Monday, February 21, 2011

My Strategy for Pricing

I have a very simple pricing strategy for doing business. It's simple to remember and easy to implement. Here is My Wealth Builder's strategy for pricing:
  • Free is not a price point. A colleague once commented that customers don't appreciate services that they get for free. He commented that customers of free services will not value the service, leading to frequently cancelled appoints. Charging a fee, even though a small one, created commitment by the customer.

    Therefore, I won't give away my service for free, even to get trial.

  • No discounts to make a sale. I do not discount my services. If customers inquire about a lower price, I have two options. First, they can buy in bulk. My yearly price paid up front is 17% lower than 12 times the monthly price. To me, the time savings of billing one time versus twelve times is worth the price difference. The second option a different and lower level of service, which is commensurate with the lower price.

    For renewing customers, I will maintain their initial price for at least two years, as recognition for being long term customers.

  • 50% conversion is a good price point. I price my service such that 50% of those that inquire think the service is a great value and 50% think the price is too high. I don't want the customers that think my price is too high. In my experience, customers who didn't buy would have been high maintenance, e.g. paying bills late, requiring multiple billing, or constantly negotiating price.

    The customers that pay my price realize the benefit that my services provide.
  • To note, I have no formal marketing or sales experience, which probably makes those in the field cringe:-) However, since my business and revenue is pretty small, this simple pricing strategy works for me.

    For more on Strategies and Plans, check back every Monday for a new segment.

    This is not financial or business advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    No comments: