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4 Highly Effective Pricing Structures for Your Service-Based Business

One of the biggest challenges you’ll face in your business is pricing.


It can be tricky to set the right price for your work and do it in a way that makes sense for you, your time, and for the client. To help simplify this process, let’s take a deep look at some of the alternatives to consider when pricing your freelance writing services.


The price you charge for your product or service is an important part of your branding and marketing strategies. Your business needs to make money, but it also needs to be perceived as fair and honest by customers.


Prices are not just about money; they are about perception. If you're selling a product or service at a high price, it sends a message that what you're offering is of high value. But if you sell at a low price, then it can be assumed that the item isn't worth much.


Your price can change how customers perceive your brand.


If you want to establish yourself as an upscale retailer, then charging premium prices can help build that perception — even if it doesn't always reflect reality. You could also choose to set low prices in order to position yourself as affordable and accessible to everyone — even if this isn't entirely true either!


The tricky part is finding the right balance between making money and building trust with customers based on what they think of your products or services.


4 Pricing Structures for Your Service-Based Business...


Economic/affordable pricing - This occurs when companies intentionally price themselves at a lower dollar amount compared to their direct competitors. It’s common for companies to try to position themselves as a low-cost alternative, or to offer their products at the lowest possible price.


However, this can be tricky because if you make your prices too low, then customers may think that you are trying to take advantage of them or that the quality of the services you provide will be low as well. For some people, when they see a lower price they immediately think it's low quality and will not take it seriously.


Also bear in mind that when you price your services to be "affordable," you may attract more customers and have difficulty keeping up with demand. Do not do this in a way that will leads to you compromising the quality of the work/services you provide.


Competitor's Price - You set your prices exactly the same as what your direct competitors are charging. This is a great way to create a price anchor and avoid getting undercut by your competitors.


However, if you want to be unique or different from your competitors then this strategy most likely won’t work for you. Sometimes the only difference in a consumer choosing you or someone else is the price.


A major issue with this pricing structure is that many people will take what their competitors are charging and use that but are not delivering the same level/quality of service. Just because one coach is charging $10,000 doesn't mean you should as well. There are many other factors to consider.


Value Based Pricing - Setting your prices based on the perceived value of the services you provide. This one is probably the most common I've seen and it's based on the concept of people paying for the transformation they will receive from your program or services.

Consider the minimum transformation the person can expect to receive as well as the importance or "worth" of the information you will provide to them.


For example: when people make 6 figure claims at $97 prices. Think about this, someone is going to help you make at least $100,000.00 and they are only going to take $97 of it? Something isn't adding up there.


It's important to keep this in mind as you are building your brand because it will set the standard for how people treat you and your business.


Decoy Pricing - This occurs when a company has 1 target offer and they create "decoy" offers that drive consumers to the target offer.


The decoy offers are usually very similar in price, but slightly cheaper or more expensive than the primary offer. This causes consumers to focus on the primary offer while they think about whether they should buy one of the other "decoys." The power of using decoy pricing is that it allows you to charge a higher price for your product by making it seem like it's a better deal than it actually is.


Why is it important to have a pricing strategy?


Pricing is a central part of how people perceive your business and establishes an expectation in customers' minds about the quality of service they can expect as well as what you expect of them.


It's important that you decide what other brands you want to align yourself with from the start.

Your price point will affect everything from your sales copy and brand visuals to what kind of packaging you use so it should be taken seriously.


Benefits

Accurate pricing based on factual information can lead to positive results for your company.

It can help you avoid making mistakes by not over or underpricing your products. It will also give you a clear idea of what your competitors are charging for similar goods or services so that you can make an informed decision about how to price them yourself.


Other benefits include:

  • An increase in your conversion

  • Fewer charge backs and refund requests

  • Alignment with your branding and marketing efforts

A huge benefit of doing this early is that it’s the foundation for everything else you do—digital products, services you offer, ads you run and when to launch them.


Factors that can influence your pricing

  1. Your level of experience. Not to be confused with the amount of time you've been in business. If you have experience that you're carrying over from previous jobs or opportunities etc., you should be charging for that (even if your business is only 2 days old).

  2. Your capacity. Keeping in mind how many clients/customers you can reasonably work with each month, quarter or year, set your prices accordingly.

  3. The transformation/results you will get for the client. Instead of focusing on how much your time costs (especially for coaches, strategist, and consultants) prioritize the end result people can expect to receive from you.

  4. Your confidence. This is vital! If you're asking for a price that your not confident about, people will be able to tell. This is what often holds people back from charging more.

Not because you don't want to earn money in your business but Because you lack the confidence to articulate clearly why customers should pay that price. When evaluating pricing structure, it's important to define your brand and consider the image that you want it to project. Your price says a lot about you and your product. Ask yourself the following questions in relation to the above:

  • What is my USP?

  • Who is my target market and what price are they willing to pay?

  • What will this price achieve for me?

The answers to these questions will enable you to leverage effective pricing strategies as authentically and transparently as possible.


If you're ready to start building your service-based business with intentionality, click here to learn more about the services and products that can help you.


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