How to price a service? without over or under pricing

by lewisjamespro 12 replies
Hi Warriors,

Thanks to lots of people leaving me great tips on how to scale my business.
I now have two businesses doing really well (one on fiverr and another on Instagram)

I just wanted to ask if anyone had any tips on how to price a service?

I have an instastory business that has done really well in such short time and made me a Level One seller within 3 weeks. I think I have cracked the prices for this business.

My other business is (making lyric videos for musicians) which took off by itself on Instagram.
I feel like I'm under pricing. Each video takes 3 hours roughly and I been charging for $40 for full animated lyric videos. Should I test prices or definatly up them? n by how much

Thanks
#main internet marketing discussion forum #price #pricing #service
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  • Profile picture of the author Michael Meaney
    Test 'em!

    Also, another way to look at it...

    Once you've got a buyer, the conversation in their head changes from "am I going to buy?"... to "how much am I going to buy?"

    ...So you've got the front end sale, which could be low enough to tempt them (too low and it might look like you're selling crap, though), and once they've made the commitment to buy, you upsell them extras.

    I've never sold anything on Fiverr, but maybe they allow something like that?
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  • Profile picture of the author rhealy29
    Couldn't agree more with the testing answer.

    Research ahead of time certainly helps. Who are your buyers? What do they value? Are there similar products on the market? What are they selling for? Which of them are selling and which aren't? Can you get data directly from your target customers through surveys, focus groups, or some other means? Etc, etc, etc.

    In the end though, you really have to test. Even if your initial pricing decision is close to optimal, the odds of it being exactly optimal are slim to none, so testing is a necessity. If the product is ready to sell, use your smarts to get as close an estimate to what you think the optimal price is, and then get it out there and refine from there.
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  • Profile picture of the author AceOfShirts
    If you are only charging $40 for 3 hours of work you are only making $13.33 an hour.

    That's just the gross profit. After you pay taxes on the income and consider the price you pay for your internet, electricity, computer, software and other little things you need to keep your business running you are making even less than $13.33 an hour.

    Your profile says you are in the UK. I don't know what the minimum wage, average or prevailing wage or tax rates are. Maybe this is a good rate for you since you can do it whenever you want, or when you have a few hours of time available.
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  • Profile picture of the author sagarerande
    Basically there's always some scope to scale up your business. Once you know that people are buying your service for a certain amount I beleive they will always pay higher for the same service. So, basicaly test out, increase the price by 10% every time someone buys it from you. What's the harm in trying out , you can always reduce it if it doesn't convert well!
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  • Profile picture of the author BradKasten
    You definitely have to raise your price. I would triple it immediately and see what happens. Custom made videos are a premium product so you should charge a premium price.

    You also have to convey what your process is in your sales copy. Mention you only make high-quality videos and you spend three hours to make them perfect. have lots of examples of your awesome your videos.

    If you have testimonials use them. If you don't have testimonials get them from your previous customers.

    Don't be shy about charging what you're worth. I even think $40 an hour is a little low.

    I'm not sure how competitive your market is and I'm sure you'll sell fewer videos at $120 than $40, but one at $120 is like three at $40.

    Market yourself as the high-end premium video maker. Offer a package of three videos for $299. It will make the $120 (or $119) for one video look really good.

    The worst thing that can happen is nobody pays the high price. You can offer discounts, you can run a two for one deal, or you can just lower the price.

    I Hope this helps and good luck.
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  • Profile picture of the author Peter Adamson
    If you do not lose a single sale because the price is perceived as too high, then it is too cheap. You want to push the price to the point where at least a few prospects tell you I love your offer but it's too expensive. Then you know you have it nailed.
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  • Profile picture of the author tritrain
    Huh, I didn't know there were businesses on Instagram. I thought it was mostly just pictures..

    Great question!
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  • Profile picture of the author najminrahmankoly
    Actually the price of a work may differ from work category to category. Such as The graphics Designing work & Web Designing work rate are not same. So you have to decide the work rate by your work category. Thanks for your advance.
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  • Profile picture of the author Akula78
    i will just suggest you to check the market price, and see how folks charge this type of service, and try to make it that way!! you can make it a bit lower, if you are just starting, so that you can attract some new leads. If you over charge on your beginning, then for sure you will loose folks!
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  • Profile picture of the author Steve B
    Personally, I think you should always be testing price points. Why?

    The value of service in every market fluctuates and changes over time. So does the competition you have for similar services.

    I have been in the position of raising my prices as new competitors have entered the marketplace and tried to under sell me. Why would I do that? Simply to establish my brand as the best. Let my competition fight over who becomes the cheapest - that's fine with me. Playing cutthroat is almost always a bad idea.

    Every owner positions his business in the niche marketplace based on quality, service, value, and price. And quite honestly, I want the kind of customers that shop for quality, service, and value first. Often these customers, when they're convinced you have quality/service/value, will accept any reasonable price you offer.

    Only you can decide how you want to position your business and how much you want to be paid for your effort. So decide how you want to be perceived - how you want to position what you sell first - then worry about specific product pricing that will support your positioning later.

    Good luck to you,

    Steve
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  • Profile picture of the author Jessica Amboos
    It's best if you test it first. You might not get any sales if you charge too high and people might think it's below average work if you charge too low. Also, nothing beats research. Connect with people who are roughly in the same business, check the demand in the market and look for something that will encourage buyers to avail of your services.
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