How To Price

Ever wondered your SEO services? Your products? Have you set your prices at a point where you can get the best possible returns?

Pricing seems simple, but there's a bit of an art to getting it right.

In this article we'll take a look at different ways to price, a few strategies to use, and why you might want to avoid charging everyone the same price.

Why Pricing Strategy Matters

Obviously, if we get our pricing wrong, we'll miss out on business.

In order to increase profits, we could devise new services and products. However, by adjusting our existing pricing strategy on goods or services we already provide, we can squeeze out extra revenue with little effort.

To get greater returns from pricing, companies typically find ways to charge different prices to different customers.

Cost Plus Pricing

Cost-plus pricing is a common pricing method. Pricing of a good or service is determined by working out the total production cost, then add a profit margin. There's nothing wrong with this method - cost-plus pricing is widely used - however it does present a few problems.

One problem is that cost-plus pricing doesn't take into account the role of competitors. If we offer a SEO service at $15,000, arrived at by the cost-plus method, but our competitors offer the same service for $10,000 then our pricing clearly won't work. We must price in accordance with the market.

Cost-plus pricing doesn't take into account fluctuating demand. If demand for your products/services suddenly goes through the roof - say because you've been interviewed on nationwide television - they become scarce, and price should rise to reflect this scarcity.

Another problem is that it doesn't take value, as perceived by the customer, into account.

Imagine that you've created a widget that enables a machine to work at twice the output it did before. The value to the customer is considerable, as they can now double their output with little extra investment. The total cost of building the widget may be low. Cost-plus pricing would typically underprice such a widget. Value based pricing would charge in line with the total value it creates for the customer i.e. the increased value of their output.

In terms of SEO, are you charging enough for your services if you charge a few thousand dollars, whilst your clients make millions? Thinking of pricing in terms of value provided to your customer is a key to increasing profits.

Let's look at a method to accurately calculate a price for your goods or services.

Pricing Calculator

In the The Art Of Pricing, you can find the following method for setting prices.

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