Setting Profitable Prices: A Step-by-Step Guide to Pricing Strategy--Without Hiring a Consultant, + Website

Chapter 13

Pricing Services

In-a-Rush Tip

You can skip this chapter if you sell products, not services.

Also, you can skip chapters 13 through 16 if you need to set prices immediately. These chapters give you additional ideas to test down the road, to continue improving the profitability of your pricing.

Imagine No Chapter 13!

I wanted to skip Chapter 13, but my book editors overruled me. Why skip it? To help sensitize you to the power of numbers. You see that power when:

• High-rise buildings in the United States skip a 13th floor and go right from 12 to 14, because otherwise they would have to discount the rentals they get on that floor.
• People in Japan avoid elective surgery on the 4th of any month (“shi” is the number 4 and also means death in Japanese).
• More people buy products with a “7” in the price.
• Many more people will buy a product at $99.99 than at $100.

I recommend you reread Chapter 10 and start profiting from a smarter use of numbers in your pricing strategy.

The Complications of Setting Prices for Services

Many problems complicate the problem of selling services. A few of them are:

• Pricing by the hour versus the job
• Finding out what your competitors charge
• Comparing your services to a competitors—when what you’re offering depends somewhat (or a lot!) on the person providing the service

Additional problems arise when the service business is a sole proprietorship ...