“People don’t buy products because of the actual value of the products – they buy stuff because the price of the product closely matches their perceived value of the product.”
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A word about pricing your services...
Pricing is both an art and a science that requires both a business mindset and experimental approach, coupled with an intuitive feel for your clients and how you want your inspection services/products to be perceived. Selling price is one of the major contributing factors to our perception of value. Perceptions of price positively influence perceptions of quality for a service or product, and inversely influence the perception of value. Price your services too high and it’s a rip off, but too low it becomes cheap.
If you price your services too low you might get a ton of sales! Sure, it may seem that you’re bringing in tons of money, but you’ll likely find yourself with little (if any) left over for all the work you’ve done when you tally up your true expenses at the end of the month. Suffering the proverbial “spinning your wheels” syndrome, you’re essentially working yourself to the bone with very little real financial reward. The other drawback (or benefit depending on your point of view) is perception of “low cost” equating to low quality.
On the other hand, when you price your services too high you might give off an aura of high demand and exclusivity, likely attracting a more well-off clientele in smaller quantity of jobs. Even though smaller in number, these sales make up for lost volume by purchasing your services at the higher price. However, if you’re in an area where the demographic is especially price-sensitive, the risk of over-bidding the job is real. Then what will you do?
This is where the science and the art come into play. Scientific studies have been performed on consumers for ages. A prime example is one study offering an identical wine in two separate glasses, one marked $5.00 per glass and the other at $45.00 per glass. Beyond the price difference, the product given to the consumers for sampling was identical and poured from the same bottle. The overwhelming majority of test subjects claimed the higher priced glass to be of better quality and most were willing to pay the $45.00 for a glass over $5.00 for the exact same wine! The price alone deceptively determined the consumer perception of quality and value. Similar scenarios are repeated over and over like in This Video of Cake Deception. Most of us are also aware that consumers are attracted to price points containing the number “9”. So much so that these ‘Charm Prices’ actually help to increase sales of a product or service by up to 24%! This means the chances of you landing a $2000.00 inspection job are increased by 24% simply by offering the same job at $1999.00!
The target of “happy medium” can be a difficult one to hit. Ultimately, you’ll have to decide whether you want higher prices for your services with a potentially lower volume sold, lower priced services with potentially higher volumes (and greater work loads) sold, or somewhere in between. The beauty is that it’s your choice which direction will enable you to achieve profitability!
Keep in mind that when you have a range of products or services offered, you can sometimes risk lowering your price for one, so long as you also can sell services that are marked up at a higher price to offset the low-priced losses. In the service industry, this can be a difficult (but not impossible) task to achieve from client to client.
The administrators at Building Intelligence Center trust you’ve found the resources presented on this page have proven helpful in determining suggested fee structures and profitability for your inspection services and individual markets.