Being passionate about your career in business is great and all. It’s a great feeling knowing that you genuinely believe in your cause, and the reason for establishing your business goes beyond profits. But while forging your passion and career into one is a dream come true, a business – at the end of the day – is still a business. Service pricing is gonna be the topic for this content.
You need to make money out of it. Otherwise, it’ll be hard to stay afloat.
So before even investing a good amount of money on marketing and branding activities, you first need to focus on pricing your services right.
Are There Laws About Service Pricing?
Yes, there are. There are regulatory laws that aim to standardise the price of goods in the market. And, believe it or not, it’s a much graver offence to “under-price” than to overprice. The term used is Predatory Pricing. It refers to selling goods at a loss to disrupt the status quo in the market, leading other businesses to ruin. The Competition and Markets Authority or CMA largely regulates market competition in the United Kingdom. They protect consumers and businesses from possibly fraudulent and unfair market practices by conducting market investigations to reduce or prevent any breach in anti-competitive laws. Then again, this often pertains to tangible goods.
So, how about services?
Service-based businesses, on the other hand, have a bit more leeway when it comes to pricing. Online companies, especially, have a lot of grey areas because many B2B industries are relatively new, and therefore, there isn’t much historical market data to go around to be used as a reference for pricing purposes. Some service pricing ideas are so new that there are only a handful of competitors in the market.
If you belong to this kind of industry, one that’s really new, it’s confusing; there are still some ways to determine the right price for your services. By right, I mean a price that’s fair to both you and the customer – a price from which you can profit.
With that said, we can essentially break down the “pricing process” into four steps:
- Determine Who Your Customers Are
- Study The Competition
- Self-Evaluate The Value Your Services Bring To Consumers
- Listen To Feedback
A Penny For Your Thoughts about Service Pricing
With all that said, you have to think about how you can make your business “profit-first.” Actually, there’s a really great book written around it that you can check out. If you’re too preoccupied with more pressing matters that it’s hard to find the time to read, just let me know. I’m a Profit-First Certified Chartered Accountant, and I’d be happy to give you some advice when it comes to pricing your product. You can also follow us on Instagram for more quick updates!