I recently met with a client who is establishing a service-based business. She is developing her service packages and choosing the prices to assign to each package.

She has chosen to niche her service to a particular industry which she has worked in for over 20 years, and consequently will be bringing her experience and expertise to her service.

After agonising on her prices she presented me with her proposed pricing structure based on the size of the organisations she expects to be working with.

Her total price for her complete package, consisting of 4 services, were as follows:

Small Business – 0-20 employees                           $3,500

Medium Business – 20-100 employees                 $4,500

Large Business – 100+ employees                          $6,500

My advice – $6,500 for an organisation employing more than 100 people is a drop in the ocean, and likely does not accurately reflect the amount of time and effort which will be required in order to deliver the service.

From another perspective, imagine you were the decision maker for this business, and you were presented with 2 or 3 quotes for comparative work.

Proposal A         $6,500

Proposal B         $17,000

Proposal C         $29,000

Which would you choose, and why?

The old adage, “You Get What You Pay For” probably heavily influences the decision, even though the service quality may be as good, if not, better.

What message is your pricing strategy telling your (potential) customers?