Think about lowering the prices of your services?

The number one reason why you sailed into the business waters was to make a profit. Also, it is the same for selling products or services.
If you are giving away your service for less than the cost, you are doomed.
The main difference between a one-man show, a small business, or a company with dozen employees is how they set their pricing strategy.
We agree that service pricing is a little bit tricky and has some grey areas.

First, a little discussion about the pricing methods

Cost-plus pricing – standard method, most exploited. Just subtract your costs for providing the service with a desirable profit. You need to calculate all of your costs, even the ones that aren’t directly tied to the service like a part of your rent, utilities, administration, etc.
Competitor pricing – Our opinion is to use this just for informative purposes. Compete with the service, with small things that set you apart not with the price tag. From our experience that is the way to gather loyal customers around you, not the folks attracted by the lowest price.
Value to the customer – Basically, how your ideal client values your service and expertise.

The effect of lowering your prices isn’t good, let’s see some of them:

• you start attracting ‘discount clients’ knowing that they won’t pay the full price
• you are scaring off the high paying clients
• and finally, you are cutting down your profit.

With everything above, and the fact that your service has a hi-value (we assume), lowering your prices isn’t the answer.

The balance between price and the value of a service

You must know that setting a price for your service has an important psychological impact on the customers’ minds. The service price is explaining directly to customers, how much your service and your brand are worth. It’s creating a perceived value instantly in their minds.

A wave of price reduction by competition

If competitors are lowering their prices, some of the steps that you can make are:

• Firstly, be transparent and detailed about what s included in the price. 
• Secondly, improve customer service experience.
• Thirdly, add some extra features
• Fourth, offer additional payment plans
• And finally, remind them about the result that you are giving.

Don’t let your income base minify by clients who don’t fit your target market. Stay true to your values and protect the House.

The clients who appreciate what you do, and will pay what is needed to maintain your service’s value exists!