Pricing Strategy: Rate vs. Value

Pricing Strategy: Rate vs. Value

Pricing Strategy: Rate vs. Value

Comments Off on Pricing Strategy: Rate vs. Value

One of the best thing I like about business is the ability to create wealth and not just income. This concept is made possible on the basis that business don’t receive salary, but they are paid for the value they create to the clients. This is why you heard of consultant charging as much as $20,000 for a day work as well as those who charge $20 per hour.

The Employee Mindset

The problem with a lot of business owners is when they started a business post employment, they carry with them their employee mindset. We heard all too well the 9 – 5 mentality and the complaint heard when the business doesn’t turn over as much money in 6 months time after the business started.

But the real problem is that these business owners rate themselves in terms of effort rather than value. Now, you will ask: “What do you mean by that?”

Suppose it takes you an hour to complete a project and in your industry, people typically charge $20 for the job. You’ll think: “That’s a fair amount.”… WRONG.

You also need to take into account the expertise, time it takes to achieve the level and how accurately you can deliver your value to the clients. If you think I overuse the word value here, you might be right.

Fact is, no one has ever become rich by pricing their service based on the effort they put in. In other words, they way you sell yourself shouldn’t be limited to how much time or how easy/difficult it is to do certain job.

Suppose you are a website designer that able to complete the entire website project under 1 hour (fully functional without any hidden surprises). Don’t accept that your service is valued between $20 – $50.

Value Mindset

So how are you supposed to price your offering? If you think the answer is in value, then you are absolutely right. This is the reason why some people can charge thousands of dollars while others only a menial sum.

The key to this strategy is knowing exactly what you have to offer to your clients, and no, it’s not your time. In this age of technology, there are thousands of ways people can do everything by themselves. Websites, accounting, bookkeeping, marketing, etc. So your business should really need to offer more than just a replacement of their effort in doing them.


This brings us to the ultimate challenge of all business owners:

“How to position your business in a way that it is perceived as giving value to clients.”

This comes down to really knowing your target market, knowing what they want and package your business offering to give what they want. It is not value unless you present your market with a solution a problem (or problems) and price your product/service at a level that is still acceptable to your market to help them get what they want.

For example, $10,000 a day consultant sounds expensive unless the result of that 1 day service will save them $1 million. Likewise, engaging a company for $100,000 service it cost effective, if the result of that service will save the company from bankruptcy.

In Short

What is your value? Do you underpaid yourself when it comes down to pricing your service? Let us help you get paid what you deserve. Let us help you position your business to be able to charge whatever you want.

Image coutesy of patpitchaya –

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