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  • #987360
    gareths
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    Hi everyone.

    Just a little confused about what I should be charging for my services.

    I have set my prices low to begin with but after a chat with a consultant yesterday they apparently should be around 4-5 times higher so that they line up with industry standards.

    My prices are based on a competitor analysis I did early in the planning process and nobody had prices as high as being suggested except for the biggest player in the market.

    There is one competitor whose price is just above mine with the others slightly higher so I don’t know if raising my prices so high is going to help or not.

    I also fell into the trap of having a price list on my website so now a number of clients have seen the low prices.

    #1162347
    altima
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    Hi Gareths

    pricing isn’t easy decision.

    From economics theory, price is between your willingness to sell (minimal price where selling your product or service is still economically viable for you) and your buyers willingness to pay (price, where value they get from your product/service exceeds the price they pay). Depends on the bargaining power the price can be closer to lower or higher end.

    Issue that both bargaining power and at some extent value are rarely easy to measure.

    Interesting that for many people price corresponds with the value (e.g. people find more expensive vine better when see the price tag, while at blind testing the result is opposite).

    Also you may find couple links below worth reading:
    pricing guides, like this one
    Placebo Effect (by Seth Godin)

    #1162348
    Jenny Spring
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    gareths, post: 187593 wrote:
    Hi everyone.

    Just a little confused about what I should be charging for my services.

    I have set my prices low to begin with but after a chat with a consultant yesterday they apparently should be around 4-5 times higher so that they line up with industry standards.

    My prices are based on a competitor analysis I did early in the planning process and nobody had prices as high as being suggested except for the biggest player in the market.

    There is one competitor whose price is just above mine with the others slightly higher so I don’t know if raising my prices so high is going to help or not.

    I also fell into the trap of having a price list on my website so now a number of clients have seen the low prices.

    Definitely don’t go low! You’ll create a commodity product if you do that, and you’ll create a stream of customers who will expect low pricing for ever.

    Your pricing should be based on the WHO you want to attract to your business.

    Instead consider offering a 3 tier. A total basic product, nothing fancy. Then a middle product (the one where you have the best margin, and it suits the customer best as well), and then a deluxe package (where only 5% of your customers can afford).

    Jenny

    #1162349
    bb1
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    If you have done your market analysis and set your pricing to approximately what the rest of your industry is at, than I would very much be questioning the motives of your consultant, for you than to set your pricing 4 times higher than your competitors, well I know where your business will go.

    I would be back to your consultant and get his logic behind setting your pricing well above the market rates.

    I did my initial pricing by ringing around the competition and getting an idea of thier pricing, than validated this against my own planning documents which showwed what I needed to make a profit, and set my pricing based on that analsys, not 4 times above market rates.
    You really need to question the consultants movies. not all consultants are looking after the interests of the clients.
    I have 3 rates,
    1st current market rate equivalent to my competitors,
    2nd – Rate for those I know will pay above market rates for the jobs.
    3rd a rate for the jobs I dont want, but hey if you are prepared to pay me well above market, i may as well

    #1162350
    bb1
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    Definietly dont publish your rates, doesnt leave you any ability to move

    #1162351
    altima
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    regarding having multiple version of fundamentally the same project – it is usually a good approach, can help you to extract significantly more value.

    If you are interested why you can check my Slideshare presentation

    Note that it works if cost of supporting several versions will not be prohibitively expensive (for example for high-end product you need to buy extremely expensive hardware that is not used otherwise).

    #1162352
    MissSassy
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    Just use a simple rule – Make the price at what ever you are happy to do the work for.

    Yes take into account, profit margins etc – but at the end of the day you have to be happy to provide your product or service at that price.

    Priced too low and you will complain that you are not earning enough, priced too high and you won’t attract people as you are not confident to sell at that price.

    #1162353
    Stuart B
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    Also consider that if you want to have above average prices, just do something which adds some more value compared to your competition.

    #1162354
    affgar
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    You are in a difficult game in terms of prices Gareths. Creative industries can have huge price fluctuations.

    I think you are doing something good & could do well out of it.
    Obviously if you are competing on price in a studio sense … you would not want to be charging less than $40 per hour to start with (work that into your pricing if you want fixed prices). This should be a bench mark to work up from … though if you are starting out & you feel you aren’t as efficient as competition, or don’t have the pro gear you might aim for that.

    Ring around for prices .. though you may find most people will say they need to know details so they can give you a price.

    I believe it is always of benefit to both parties to have a clear price per clear job performed. Clear being the key word. You need to be clear about what you will offer, the client needs to be clear with what they will get. If you price ok, give them more for their money as a sweetener. Especially in early days of building client base.

    Get part payment upfront & final payment upon work completion (progress in the middle if larger project). This makes sure you cover your costs & it also shows people you are serious. Regular good clients you may be lenient with…

    Once you have regular work & clients .. then you look at lifting prices (unless you priced well from the start) .. rare though especially in creative field because you want exposure.

    Be professional & offer a professional product.
    Doing a little voice over for Tom around the corner because he wants a nice family video is not the same as Toyota creating a ad for the global market. Fixed prices do not cater for this.

    Though I do like your idea of offering a cheap already created product… ie you recorded additional material while trying to record for a paid job. Kind of like stock music or video. At the least, could be a communication medium to help clients to understand what they could get for their money.

    I hope I was not too blunt for you in my post to your other thread Gareths. I genuinely want you to do well & not sell yourself short. :) Previous post I talked about how to work out your costs or what to factor into price.

    Pricing .. one of the hardest questions in business.
    The funny thing I found in my service business was this: when I charged a higher price I gained more respect, better clients & people valued me & my time more.

    #1162355
    David
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    You might find our Pricing and Breakeven Analysis software of interest? It allows you to test various pricing scenarios and includes an Extended Price Analysis to determine Optimum Pricing to maximize your business surplus.

    pbae.jpg

    bizpep.com applications deliver unique business and investment insight providing solutions for 1000's of clients world-wide
    #1162356
    gareths
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    Thanks everyone for the comments.

    I have taken my pricing down off the website now, I can see that was a mistake and was probably turning people off.

    Just wanted to share with you the market analysis I did at the start up stage of my business. The prices are for 30 second voice overs.

    Competitor 1: $85
    Competitor 2: $120-$150
    Competitor 3: $140
    Competitor 4: $168
    Competitor 5: $369

    I am charging $75 based on trying to come in under the price of the lowest competitor, but I have had people ratchet me down to $60 or even $40, so I may need to increase prices to stop people taking advantage.

    #1162357
    Stuart B
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    Don’t try and undercut everyone, there will always be someone who will come in lower and be out of business in 6 months. Add value to what you’re offering so that the higher prices are justified.

    #1162358
    bb1
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    Your rate is already well below the market, and to far below, you should be meeting the market or exceeding.

    Dont let them talk you down from your going rate, if you stick to $75, dont go to $40, I would rather walk away from a job than give my services for nothing.

    If I give a quote of $75 , and the potential clients asks what is the best you can do for me, I go straight back with my best is $75, 90% of the time they will go with that, the other 10% I dodnt want as clients anyhow.

    Dont sell yourself to cheaply, the unemployment queue is only another $10 less a job away.

    #1162359
    affgar
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    This is why you start by offering a premium package … all the bells & whistles.
    Then you drop to mid range & only for certain situation do you drop for the lower range of your prices.

    Remember a client must earn your trust … not the other way round.
    You get one crap client & they send you through the mud .. you will never forget it.

    Ironically for me .. the few times I drop my cost low out of a pity or grovel I got burned harder than ever … so my lowest price & then I didn’t get paid a cent.

    Or one time you avoid getting the deposit payment … then the wealthy millionaire says he is bankrupt & you are not getting a cent.

    You will learn … have trust in what you provide & trust in yourself. If you don’t have that .. then work harder, learn more, strive for excellence.

    In most cases from what you have laid out Gareths I would not go below $150.

    Remember .. many people who get work done .. only see the end result. They think it took you 2 minutes & no cost. It is your job to explain the complexities, the time, the money involved to get them their product.

    Great discussion … some very good points being raised by many knowledgeable people. :D

    #1162360
    altima
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    Octopus Labs, post: 188065 wrote:
    Don’t try and undercut everyone, there will always be someone who will come in lower and be out of business in 6 months. Add value to what you’re offering so that the higher prices are justified.

    Good point, there will be always a competitor who is cheaper. There are gigs for voiceover on Fiverr from people who promise to do it for $5. Does it mean that you have to drop to $4?

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