who you are competing with, what they offer and for how much.

If you find your current or projected prices are higher than those charged by your competitors, you risk losing custom to your rivals. This does not mean you should slash your prices, however – set them too low and customers might think your service is inferior.

How To Price Your Service

Calculate your costs

Next, you need to understand what it costs to provide your service to customers. Calculate your direct and indirect costs when supplying your services, including labour, training, overheads including stock and supplies and marketing. You will need to decide to what extent these costs should be reflected in your pricing.

There are two basic pricing models to work from: cost-plus pricing, which involves adding a mark-up to your break-even costs; and value-based pricing, which takes into account the value of your service to your customers.

A value-based price reflects what a customer is willing to pay. You can charge more if you have built up loyal custom, offer a higher quality service or are seen as better than your rivals.

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