Getting your quote and job pricing right
30th November 2021
If you are looking to get more business you will want to make sure that you are not quoting too low or too high. You want to set your pricing right in the sweet spot - where customers are willing to pay but it doesn't break your bank. Let's take a look at some pricing tips on finding that sweet spot and getting more business by having your pricing just right.
What is perceived value?
One of the first things you need to nail down is the perceived value of the main services you offer. Do you want your customers to be getting a bargain, or do you want them to pay a premium price for a superior product? The answer to that question will determine how you set your pricing. Will you provide lots at lower margins, or fewer jobs at higher margins?
Your profit margins
You need enough profit margin built into your pricing to ensure that you're making money on every job. You'll have to consider how to price your time as an expert in our area, as well as any products you use, any machinery you've bought and had to spend time training in how to use, and your vehicle and travel costs. This helps you to set the base price for services and determine which services are the most profitable to your business.
Make sure you're competitive and charging properly
Always check out the competition before you set prices for your services. If there are already several similar service providers in your area, that will affect how much you can feasibly charge. If there are only one or two in your category, then go ahead and set higher prices as long as you know you can deliver the best service to back it up.
If your competitors are setting their prices lower than you can afford, then you either have to price higher for a higher quality service and focus some marketing around this, or find some way of trimming your costs to not price yourself out of the market.
Consider 'value pricing' rather than 'cost based pricing'
Using market research and figuring out what your customer base is both expecting and willing to pay for your service - using value-based pricing is figuring out the sweet spot of the 'beer on the beach' experiment for your business. In this experiment, Richard Thaler, am economist, determined that people are willing to pay more for a beer in a hotel, than a supermarket. Even though the products are identical, their values were seen differently because of the context. So how does this apply to your appointments based service business? Do your research - find out the local competition's pricing and base your pricing on your brand perception.
Don't be afraid to explore new ways to make money by charging more, higher pricing can capitalize on your company's reputation as well as having greater interaction with customers and building loyalty.