Money – the deciding factor for any business.
Even when you are in a nonprofit business – money still matter.
Talk to any entrepreneur and you’ll hear, “When I started in business I would pretty much take anyone walking through the door.” That’s still true for most businesses – whether you are a short five-minute’ drive from your customers, or just a click away!
As you get more experienced (and have more clients) you can then afford to be more selective. The survival of your business depends on you knowing how to price your products and/or services.
What’s the best way to price your products and services? Charge one total all-inclusive price or charge separately for each product and service? Or maybe a project-based price is more appropriate. It depends on your type of business, whether your customers are doing lots of comparison shopping, etc. You decide what pricing strategy works best for you. And choose the one that’s more practical in the long run.
“Nickel and Dime” pricing strategy
Much like phone companies do, you’ll charge for each product/service separately. It works well for many businesses. And it’s a very practical method to use with consumers that focus on the base price. (Lots of research out there suggests that consumers forget the total price, focusing instead on the base price.)
One total (all-inclusive) price
Businesses that prefer to keep it simple bundle everything in one total, all-inclusive price. Again, there is research out there suggesting that on certain types of products/services, consumers prefer this method of pricing. In certain market segments this is an effective pricing strategy.
When using project-based pricing you need to get as much information as you can about the project. Another important factor is experience. The more experience you have the more accurate your assessment will be (of the work involved on a specific job). Some projects will be far more challenging than you expect and you need to price accordingly.
There are some projects that even a high fee pales in comparison with the effort you put in to get it done.
Years ago I was brought into this organization to organize and improve their processing systems. The business had recently changed hands. The new ownership was a “hands off” type of management. Under the previous management, the left hand didn’t know what the right hand was doing. With a general atmosphere of distrust among employees, the transition wasn’t going smoothly. I was there even on Sundays to try to make some sense of it all and come up with solutions. Weeks seemed like years….
I received a substantial fee for that work but I was really glad when it was over. It was one of the few times when the only reason I stayed on the project was because I gave my word to see it to completion.
Money is a deciding factor whether you take a job or not. For those of you just starting out keep this in mind: while money is important so is the experience you gain working on great projects. Especially if you have the good fortune to work with top notch individuals.
Personally, I look at money as a “vehicle” I need to travel to wherever my life journey takes me. The money vehicle enables me and my family to live a comfortable lifestyle. Enables me to give support to causes and charities I care about. And the money vehicle should definitely enable me to have an endless supply of dark chocolate truffles : )///