When it comes to pricing strategies, there are so many options to choose from. But as with many things, it isn’t always down to the number of choices available to you - it’s more about picking the right one for you. That’s why it’s so crucial that you think about your business and opt for the strategies that work for you, especially when it comes to pricing.
So how can you make it easier for yourself so you’re not bumbling around trying to find pricing for your clients? You can use so many different ones, but instead of overwhelming you, I’m just going to cover the five main ones in this blog.
Lots of freelancers and consultants use this. But if you’ve spent any time following me, you’ll know I’m not a big fan of this style of pricing. You should not be pricing by the hour as it punishes efficiency and always puts a ceiling on what you earn.
It is, however, often a good way to start when you’re first setting out, as you’ll know that you’ll make money for every hour you work. But it isn’t a suitable long term strategy. For that, I recommend opting for package prices and value-based pricing instead.
On my podcast with Jonathan Stark, we talked about this in detail. Jonathan is the expert in value-based pricing strategies, so if you haven’t listened to that yet, I recommend you do - you’ll find it here. When you’re working with project work and quoting for a project, you look at the value that it gives the client and then offer them a price that’s worthwhile for you. It isn’t about the time it takes but the value and transformation you give.
To price this effectively, you need to establish their budget, why they need the solution you offer and why they need it now.
I don’t recommend you use this pricing strategy if you’re in the online world. Looking at your competitors and constantly benchmarking yourself against them isn’t a great way forward. This type of pricing is evident in the supermarkets - with price matching, but it’s a race to the bottom and a real loss leader.
It’s why I don’t recommend it - you don’t want to be running to the bottom all of the time. Some benchmarking is helpful, but it can be challenging and depends on the market you’re in. It’s only something to consider doing if you’re in a price-pressured market.
This type of pricing strategy is where you start low and put your prices up over time. That could involve an initial launch price for a new product or course, then a higher price for a set period of time or a certain number of people etc., before putting the price up again.
You may add extras to your initial launch product or add in a live element, and this might make it more expensive. But you’re essentially increasing the price incrementally, the more you sell, or the more you get booked up.
Don’t underestimate the power of using psychology to help your pricing. It can feel a little silly, opting to use the number 7 or 3 in your numbers, but it really does help! The magic 7 works particularly well for me, and where you have prices that end in a number 7. Using an odd number really does help people feel like they’re spending less - it’s why so many prices aren’t rounded up to the nearest pound. So £97 and even £99 seems a much better deal than £100.
Discounting is another way to include psychology in your pricing. Showing the original price (in either brackets or striking through it) next to your discounted price is a great way to help people see how much value they’re getting and the money they’re saving. I use this method when I’m pricing together bundles of my low-priced masterclasses. It helps lower the barrier for new clients to buy from you for the first time.
When choosing a pricing strategy that works for you, I always recommend you use value-based pricing as your go-to strategy. Look also to get more involved in packaging up your products and services and fixing your prices instead of pricing by hour and resorting to competitive pricing.
Listen more to the podcast on these 5 pricing strategies that can work for most online business models.
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The Pricing Queen podcast is produced by Decibelle Creative