Pricing strategies for services

My name is Sally Keter. I am a web designer, a career I started 7 years ago. When I was starting out in web design while still a student in campus, I felt that I needed to price myself lower than everyone else so clients could pick me over the next guy. I told myself that it was a temporary strategy, just until I created a portfolio.


Getting the pricing wrong


Do you as a service provider sometimes tell yourself that if you charge lower than other players in the industry you will attract more clients? I convinced myself that all I needed was to do a great job, believed that the clients would be happy enough with my work to refer other clients. This, would increase my credibility then I would raise my fees to what I deemed profitable, or so I thought.


What I did not know nor put into consideration was the fact that when a client refers another client, the referred client would come expecting the same fees. If a client returned, as pleased as they were with the initial job, they would still expect the same prices, if not lower.


Undercharging got me into a cycle of frustrations; overworking and barely making enough to get by. Whenever I raised my fees even a little bit, my clients would not be pleased.  They would either look for the services elsewhere or if they chose to work with me, they would demand so much because subconsciously, they felt they had to get more from me since they were paying more.


After months of working really hard and being always busy, I was still struggling to make enough, to make ends meet. I started resenting the jobs and didn’t have the drive and passion I once had for web design.


It started to feel like web design was a chore, a punishment or a boring job. It was then that I chose to step back and take stock of the situation. I knew that I could not go on the same way.


Here are some of the things I have discovered when it comes to pricing your services as a self-employed person.


  1. Be confident about what you are offering


Most of the times when starting a new service, it is very easy to lack self-confidence, feeling like you are not as good as others who have been in the field longer. This is what leads to under-pricing by people who are new in a field.


Unfortunately, being new does not reduce your costs. You could easily get overworked and still earn less than what you put in, constantly operating at a loss. You could exhaust your resources that way and end up closing shop.


Adequate preparation enables you to begin somewhere that is not exactly the bottom. No matter how new you are, ensure that your work is good. As long as you are confident in your work and are sure that what you are offering is valuable, it will be easy to price yourself competitively.


Consistently work on your self-confidence otherwise even if you price your services well at the beginning yet you are not confident, a few rejections here and there – which happens to everyone anyway – and doubts will creep in making you to lower your fees.


The key to earning enough is therefore pegged to working on your self-confidence and believing in yourself. Do not falter when quoting your fees. Do not be tempted to beg and act desperate. Be ready to walk away from the negotiation table if accepting the deal will mean undercharging. Keep reminding yourself that there are a lot of clients out there, all you need to do is to find the right ones.


  1. Do not make your prices out of desperation

You quit your job or have been jobless for some time and are desperate to make some money, so you are ready to jump at any opportunity as long as it pays, the amount notwithstanding. Earning something is better than nothing, you tell yourself.


As tempting as it may be, do not quote your prices based on your current situation. Being broke and desperate is temporary. Take your time, price yourself well and if you need to, run a promotion or offer giving massive discounts. You may launch yourself into the market with subsidized prices for a limited period.


Ensure to state that the subsidized price is discounted from the actual price and for a specific duration and if possible indicate the actual price and the discount. (Was: KShs. 25,000/- Now: Kshs. 20,000). You could attach the offers to events or the calendar; New Year offer, Valentines offer, End of year offer, Easter offer, Christmas offer, etc.


Despite being a marketing strategy, when you are ready to go back to the normal prices, no one will ask why the change because from the onset they knew they were getting a discount. Avoid giving the impression that the low prices are your usual prices otherwise you might face resistance from your customers when you raise the prices.


  1. Consider your overhead costs and man hours

Pricing a service is not the same as when you are selling goods. With goods, many clients use pricing as the major determinant factor when choosing who to buy from, as long as the goods are the same. It is not so with services. You don’t have to be the lowest in price in order to build a successful business.


Most people who venture into the service business undervalue the time and resources it took to learn the skills they are offering and the time they put in to work on the projects. They also fail to put into consideration the unique value they alone can provide.


It is important to consider how much time and resources you put in to be able to offer that service. How much is your time worth per hour, per day, per month, etc.? This helps you to price yourself right.


Pay attention to the needs of different clients. Ask questions and seek clarifications while you are negotiating for the deal. Projects may seem equal at face value but in reality projects are rarely ever equal.


You can have two clients asking for the same thing in terms of the final product yet one requires more time sourcing materials and resources, or one has very little info to begin with so you have to spend a lot of time on the ground work while the other one has everything set up and ready.


Do not rush to quote based on what is to be delivered, take your time and get the finer details of the project. The saying that the devil is in the details is not just an empty statement. Those little details like how many hours it would take you to get the job done, the running costs like phone calls, internet and meetings can make what would have been a profitable business turn into a loss.


One client’s project might require a lot of movement up and down or hours spent online researching, which drives up your costs. Learn to take time before giving a quote so that you evaluate carefully what the project demands are.


  1. Strive for quality as opposed to quantity

One of the issues brought about by under-quoting is you might end up taking on too many clients and jobs just to make ends meet. This in turn may hurt the quality of your work. You may have every intention of doing a good job but due to the stresses of juggling too much you become a bit lax.


You could end up hurting your credibility and doing more harm than good. I believe in taking a few good clients and doing a great job, so instead of living to work, you actually work to live, and thrive. You get known for being great at what you do thus attracting the right clients. You are not just another service provider in the market place.


There is a lot of competition at the bottom of the valley but the competition reduces as you go up the mountain, so strive not to be just one of the many at the bottom.


  1. Have a few “fillers”

When all is said and done, I acknowledge that there are times when the well-priced services you offer just don’t move fast enough. That is why you may need to create fillers to keep you going during the low seasons.


Have special offers and low effort jobs that are priced low enough to get volumes but do not need too much effort. Fillers help during times when business is low and can help boost your overall income.


I like to compare a business to the traditional fire burning in the fireplace. You need a few big logs and many small sized pieces of firewood in order to keep the fire burning long term.


The big logs are your major clients and they sustain your business. The smaller firewood has an important role to play in supporting the big logs. If your business only has the small firewood, you will overwork and never rest. You will lack stability and be in panic mode most of the time, always chased by bills.


The right mix of services and clients keeps your business stable and enables you to focus on giving quality service rather than always being in a crisis mode desperate to stay afloat.

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