December 14, 2016
How to price your productized service
Yesterday’s episode of Ditching Hourly raised some questions about how to set a good price for a new productized service.
Put simply, you should:
Set the price high enough that you at least break even, and low enough for it to be a “no-brainer” for your clients.
At the beginning, your “break-even” price (i.e., the least amount of money that you accept for delivering the service) and a “no-brainer” price for your clients will probably be pretty close. Which is to say, your profits will be at a minimum.
But don’t worry. Over time, two things will happen that will increase your profit margin:
- You’ll be able to decrease your cost with automation, optimization, boilerplate, templates, etc.
- You’ll be able to revise your marketing copy to maximize your prospects recognition of the value you are delivering, which will allow you to increase the price.
These two factors will make your productized service more profitable the more you do it. Virtuous cycle FTW!
Have you got an idea for a productized service but don’t know how to price it? Hit reply and I’ll try to help.
Yours,
—J