Fixing The Best Price

There is no rocket science involved in fixing the best price for a service. Often, clients are happy to pay the amount they feel best represents the value they are receiving for that particular service. Firstly, though, it would be expedient to backtrack a little and look at how one should ideally tackle pricing. Fixing a price for service involves a little groundwork. Chart the demand for service at each price point that clients would be willing to pay for a particular service. One would then be able to identify at the very least the average point of price vs. profits from this chart. Simply put: businesses often find that there is a threshold of what clients are actually willing to pay and this would be at a price that would be able to give businesses the highest profits. When defined in such a way, this looks like a win-win situation for all. It doesn’t always work out, though.

Practical Pricing for Accountants in Singapore (Part 2)

After all, the price and demand for this chart is based entirely on one’s own assumption. How would we be able to tell if clients are actually willing to pay such-and-such amount for this particular service? The only way to go about this would be to experiment with the prices. By experimenting, I don’t mean offering different prices on the same service to different clients in the hopes of being able to determine the best price. Instead, think deeply about the relationship with clients, the service being provided to clients and the value that clients actually place on the service. This can get tricky as one can never be too sure what client’s actually view as important and valuable in a service.

Read on Practical Pricing for Accountants (Part 1) here

The key point in all of this then is to ensure that there is a definite value affixed to the service. Who better to fix the value than you – the service provider? A general rule of thumb is to never let the client dictate the value they can get from the service. As a service provider, one should take ownership of the value of the service and then pass on the benefits and importance of these values to the client. If you’re finding it difficult to fix a definite value on your service, conduct this simple exercise. Imagine that you’re building a house: the foundation should be the important base that will ensure that the structure is sound. This is the value you place on your service. Most service providers make the mistake of placing their service as the foundation because it is the practical choice. However, by ensuring that the value of your service is exactly what your client requires and giving your client added value, you’ve pretty much already covered both the service and value aspect. Always remember that value of the service is pretty much the foundation of your business!

The next layer of your business is to ensure that your client perceives the value of your business exactly as you view it. This is slightly difficult but not impossible. Think about the fact that just as you want to maximize profits, your client would ideally prefer to pay less costs for the same service. Thus, your task is to change his perception of valuation of your service. When explaining about the value of service to your client, put yourself in his shoes. Something that seems to be apparent to you in terms of value might not be the same for him. If you are unable to convert him to your way of thinking, you’ve pretty much lost the battle. One tip that could help you would be by visualizing yourself as a client and think about what you would want to know when meeting with prospective service providers. Unless your client is able to be on the same wavelength as you with regards to the value of your service, he will definitely not be willing to pay a premium price for your service.

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The final layer of your business in terms of pricing strategy would thus be to fix a price to your value and service. Again – if you are still utilising the method of billing by hours, throw that out of the window. Your pricing strategy determines whether you will have the benefit of satisfied customers which in turn develop into repeat customers in the long term. Thus, once you have laid the foundation of ensuring your business has good value and that your client perceives that value in the same way, fixing a price to the value should be relatively pain-free. This of course is a chapter in itself as there are many methods in which you can fix the price for your valuable service. Some service providers utilise a pricing strategy that includes guarantees. This is particularly normal in the law sector where certain practising lawyers only charge clients fees upon winning a case. Then there are other service providers which charge their fees based on the percentage of savings that client has enjoyed upon utilisation of that particular service.

Continue to learn more about Practical Pricing for Accountants (Part 3) here