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Profitability - Pricing Strategies To Make Money

At a meeting the other day, a marketing consultant opened her

talk by asking the group, "What are you worth?" She went on to

discuss all the different ways we minimize our worth or discount

our value in desperate attempts to close the sale. After all the

pitfalls of pricing and selling were laid out, she closed the

talk by asking again, "What are you worth?" The responses around

the room were very entertaining as people began to realize or

give themselves permission to adjust their prices to make a

profit!

As a wakeup call for your own business, I want to give you some

options to consider ensuring your pricing delivers the

profitability you deserve.

1. Educate your customers. When prospects approach you or

calls/emails you for an estimate/quote, this is a buying signal.

They are telling you they are ready to buy and willing to spend

money to purchase your expertise. - Provide superior service and

they won't look elsewhere and won't blink at your price.

Excellence is priceless.

2. Many prospects perceive value and price as equal. A lower

price can actually hurt your credibility and sales because they

associate the best quality products and services with premium

pricing. Listen to your customers. - Do some competitive

research and be sure you are not shorting yourself.

3. Periodically calculate your profit margin to be sure what you

charge, after expenses and overhead, pays you a good living.

Covering expenses, overhead and payroll is not enough.

4. Periodically do the numbers to be sure that the actual

cost/hour and price/hour give you the necessary profit margin.

Your daily rate may sound reasonable. But if you bill for 7 or 8

hours and put in 12 -14 hours, you may actually be paying

yourself less than your lowliest employee or intern.

5. There are ways to keep your prices fixed to maintain value

and yet be flexible. Add the flexibility by designing different

bundles of services or different packages of hours/month or

hours/project to be contracted.

6. Set your fees just a bit above what you feel comfortable

asking for. Then, bump them up incrementally until clients

complain or you stop getting reorders.

7. When asked, be upfront about your prices, and then zip it. Do

not apologize for your prices, defend your prices, or justify

how you derived the price.

8. Yes, there are strategic times when negotiating a price is in

your best interest. For example: a unique packaging of services

for a new type of client, or the pilot or beta testing of a new

product or program.

9. If you still think your initial consultation/sales

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presentation with a client should be for free, set some

boundaries and expectations and clearly state the value and your

investment in preparing for that initial consultation. Another

way to approach this is to charge for the initial consultation

at your full rate and if they purchase your product or service,

that fee gets applied to the final invoice payment.

10. If you close the sale and get paid on that one sale but

provide value-added services of following up in a number of

ways, are you losing money from the opportunity costs? Maybe you

can charge a small premium to provide stellar customer service.

Clients will value it more if they have to pay for it.

You have to appreciate what you are worth before your clients

will. Decide what you are worth in the marketplace. Be sure your

fee or rate has a profitability factor built in. You are worth

it.

About the author:

Kerri Salls, MBA runs a virtual business school to train,

consult and coach small business CEO's and entrepreneurs in 10

key strategies to make more profit in less time. Learn more at

http://www.breakthrough-business-school.com/products.html or

sign up for a free weekly newsletter at

http://www.breakthrough-business-school.com/newsletter.shtml