How to use pricing as a sales tool for your services

More often than not, business owners and service providers view their pricing as the last big hurdle before gaining a customer.

In fact, some companies have made payments so transparently that their customers barely think about the true cost. To give you an idea, Amazon’s 1-click shopping system is now worth billions.

This is good for e-commerce businesses, but what can service providers do about their pricing to achieve the same result?

After all, a plumbing company can’t very well expect their customers to approach purchasing an underfloor heating system the same way as ordering a spatula.

One response is to leave the herd and go your own way. Instead of always fighting your competition for the lowest price, the kind of price a customer won’t even feel, you can try using price as a sales model.

In this article, we help you do that.

Here’s what we cover:

Price for value, not for costs

Use quotes and / or quotes

Good-better-best price

Consider a subscription model

Don’t forget to personalize your invoices

Final thoughts on using pricing as a sales tool

Price for value, not for costs

This means calculating your prices not only on the basis of the classic formula of fees + 10% profit, but on the value you deliver to your customer.

Let us take a concrete example.

Gary wants someone to install a new air conditioning unit at some point in February. He is only prepared to pay X amount because he has the time and convenience on his side.

However, if Gary wanted the same service to be done the next day, in August, an HVAC (heating, ventilation and air conditioning) company could charge him a lot more than X because at that point he needs the service to be done. as quickly as possible. and during the high season.

This is twofold when you think about how to write a call for tenders to win commercial contracts.

Things like 24-hour uptime or minimal asset downtime are invaluable to customers looking for reliability.

Generally speaking, if you are able to offer the convenience, you will be able to charge a lot more than a competitor who forces customers to comply with their own preferences.

Just as Booking.com has been a game-changer for travel agents with a simple yet extremely convenient self-service feature, you can also use a booking portal and attract all the customers who hate to call, even if your services are a bit low. more expensive.

It all depends on the value you offer, not your costs or the competitor’s price.

Use quotes and / or quotes

Estimates and quotes are service provider specific, especially for jobs where the work required is not immediately obvious.

Installing five smoke detectors might seem straightforward enough, until the security company realizes the location is a protected historic building.

Then they’ll need to bring in plaster experts and new tools to get the job done.

This is where estimates and quotes come into effect.

The first is an informal number that a company can offer to give the customer an idea of ​​what the final price might look like. The latter is a formal document where the costs are broken down and the entrepreneur agrees to invoice that specific amount.

With both comes a selling opportunity that many vendors overlook: the power to have options.

When trying to give an estimate, be sure to offer multiple numbers for different types of services.

Keep in mind that you are pricing by value, so next day service will come with an approximate price, while booking four weeks in advance might actually earn the customer a little discount that will make them happy. and will guarantee you to work during a less busy period.

An excellent strategy for giving multiple estimates is …

Good-better-best price

Offering multiple prices is a great first step, but you should always think of these numbers as a sales tool and tailor them so that they all look attractive in their own way.

On the one hand, giving the customer only two options can make them feel like they have to choose between cheap and getting ripped off.

On the other hand, too many options and they are so overwhelmed that they might just consult the competition for a more convenient process.

This is where much-better-better pricing comes in handy.

Laddered pricing should be presented as good, best, and best service so that no customer feels like they are being wronged and you are not damaging your business brand by giving discounts.

There will always be people who only want the premium option, while a cheaper “good” option will make your services available to more people, who may become “better” or even “better” customers. later.

Another way to shake up your pricing strategy is to create subscription options.

Software vendors are experts in this area, but this method can easily be adapted for other industries.

For example, in the field service industry, recurring checks can be bundled together and sold as a monthly fee for a small fee, instead of a large one-time annual payment.

The subscription model can greatly benefit your customer retention rate as it relieves the customer of the constant pressure of finding and reserving new suppliers.

At the same time, you benefit from a reliable and recurring source of income which makes it easier to manage cash flow.

This overall stability between a constant flow of loyal customers and money in the bank at all times will give you more opportunities to grow your business and focus on growing rather than always struggling to stay afloat.

Don’t forget to personalize your invoices

No matter how good your pricing strategy is, there will always be situations where businesses will have to deal with non-paying customers.

While many are tempted to blame people, a lot of it also depends on how the service providers actually request payment.

Invoicing correctly is essential for this process (not to mention it helps when trying to build brand awareness by adding your business brand to it).

There will always be customers who try to evade an invoice, but that doesn’t mean you should make it easy for them.

A page with basic errors and an unclear layout can make you look unprofessional and that’s something you’ll want to avoid. If you are working with business clients or real estate agents, they might even use it as a legal ground for delaying or refusing payment.

When it comes to something as important as invoicing, even a small typo makes a big difference.

A professional invoice that covers all the required information will help build trust and ensure that no matter which pricing method you use, you won’t have to chase debt in the end.

Final thoughts on using pricing as a sales tool

There’s a reason they say information is the new currency. But this currency is only really valuable if you know how to manage it.

These are just five basic ways to use your pricing as a sales tool, but it’s up to you to tailor them to your business.

What is certain is that onsite service software can help you do just that, letting you run your business from one screen.

Take your business to the next level now.