As an agency or freelancer, figuring out how you will price your services can be challenging.
Here are my 7 rules for creating a pricing model that scales.
Rule #1: Keep it simple.
If you have a bunch of “if this, then that” rules, your pricing is too complex. You want people to see what you charge and what they get at a glance. If you can’t put it on a grid (like a SaaS pricing page), then it’s too complex.
Pro tip: SaaS Pricing is the gold standard. No industry has done a better job at figuring out how to ensure pricing isn’t a barrier to conversion. If you offer tiers, yours should look like a SaaS pricing page. It anchors value and forces you to streamline your services.
Rule #2: Reward growth.
There’s an economy of scale to everything; build this into your pricing and make it obvious.
As your customers grow with you, they get more for their money. This starts them thinking with a growth mindset from the beginning of the engagement.
Rule #3: Manage risk.
Build risk and cost management into your pricing strategy.
For example, Solutions 8 charges a fee + a % of the ad spend we manage. Charging a % of the ad spend ensures I can always cover the costs and insurance of growing accounts.
Rule #4: Clear starting point.
Use pricing tiers to help customers know exactly where they should begin. Do they need to dip their toe into the water or go all in on your full-service offering? Keep enough distance in your pricing to make it an obvious decision for them.
For example, HubSpot’s pricing is brilliant: “Sales Hub” has three tiers: $0, $20, or $500 monthly. You know exactly where you belong almost instantly. Are you looking for the most economical option, or are you more interested in maximizing the features available? Compare that to…
Zoho’s pricing, which I hate. There are too many options, and they’re all too close together to make a big enough difference. I have no idea where to start and can’t use the pricing as part of my decision-making matrix. As the saying goes, a confused mind says “no.”
Rule #5: Price by output.
Hourly pricing is a death trap. It means you’re 100% dependent on human input, the least scalable of all activities. You experience no benefit with improved efficiency, automation, and/or output (super crucial as AI supercharges everything).
Exception: I’ll use hourly pricing as a safeguard and tool to dissuade tasks I want to avoid. For example, I hate meetings with everything inside of me. If someone wants additional meetings (beyond the project’s scope), I’m happy to oblige at $2k an hour.
Rule #6: Pricing is public.
Afraid to publish your pricing? That’s a clear sign of a broader problem.
Are you worried about looking expensive? You need to anchor your value and improve your messaging.
Concerned they’ll be confused? You need to streamline and simplify your processes.
Rule #7: No discounts.
Discounting is expensive. The cost isn’t just in lost revenue; it’s the lack of respect for your services, the need to manage specialized agreements, and the acceptance of high-maintenance clients.
Refusing to discount is the greatest way to filter out headaches.
What rules do I need to include?
How do you approach pricing for your services, and what lessons have you learned along the way?