The Verdict on Successful Pricing Strategy: Profitable as Charged
It would be a crime to kill your bottom line simply by charging clients too much or too little. Yet you may be guilty without even knowing it.
There’s nothing shameful in needing a little help to get your pricing strategy right. Knowing how much to charge, when to raise or lower prices, and even how to justify rates to your customers can be tricky business.
Our team at ConnectWise is highly experienced in helping technology service providers develop pricing guidelines. Here are some basics to help you get started:
1. More In. Less Out.
Your cash flow shouldn’t resemble the tide. Put simply, the portion you keep of what comes in should be greater than what you send back out. It’s impossible to determine what you need to charge until you have a handle on what it costs to stay in business.
So, your first step in a pricing strategy is an analysis of both your fixed and variable costs. This is also a great time to look at areas where you may be able to trim a little unnecessary fat off expenses.
2. Embrace Your Uniqueness…and What It’s Worth.
Define what you have that the other guys don’t. Understand that it’s probably not the product you offer. And that’s a good thing, because there’s only so much wiggle room in pricing a widget (even if that widget is a service). A powerful method is to position how you do what you do as the main attraction so that your value is uniquely obvious when measured against the competition.
3. Don’t Go It Alone.
Buy-in is a wonderful side effect of involvement. Come right out and ask your customers what they think your services are worth. Encourage their feedback about other areas where you may be able to help and what they’d be willing to pay. You might be surprised to learn your current and potential value in their eyes.
4. Beware of Loose Change.
Any change in pricing should be carefully planned and executed. The more convinced customers are that you’re essential to their business success (think unique value again), the more likely they will accept reasonable rate increases. Start small and share explanations whenever possible. Be aware that lowering or discounting prices can raise a red flag about your perceived value.
5. Tell Them Why They Need You. Often.
Don’t be shy about reiterating your value to existing clients. Even long-term customers may wonder occasionally if they’re really getting their money’s worth. Stay a step ahead with regular reviews that showcase positive results of your work, and invite discussion about future needs.
Protect your bottom line from becoming a victim of poor pricing decisions. Let ConnectWise help you develop a foundational pricing strategy for long-lived financial success.