Hi! This is Samuel Junghenn and today I want to talk to you about setting your pricing if you are a consultant or a service provider. In this video I’m going to show you the number one mistake consultants make when deciding on the price for their product or service.
I’m also going to share with you how you can avoid this and set your prices correctly so you’ll have a well-structured proitable business.
Let’s start off with the mistake – probably the biggest mistake we see with people when setting their prices is they look at the competition and they see how much the competition is charging and then they decide “okay we think we are probably better than them so let’s charge a little bit more” or “we think we are on par so we charge the same thing” or “we’ll try to undercut the competition so we’ll get more clients”.
The inherent problem with creating your products or your services around the price is you are trying to fit inside this little box the experience and the value you want to provide your clients and so most people think “how much is a client willing to pay for my services”.
Now instead of going that route what would happen if you ask the question – “what needs to happen so that the client gets an amazing result and an amazing experience with my business?’. If you come from this perspective, you’ll have a much larger playing field to fit in and design your service or your consultation within so you can deliver the best value to your clients.
What you can then do is wrap the price around it and say – “Okay, how much am I willing to do this for? “. It’s a much better place to come from because anyone who purchases your service is now going to have an amazing experience and they are going to get phenomenal results for whatever price they pay.
Obviously if they are happy with the results, they are going to tell their friends and they are going to tell their family and they are going to spread the word bringing you more business. However if you look at the other model where you are trying to create something to fit within the price range, you are not going to be happy.
You probably are not going to be as motivated, you are not going to give as good service and you’re not going to get your clients the results they desire. You get people to come in and they might purchase the package and maybe it’s a little bit cheaper than doing it the other way however, if you are not completely happy with the interaction and they are not completely happy with the interaction then you both lose out.
In your business you also have what is called opportunity cost and basically it goes something along the line of if you accept this deal with someone- let’s just say this is a cheaper deal, let’s just say it’s $2000 for examples sake. If you accept this $2000 deal with someone, you only have so much time in the day and so much time in your life and if you accept this $2000 deal it means you cannot accept this $4000 deal.
So you are cheating yourself out of potentially $2000 there or whatever price you want to put on it based off the time you are willing to invest to provide that service to your clients!
Now there is nothing to say that you can’t set the price low to start with so you defined your ultimate service offering or the experience and results you want to give your clients based on these packages you’re going to give them and then you wrap the price around it.
There is nothing to say once you’ve figured out how to provide this amazing experience and these amazing results for someone that you can’t start off with the price a little lower to test the water. What that does is it allows people to come in and purchase the service at a lower price if you are having trouble selling it at a higher price and you then do some case studies once you’ve filled your business.
Basically with consulting you are selling your time and once you’ve fulfilled your goals at the low price you can then start putting your price back up to the normal price you were willing to do the service for in the first place.
The end result is the clients are going to be much happier and you are going to be much happier and you are going to get more referral business, testimonials and everything that will help you grow your business to greater heights!
I hope you’ve enjoyed this video and I hope you got some value from it. If you have, please subscribe to the channel and share the video to other people. The motivation for making these videos is to help more people and the more I see it being shared, the more I want to make more quality videos for you. Thanks for watching and I’ll see you in the next video!
Samuel Junghenn is the Managing Director of Think Big Online and has over 12 years experience in Online Marketing. He is passionate about building businesses using the power of automation and the Internet along with the thrill of motor racing.