Are you trying to figure out how much you should charge your clients for your services. We all know trying to find the perfect pricing strategy can be time consuming and stressful.
One of the hardest things to determine when trying to price your services is how much do you value your time and how much do your clients value your service.
In this blog post, we will go over some easy guidelines on how to set a monthly retainer and how to price your services so that you make a high profit margin.
Putting a price tag on your services is one of the biggest business decisions business owners will have to make. It's so important because your pricing model must cover your overhead costs and expenses all while offering the best value to your potential clients for a great profit.
Before you make a decision, consider these questions:
- How much time do you spend providing your service to clients?
- How much do you think your service is worth?
- How much value are you giving to your customers?
- Do your clients find your service valuable?
- How much do your clients believe your service is worth?
- How much do your customers benefit from your service?
Once you have clear answers to the questions above, that should begin to give you an idea for how much your service should cost.
Remember This General Rule Of Thumb
1 out of 5 people should be telling you that you are too expensive.
If you don't have 1 out of every 5 clients telling you that you're too expensive then you need to raise your prices.
You're in a sweet spot when 80% of your clientele is saying they can afford you and 20% say they can't afford your services.
However, if 2 or 3 people say you're too expensive, then you need to lower your prices. Here's another thing to keep in mind - if your people keep saying they can't afford your services it could also be because your service is too expensive for the audience you are trying to sell your services to.
Which means, you either need to find a better audience to serve your services to or you need to drop your pricing.
There's no wrong option when it comes to pricing your services, it's whatever makes the most sense for you and works best for your business -- it's a lot of trial and error.
Value-based pricing is defined as the method of setting a price of a product or service based on how much economic value it offers to customers. In other words, how much value do people find in your service and how much can you charge based on that product or service.
Let's say you spend 12 hours on providing a service to a client. You then have to think, what is twelve hours of your time worth.
Value-based pricing has proven to be extremely profitable, especially if you have something special that adds to your customers business or life.
Market-based pricing is defined as a process of setting prices of products or services based on the current market conditions. This is where you shop your competitors -- research what your competitors are charging and come up with a price that would compete with theirs.Now, let's take a look at the different ways to price retainers:
The most traditional form of a retainer is to charge a fee up front and then bill for X amount of hours after that.
For example, law firms typically bill for a number of hours. They will charge you $5k up front and then charge you for an X amount of hours after that until that retainer is spent.
We like to take a different approach to retainers and make it fun.
Here are a couple of examples you can try:
Here you would put together a package that includes a full scope of services and then charge a fee for those specific services each month.
You also have the option to set retainers based on percentages. In other words, you would handle x, y and z in exchange for X amount of revenue or ad spend.
Flat Fee Plus
For this you would charge a flat fee each month, plus a percentage.
For example, you could handle their advertising for $3,500 a month and that includes $10k in ad spend and anything over 10K in ad spend, your client will spend 15% of that ad spend.
When looking to on-board a new client, there are so many cool tactics to help you attract more customers and increase your profitability. It really depends on what you feel comfortable charging people.
Once you find that sweet spot, your business will grow like crazy!
If you would like more of our help on how to price your services then I encourage you to check out DM Impact! It's our mentor and training community where you will work closely with our team to grow your audience using Digital Marketing!