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Pricing & Selling Your ServicesSusan Perreault, D.B.A., M.B.A.
Program Manager
Washington Women’s Business Center
Pricing Models for Service Businesses
“You don’t get paid for the hour. You get paid for the value you bring to the hour.”
- Jim Rohn
Pricing Models for Service Businesses
•Hourly Rate
•Cost Plus Hourly Rate
•Project/Job Rate
•Estimate
•Value-based
Basics of Value-Based Fees/Pricing
• Based on your competitive advantage and brand (perceived value)• Value Proposition – Brand differentiator
• Main Goal- To better align fees/pricing with value delivered• Outcomes/Results, Not Inputs/Tasks
• Focus – Buyer self-interest (needs/desires)• Takes focus/discussion away from price
• Key – Establishing value with client
(Weiss, 2008)
Focus on Outcomes/Results, Not Inputs/Tasks
Inputs Outputs
Run sales training sessions Improve sales closing rates
Conduct focus groups on morale Improve lateral communication
Redesign performance evaluation Increase retention of new hires
Study technological needs of service
personnel
Improve service response time of
personnel
(Weiss, 2008, p. 251)
• Set fees primarily on the perceived value to the customer
Establishing Value with the Buyer
Define –What is value to your customer?
(SBA Package and Promote Services, 2016)
Establishing Value with the Buyer• What if you did nothing? What would be the impact?
• What will you be able to do that you can’t do now?
• What will the effect on revenues (sales, profits, market share, and so on)?
• What are the three greatest impacts of the result of this project’s success?
• What will your boss’s reaction be to this success?
• What will this mean to you personally?
(Weiss, 2008, p. 7.)
Establishing Your Unique Value
• Establish yourself as the expert
• Demonstrable experience solving similar problems
• Unique perspective about client problems or projects
• Staff who has dealt with similar challenges or projects
(SBA Package and Promote Services, 2016;Weiss, 2008)
(SBA Package and Promote Services, 2016)
(SBA Package and Promote Services, 2016)
Bringing Clients On Board VBP
• Don’t try to convince your clients• Invest in prospecting ideal clients
• Define what an ideal client looks like• Budget, what they value and what they have to have
• Be in alignment
• Target high-value ideal customers & filter out anyone who isn’t
(Weiss, 2008)
Keys to Bring Clients On Board VBP
• Prove your value – Begin with a small deal in an area they are unhappy – over deliver!! Build a relationship
• Concentrate on the value you provide • This takes the focus/discussion away from price
• Continue to over deliver; Be memorable
• Keep increasing your pricing/fees as you improve and deliver more value
(Weiss, 2008)
Fee Progression Strategies
Phase Business Source Business Qualification Fee Integrity Fee Levels Margins
Entry Level Friends & former
business
Accepts almost anything Client determines the
fee
Rock bottom Slim to none
Going
Concern
Referrals & early
marketing
Accepts most business,
plans to cut out some
Extreme flexibility Below average or
average
Small to average
Word of
Mouth
Referrals & marketing Must be high margin with
strong potential
Determines value-
based fees & is firm
Demands a
premium above
average
Above average
Brand Referrals, name in the
market
Selective, only aligned
with strategy
Maximizes margins in
every case
Far above average
& firm
Very strong;
near the top
The
Ultimate
Key buyers/clients
seek you out
Selects only those of
interest
Not even discussed At the very highest
levels
Extraordinary
(Weiss, 2008, p. 211)
How to Package Your Service Business
(SBA Package and Promote Services, 2016)
(SBA Package and Promote Services, 2016)
(SBA Package and Promote Services, 2016)
(SBA Package and Promote Services, 2016)
(SBA Package and Promote Services, 2016)
(SBA Package and Promote Services, 2016)
(SBA Package and Promote Services, 2016)
(SBA Package and Promote Services, 2016)
The Veterans Business Outreach Center mission is to contribute to the success of entrepreneurs who are members of the U.S. military community including:
Veterans
Service-disabled veterans
Reservists and Guard members
Family members
Active-duty service members preparing to transition from military service to business ownership
Washington Women’s Business Center Mission:
“To provide technical training and counseling to women and minority business owners to empower them to acquire the skills they need to make their business start, grow, and thrive financially.”
MissionBusiness Impact NW (BIN)’s mission is to promote long-term positive economic change for low/moderate income business owners and underserved communities through financial services and business advice and training.
Target creditworthy small entrepreneurs who would otherwise be excluded from the formal banking system
Focus assistance on small businesses owned and operated by people of color, women, veterans and immigrants
