6 replies
Hello warriors,

One of the toughest things to come up with is the right pricing for your product or service. I had recently a fun experience between trial and error to come up with my pricing for a new service and I wanted to share it with the rest.

Earlier this year, a crazy idea hit me in the face . I decided maybe it is not as crazy as it sounds, spent couple of weeks planning how this will play. Packed my bag, and traveled half the world to expand my company overseas and offer a service for the first time. Interviewed people, hired team of SEO experts, trained them, and figured I put out a very competitive offering with low rates, this is definitely a big win or at least I thought at the time

I came back home and launched my service with the lowest rate I can afford, less than $2/hr, I figured nobody can compete with that. I done my home work and expected as always to burn cash first before I see real results. 1st Month I ran with that rate, and my conversion rate was zero and few thousands in ads cost. As I start adding more services and burning more money on advertising (nothing that was promoted differently from the original offering), I had to raise my rates. Once my rate jumped above $2/hr, I start getting clients slightly, one at a time, every couple of weeks I would increase the price slightly and as a result I get more people people hiring us for their business.

When I first launched the service for less than $2/hr, the only thing I was getting on regular basis are people who are questioning the service, after all there is that concept "if you give out a peanuts you get monkeys"

As my prices start maturing up, I realized while people expect a low price, going way lower than the average / minimum of marketplace can actually play against you.Not only I was getting the service questioned as low or bad quality, but I was getting a specific type of people who would be bugging me all the time for every small and big thing.

Now that the price has matured, I am getting only a quality customers for the most part ( small - medium business owners who appreciate what I am offering and actually value it for the rates that is being offered ). I also want to highlight that nothing in my campaign (landing page, chat, communication) has changed but the rates, the landing page exactly the same.
#experience #pricing
  • Profile picture of the author joyouscreature
    Congratulations on finding your happy price point. It is so true that low priced offers are perceived as worthless when in fact it may just be someone new trying to compete in the market place.
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  • Profile picture of the author gingerninjas
    I agree with the 'you pay peanuts your get monkeys' concept.

    I started out offering a fairly low rate per hour - I thought it would be a good way to bring in business, while I was busy I wasn't getting the sort of clients I wanted long term. There were tyre kickers and leads were people who were searching for bargain basement style marketing.

    After a while, I started weeding out the client's I didn't want and when people enquired for new business I was able to figure out if they 'fit' my business and if I wanted them as clients.

    Now I have a higher rate and my husband who works for the business has an even higher rate and he never needs to search for work.

    If you offer quality and you're presenting a bargain basement price people will be wary.. just as you probably would if the shoe was on the other foot.

    The higher I raise my prices the busier we get - while we are still affordable if people don't want to pay the rate I don't mind, they're probably after a cheaper service that isn't as higher quality so it's not something I get caught up in.
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  • Profile picture of the author Steve B
    Originally Posted by onegoodman View Post

    I realized while people expect a low price, going way lower than the average / minimum of marketplace can actually play against you.

    A couple of things ...

    You didn't mention researching the marketplace to see what prices the market will bear. I think this is a critical step. Playing a game of cutthroat in order to be the lowest price among all you competitors is a losing game. There will always be people that will do anything to claim they are the cheapest. Businesses in third world countries can exist for a long time on a minuscule amount and they will undercut your prices as their economies are totally different than someone's, for example, in the U.S.

    Which brings me to a second point. Be very careful about choosing the type of clients you want to deal with. There are people out there who will purchase products and services almost independently of price. They are looking for "the best" and will be happy to pay for it. Their expectations are very different from folks shopping on the basis of low cost alone.

    Do you want to serve people that are always looking for discounts and quibbling over prices? Or would you rather have clients that are happy to pay whatever you ask because they know your business will deliver the very best results possible and will be worth every dollar they spend.

    You have the power and control of your business and you can make a conscious choice who you want to serve and how you brand your business.



    Steve Browne, online business strategies, tips, guidance, and resources

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  • Profile picture of the author onegoodman
    You didn't mention researching the marketplace to see what prices the market will bear. I think this is a critical step.
    Thanks Steve, I have actually done that while planning.

    Definitely there will always be an underdog and I am not aiming to be know for the lowest price, but for the best quality.

    My line of thinking was to offer the lowest rate possible to the earliest clients as they are taking more risk hiring us, as we have proven quality we continue to take the price higher to meet the pricing point that we believe is best fit for our packages.

    This being said, my expectations when I started offering a lower rate will definitely be an attractive point to potential clients, now that I went through this process, I wouldn't take the low price always as a good selling point because there is a turning point where low prices can harm the business
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  • Profile picture of the author Regional Warrior

    I have done in the past some testing with two price points $17 & $25 and asked to people purchasing to pick one

    Now this will only work if you have the first price as the lowest you would go I.E when you discount

    I found that most who did purchase did go for the higher price point about 70% in total
    hope this helps in some way

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  • Profile picture of the author seobuzz
    There are many factors actually other than the pricing as you are guessing. Yes $2/hr will never attract those creamy clients which everybody wants. Because for them time is more important as they have enough money to spend. Hence they will not even "try" these low priced service

    I have also noticed you are providing SEO services. Now there is another crucial catch in this particular niche. Because of the different issues, doing SEO has only become difficult with time. Hence most of the SEO clients now believe its almost impossible to provide SEO services at low cost. I hope you are getting the complete scenario now which is still not promising for your business.
    Ideas and Techniques to Make Money Online
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