Price -based pricing can damage your business

The value -based pricing has become a sacred grille in the world of service business. This theory is staggering: Instead of charging for hours or offering hard packages, you pay your services based on the price of the client. If you help you produce a Revenue 100k KE 100K, why should you not receive K 10K instead of K 2K?

This approach can lead to high margin and more premium clients, but it comes down. When it doesn’t work, it can quietly eat on your profits, create a client’s anger and maintain its growth.

Related: Price is correct: How to cost long -term success your own product

Why everyone is talking about price -based prices

Value -based pricing has been very high in the past few years. Recently. Price -based pricing is believed that you can charge for your services based on the price that is included in the buyer’s business, rather than the cost of your supply as a service provider.

The real reasons why this means. Research High prices show that high prices can increase the cost of your services. By reducing your price, you are really reducing your services – so you have a good reason to keep your prices below the rock. Low prices can attract clients seeking the cheapest option in the market, which is often the most difficult to serve.

Is also forced Conviction Women have a tendency to reduce their services, trying to secure business, which can historically grow in men’s influence industries. The price -based pricing movement has helped women give their services more priced near or even market standards.

If pricing is too high, consumers may feel angry after deciding the purchase. Often, a business owner purchases out of emotion, pays a lot and later realizes that he paid more. It immediately presses the client’s relationship with the service provider and sometimes there is a more difficult journey between the two sides.

Value -based pricing can work, especially when the value you provide is clear, measured and ideally linked to revenue, such as sales consultants that increase nearby prices or an advertisement strategy that costs each residence at a cost. However, both the business and the market are lacking in providing services to small businesses, especially.

Related: Do you have the price of your product right? How to know

When priced -based pricing does not work

On the other hand, value -based pricing often goes out of hand. Traders are being encouraged to continue to raise their prices based on the maximum potential impact of their services. More than 50 % Businesses fail in their first year, and cost more on market standards, or the amount you can expect properly if you can initially make you a difficult path as a business owner in your business evolution.

It is rapidly common to meet the founders who are struggling to sell and its price is above the market. Just because services can provide value, it does not mean that you are initially in a position to charge these premium prices. If you are not selling, your pricing can be high, very soon in the development of your business.

Value -based buyers also compromise in a way that has become harmful to a large -scale business market. Since the service providers continue to raise their prices very fast by increasing their costs, potential consumers of these businesses are put in difficult condition.

For example, if, as a new founder, you are asked to pay K10K for a website when it only costs the provider K1K, which produces pricing conditions for the customer.

The time has come for the protection of both customers and service providers under this race to stop.

Related: 6 strategies you don’t want to win

Instead of what to do

There are some other options to connect value -based principles while keeping things fair.

Milestone -based pricing or confusing pricing is a way for those who provide their services to the benefits of serving services, closed at high cost without consumers. For example, an ADS specialist can receive a base price in addition to the lead or per signing fee. This encourages the expert to do their best, while enables them to divide and protect the user from a potential negative side.

The modular pricing is another option to determine the right size pricing. One à La Kart Pricing Menu offering allows customers to choose these services instead of closing from choosing one or two fixed packages.

Regardless of your pricing strategy, consider where you are in the market and where your margin is. If your price is in accordance with your market, and your margin is reasonable for your industry, you have considerable price. If you are significantly above the market, make an average margin above average, or if you are not selling as much as you want, try and observe one of the strategies mentioned above, how it affects your sale.

The time has come for us to find a middle land, where service providers are paid fairly for their time, and consumers are paying fair markups at prices.