For the last three years my biggest obstacle has been pricing my services.
This last year I have been working hard on understanding pricing and seeing what can be done to get everything in line with being profitable. I have been experimenting and I have noticed that the pricing I have established for some of my clients has put me into a situation where the services I give them are not profitable.
Given that only a few of these clients have supported me from the beginning, I am willing not to change their fees to fulfill my commitment.
Little by little my pricing strategy has hurt me because most of these clients, (I underpriced them), have also wanted me to quote them way below what my services are worth for other services. I have made the mistake one too many times to go ahead and offer more discounts to align my current pricing to past services. Short term, it makes my clients happy (so I think) but in the long term it affects how I can take care of them and other clients.
Getting Hurt in The Long Term
There have been instances where I have offered my ex-clients great prices and adjusted my pricing to go in line with their needs. If I underpriced that project previously, it has only created a haggling war on the clients side to bring the cost of my services down even when I have underpriced my services in the past.
It really puts me in a difficult position because nobody wants to lose a client but I also don’t want to continue running an unprofitable business. Little by little these clients, who have been given discounted services, have been leaving and I am not sure if that is good or bad.
Less Unprofitable Clients more Love for the Profitable Ones
The advantage of having some of these clients leave, is that I am able to serve my current active clients in a better way. Instead of spreading my resources thin I am able to offer better quality services to those that understand the value of what we do at CIMA IT Solutions.
A Tough Call To Make
It is a difficult topic to talk about. But during the tough economy, many of us fall under these pricing issues where the client clearly does not value what you do or services you are providing. Even when you bring them an attractive return on investment they decide they will not compensate you adequately for what you have done.
What issues do you run into when pricing your services?
What factors do you take into consideration when pricing your services?
We will be possibly creating a series on pricing products based on our knowledge dealing with clients?
photo credit by cdsessums