If you wonder how to price your optimization services, this article will be helpful for you and your business. In this post, I am going to explain to you how to set your price in such a way to get the best possible returns. We will take a look at different effective ways how you can price your inventory. Moreover, I will explain to you why you might want to avoid charging each client for the same price.
Before we proceed further, I should explain to you why pricing strategy matters.
Boosting their profits, companies devise new products and services. However, by adjusting an existing pricing strategy on goods or services you already provide, you need to squeeze out an extra profit with little effort. A good pricing strategy is evident for a profitable business. It should be adjusted according to the market changes, the flow of customers, market demand, and other factors that can affect your services price. You need to keep your cost always competitive, avoiding any sudden rises and drops.
To get higher returns from pricing, optimization agencies typically look for the ways to charge different prices to different customers.
There is one proven method of setting a price on marketing services which is called pricing calculator. It consists of five steps - cost and availability of substitutes, characteristics relative to competitors, income, the price of demand for related products, and market environment.
Let us discuss each of these steps more detailed:
Price and availability of substitutes
You need to look through the substances of your product and its pricing.
Characteristics relative to competitors
You should think over the services that distinguish you from your niche competitors. And vice versa, in which spheres your company is worse than your competitors. Do your customers value the features of your SEO agency enough to pay extra for them? If not, how you can make them find more value in what you provide? Think over other characteristics such as brand, established service levels, locality, etc. that can affect your price.
Remember that the price of your optimization services determines your future business success. That is why you should think not only about your profit but also about your targeted audience. You need to think whether your customers can afford your prices or not. If they are less able to provide your prices than they once were, it is better to revise your new pricing strategy.
Price of demand for related products
Setting the price on your services, you should research the associated overheads of owning them. For instance, if you sold SEO package, there are other costs involved that make up the total cost of this package including social media marketing, e-mail marketing, Google Adwords, and so on.
The market environment also makes sense. You should keep up with all last industry changes, tracking demand raises and drops on your services. If the demand on your inventory has increased for the last period, it is a perfect time to raise the price of your services.
The law of three
As a rule, people tend to buy the middle of the range. That is why it is essential to provide them with a range of variants to select. If they have only one SEO package to purchase, they will most likely return to the search and choose one of your primary competitors.
The law of the tree is when you have one very cheap, one expensive, and one middle priced item. The actual model you need to sell is the priced in the middle of these two extremes. Most people will buy middle of the range as it looks safest. If you only provide two options, your customers will select the cheapest one.
Auction pricing system is a great way to achieve better prices. Auctions have a great psychological effect on people making them purchase products in two, three, and even ten times higher than their real price. However, this pricing trick boils down to the fact that people place different values on products based on their own needs. So, people who need the products or services the most, pay the highest rate.
The method of versioning is used to provide slightly different versions of the same thing. Offering different versions, you can track your customer's behavior and distinguish those clients who are ready to pay more.
Versioning can be more extreme when setting a full range price. As the bright example of versioning, we can remember the companies that run conferences. These companies might run closed business conferences which cost hundreds of thousands of dollars, and then afterward, sell you a download version of it for a few hundred dollars, emphasizing the fact that you just saved a lot of money with your purchase.
This pricing model is perfect variant to attract budget clients. If your buyers can’t pay the entire cost up front, they can buy it using other arrangements, for a monthly fee. The part of your clients might purchase bundle offers where they get all services for one price, while others tend to mix different functions. That is why you should offer your clients different options so each of them can fit their budget to your offering.
Differential pricing is another way to attract customers who are very price sensitive or looking for the opportunities to purchase if they perceive a genuine bargain. One part of your customers will be happy with the coupon pricing system, while other customers will not bother with coupons, so you can successfully run two different pricing strategies at once.
It is a powerful pricing model that helps to advertise the usual price, but a line through it, and offer it at a reduced price. However, it is worth to mention that markdowns do not work for all products and services. For instance, if you sell something exclusive, markdowns can compromise their particular value.