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The price is right – or is it?
by Stacey Ackerman, M.A.

Are you pricing your services in a way that appeals to today’s economy? The key to effective pricing is showing value to your customers and minimizing risk without compromising the integrity of your brand.

With everyone tightening up their pocketbooks, you’re going to have to work even harder than in years past to sell your product or service.

During the past six months, I’ve had several clients who have successfully modified their pricing strategies without compromising their brand.

Recently, I recommended to an event planner in Eagan an attendance-based proposal for her clients. The existing pricing structure is to put together a proposal with a total dollar amount for the event, which is based on the number of estimated hours worked. This is a very standard proposal structure for anyone in a service-based business.

The flat dollar proposal may work well for the business owner, but to the client that bottom line number is usually all that is read—and it can be quite intimidating.

The suggested new pricing structure is to base her fees on a percentage of attendees who participate in the event. Most organizations she works with have several years of attendance history, so accurately estimating attendance is easy. We also built in a “minimum” fee in case there is a catastrophe that causes attendance to take a drastic hit. This way, all expenses and at least a small profit are guaranteed.

From the client’s perspective, there is little risk involved in this type of bid. It is also easy for her to budget the event. In fact, the client could simply raise admission prices by a nominal amount, which would partially or completely pay for the event planner.

In this case, the event planner isn’t discounting her services or lessening the value of her talents. She simply found a way to maintain pricing at its current level while minimizing the risk to her potential clients.

I recently worked with a veterinarian who said her biggest challenge was people wanting to do what is needed for their pets, but putting off services until later. I suggested she team up with a pet insurance company to offer all clients the option for pet insurance before there is an issue. The pet insurance company claims that insured pet owners spend an average of 44 percent more on preventative services.

However, just adding pet insurance won’t sell the services. To fully take advantage of the new pricing strategy, the clinic needs to put together a simple preventative health care plan that is communicated to clients at several contact points.

In the retail marketplace, you may have noticed high-end brands offering value products. Caribou Coffee has successfully done this by offering $1 coffee on Mondays. It is getting people in that want a basic value cup of coffee without compromising the image of its specialty coffee drinks.

When considering a pricing change, first remember what it is that your brand stands for. If it’s high quality, don’t compromise quality. Then look at ways in which you can minimize risk and show increased value to your clients. A new pricing strategy doesn’t mean lowering prices, but rather finding a creative way to meet your clients’ needs given the current market conditions.

Practical, affordable marketing that works.

Phone 651.783.5763 | Fax 651.451.5923 | Email: marketing@smallbusinessbuilders.com


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