Pricing your products and services can be tricky. How can you find the sweet spot where you’re making money without making the customer squawk at your prices? It’s all about factoring in your product, the audience’s expectations, and your needs, my friend. Read on for some assistance in designing packages at price points for maximum benefit.
1. Determine the minimum amount of money you need to make.
When coming up with your prices, factor in everything. When you add up the time, materials, expenses, and value needed to make the product, what is the minimum cost of production and delivery? And what is the minimum you’ll accept for your work? That number – right there – is your basic price point. You don’t want to go anywhere but up from this point with your work.
2. Who are your customers?
When creating your prices, keep in mind they will always be too high for some, and too low for others. The key is to know who your customers are, what they expect to pay, and what they expect to receive at that price.
I’m not a fan of immediately comparing your prices against others in your field – because only you know what you want and need to make. However, now is a good time to look at some comps in your market. You want to see who’s offering what to give you an idea of what people expect to pay – and what’s included in the price.
Once you’ve got an idea, you’ll know whether you can enhance your offer to push it at a higher price, or even remove some parts of your package to create a no-frills version that works for customers who only want the basics.
3. Create a built-in cushion.
Take your basic price point – the minimum amount of money you need to make – and pad that number 15 to 20 percent. Doing this allows you to make more than enough for your services. This extra 15 to 20 percent can stay cushy in your business bank account, or be reinvested into the business – the choice is yours.
Adding the extra 15 to 20 percent will allow you to have more wiggle room during lean times, as well as give you the experience of having “more than enough,” which is the entire point of being in business. Why live your life just over broke? If you wanted to live “JOB”, then you’re better off with a j-o-b, ya heard?
4. Create three options with the sweet spot in the middle.
Remember Goldilocks and the Three Bears? Po’ lil goldilocks broke into an empty home, where there were three of everything. One thing would be too big, too hot, or too soft, the other too small, too this, or too that. But in each set of threes, there was something “juuuuuust right.”
Think of your customers like Goldilocks. Give them three options for your services: basic, enhanced, and premium. Basic packages are no-frills. You get the basics, straight, no chaser at the minimum price (remember that’s your bare minimum price plus the 15-20%).
Enhanced packages feature more than the basic packages, including the most desirable and common details people usually want. This price, of course, is higher than the basic package. Your premium package will have the works – everything but the kitchen sink – at the highest price point.
Generally speaking, you want the “ideal” amount of money you want to make positioned in the enhanced package. This is because most people, like Goldilocks, won’t want the package that’s too high, nor the one that’s too low. You’ll find they almost always head straight for the middle, because it’s right in between the two and feels “juuuuuust right.”