How can the pitfall be closed?
Many entrepreneurs work hard but complain that they don't earn enough. But why? Because their services are priced on the basis of time and costs.
Imagine a prospect interested in your services. He asks you for your daily rate, which you set at €700. He then asks you how long it will take to complete the task; you quickly estimate between 10 and 12 days. If your estimate is too high, you risk losing the contract. On the other hand, if your estimate is too low, you will win the contract but at a small profit. At the end of the day, if the project ends up taking 15 days, it is unlikely that you will charge for the extra days so as not to upset the client, thereby absorbing the loss.
Charging by the hour is frustrating
The customer always thinks it's too expensive, but the customer is in fact not buying time, but results. To reduce the risk, the customer always negotiates the price downwards. As a service provider, invoicing on the basis of time spent is the least profitable way of rewarding your long working days and the value delivered. With experience, you work faster, and you may also have integrated ChatGPT to increase your productivity. But this puts you at a disadvantage, because you work faster and therefore earn less.
This is what I call the pitfall of time-based pricing. Neither the customer nor the service provider benefits, but ‘That's the way it's always been done...’.
The frustrating cost-plus pricing
Cost-plus pricing is also frustrating: in fact, it has nothing to do with the value you bring to your customers. You spend 5 days on a task that your customer considers to have little added value? At best, they don't understand. At worst, they get angry. Because price is not linked to perceived value.
Combine time-based pricing with cost-based pricing and your dream business turns into a nightmare. No wonder so many entrepreneurs work hard but complain that they earn little for their efforts and the value they deliver to their customers.
There is, however, another way of selling your services
Hundreds of entrepreneurs have implemented it successfully: implement pricing based on customer benefits and package your services.
You'll convert more prospects, sell at a higher price and have happier customers!
Join us on 4 July 2024 at 12.30pm for a 45-minute + Q&A session packed with examples. You'll learn the 10 practical steps for packaging your services.
Whether you're a veteran entrepreneur or just starting out, this event is your gateway to transforming your pricing model and taking your business to the next level. Don't miss this opportunity to charge more while making your customers happier.