Have you ever wondered why, in this day and age of electronic payments, retailers continue to price their goods with odd numbers, like $9.99 instead of $10? The reason is simple, really. It works. We all have a threshold of what we think something is worth. When that threshold is crossed—yes, even by a penny, it can dissuade us from making that purchase. The moral of this little lesson in marketing is, pricing matters.
I don’t have to tell you that today’s interior design clients are price conscious, even the wealthy ones. Just ask any struggling luxury retailer. It’s not for recreation that they choose to spend so much time on their smart devices comparison-shopping for products. The same is true when it comes to fees. Regardless of what you believe your services are worth, clients have their own figure in mind. If you overprice your services, you risk losing clients. Of course, if you underprice your services too much, you erode your profitability and risk harming your business. Witness all the discount retailers who are going out of business.
Not for a minute am I suggesting that you should work for less than what you are worth. Follow the example of the savvy retailers. What you want to do is to hit a sweet spot that does not cross the client’s threshold but stays within your range of profitability. Then, present the client with a value proposition they cannot refuse. Increasing the value to the client will increase their threshold of price tolerance. iPhone anyone?
Be prepared that the client may not be consciously aware of what their threshold is, so you may need to do some probing and negotiation in order to seal the deal. No matter how good a designer you are, your pricing can make the difference between making a sale or losing one.
If you’re unsure about how to price your services in today’s market, contact me. I can help you devise a pricing structure and value proposition that will win you more projects.