Building a Pricing Structure for Your Business
People buy products that solve a particular problem at a price they’re willing to pay to leave that problem behind.
The whole goal of defining your pricing structure is to define the work you will do for the price someone will pay you for it. The more value you bring to your customer, the more you can charge for your product or service. How hard or long you work doesn’t actually matter. What they’re paying for is you solving their problem with a solution you’re proud of and excited to deliver.
Hourly vs. fixed price models
Many people charge an hourly rate for their services, but I’m not convinced that hourly models bring repeat business, which is some of the best business to get! It’s much easier to sell to an existing customer rather than a “cold lead,” someone who you need to build a relationship with before they’re ready to purchase.
There is a whole funnel between the top (cold leads) and the bottom (customers) – that’s why it is so important to define your pricing structure up front. This way you can focus your energy on developing those relationships and be completely transparent about pricing throughout that relationship building.
Also, when you define your pricing structure, you can calculate your fee quicker and take their money sooner. I don’t know about you, but I don’t want to spend time doing paperwork. I want to make things and help people! So, with a pricing structure, you can get to that sooner.
When you are defining your pricing structure you can also lead the soon- to-be customer through some of the problems they might have and your proven solutions to them. Use your pricing structure to guide your customer through a journey of success.
This might seem a little wonky, but hear me out on this. By using your experience as an expert in your industry, you can craft the way a newbie can be set up for success by purchasing from you, in a particular order.
For instance, let’s take Subway restaurants, in the way you order. You walk in the door, someone greets you from behind the counter. There is a sign at one end of the counter that says “Order Here.” There you are met with a person who will handmake your sandwich for you either custom or from one of the menu pre-designed options.
First you start with the type of bread, the size of sandwich, protein selection, cheese, toppings, condiments and then they wrap it up for you with a napkin, because they know that sometimes sandwiches can be messy.
They ask you if you would like a dessert or drink with your order, because they know that you’ll be thirsty and might want a little sweet finish after your sandwich. It all comes in a narrow clear plastic bag with a big handle, easy to carry to your table or car, while navigating the drink station.
They have used their experience with eating and selling millions of these sandwiches to streamline your process of having a successful meal.
How can you do this in your business? What is common knowledge to you that someone who is just starting out in your industry need?
Shape the buyer experience around that process. You get the upsell cash, and they are set up for success! A win-win!
Focus on benefits and not just features
Clients don’t care what you do. They care about the results of what you do. A social media manager certainly needs to know how many posts they’re creating, scheduling, and monitoring – but when they meet with their clients, their discussion should be focused 100% on the ultimate goal of the services: to get more sales or to get more leads.