How To Price So You Profit!

Hey There My Friend,

One of the biggest questions I see floating around the warrior forum, is “How much should I charge for XYZ Service?”

Alot of times this question is followed up by a lazy response that goes like this.. “Price it whatever you want, besides your just going to outsource it to the phillipines, etc etc…”

That’s garbage!


You need to have some sort of pricing strategy in place for your business.
A lot of people are getting clients but they aren’t seeing their bank accounts growing. Here’s why….

You need to take a few thing into account when you’re pricing your services.

1.) How are you going about getting your clients?

– Are you cold calling? If your cold calling then the cost to get a client is relatively low

– Are you emailing? Again, the cost to get a client is pretty low

–Are you using Direct Mail? Mail campaigns can cost in the hundreds to thousands of dollars (but work very well)

–Are you going out on site to meet with potential clients? Have to take into account, gas prices, insurance, etc…

If your cold calling or emailing to get clients you can afford to offer services at a lower price. If you’re using Direct Mail or Going out on site, you’re going to have to cover those costs (Campaign, gas, insurance)… so your price points for your services are going to need to be higher.

It’s important to know your “Gross Margins” for every service transaction.

Meaning if your selling websites for $1000 and it’s costing you $200 to fulfill, your gross margins are $800. $800 of which you can use to put back into your business to grow. However, if you’re selling websites via Direct mail and you have a campaign that cost you $200 plus the fulfillment of another $200, your “gross margins” are $600 instead.

2.) Your pricing will also determine how fast you are going to make sales…

–It’s a lot easier to sell a $25 service opposed to a $5000 dollar service. There’s a longer sales process involved for higher ticket items. But, it’s also easier to sell 1 person a $5000 service compared to 200 people a $25 service = $5000.

I choose to price my services a little bit higher.

3.) Pricing perception

– How do you want your business perceived?

Do you want to be perceived as the BMW or the Toyota? Sure, both get the job done but one is perceived as “better” hence why people are willing to pay higher prices for it.

So before you go forward in your business ask yourself a few questions…

Are my “gross margins” allowing my business to grow?
At what rate do I want to make sales at?
Do I want to sell one “high ticket” item or numerous “small ticket” items.
Do I want to be the BMW of my industry or the Toyota?

4.) Are You offering “residual” services?

– I love offering web design, it’s one of the easiest closes in my mind.. but it doesn’t allow you to earn good money month after month… sure maybe you’ll get hosting, but that’s pennies on the dollar compared to other services.

Offering services like SEO, Lead Generation, Reputation Management, Social Media Management, ETC… allow you to earn money month after month.
Again, with these services you have to take into account how you are going to go about getting these clients and how you are going to charge.

Offering different packages has worked great for me. “Basic Package” ”Premium Package” “Everything In One Package” … here’s the key though, make sure even your “Basic Package” has you positive in the “gross margins” column.

Having services that pay high price points month after month allows you to grow faster opposed to always chasing the next sale. Sure having higher prices may take longer to close the deal but you have less needy clients and a higher income statement at the end of every month!

For Pricing examples go to ReachLocal.com. I believe there LOWEST package is $1200/month and they are a $200 million dollar company… just saying

Thoughts?

How are you pricing your services? I'd love to hear!