BUSINESS TIPS: Four Pricing Strategy Considerations

BUSINESS TIPS: Four Pricing Strategy Considerations

April 26, 2017

Do you know the customer

Most successful firms fix a price tag, using combination of tools and know that the key factor to consider is always your customer first. The more you know about your customer, the better you'll be able to provide what they value and the more you'll be able to charge. Further to that, some clients know what they want, others require further consultation, and surprise you with assumptions as the work commences. Taking the time to understand your customers both broadly, as a target market and individually as a client, provides the critical information to inform your pricing strategy. 

Considerations for fixed fee project participation

Project participation based on a fixed fee can be risky for a multitude of reasons, but in most cases it is industry standard and hard to avoid. There are a few things to consider, have you worked with the client before? If not, consider that your firm and theirs will be learning how to work together. This takes time. As teams build bonds, things move (where possible) faster, but do not forget- even then this isn't guaranteed. Further to that for projects/jobs where other consultants are involved has your firm worked with them before? Is there a potential for their involvement to affect yours? Who will be managing them and coordinating the communication amongst the teams?

 

Know your revenue target

It is important you have a revenue target of how much you profit you want from your business. Take that revenue target, include your costs for producing, marketing, and selling your product and you can come up with a price per product that you want to charge.

Where do you sit in the market?

In setting your price, it is helpful to look at the competition. Are the products offered comparable to yours? If so, you can use their pricing as an initial gauge. In doing this, be cautious about regional differences and always consider your costs completely.