When you run a business, not matter how big or small, one thing is obvious, it’s all about cash flow and being on top of your ins and outs. You know to look at your ROI, your COCA and all the other important factors that can affect profitability, but what about how you price for your services? Are you pricing in the most effective way? When was the last time you analysed your pricing strategy and gave it a good thought? In a recent blog post for the HubSpot Agency blog, titled Why Tiered Pricing Could Be Hurting Your Agency, Eric Pratt, looks at how the wrong pricing model could potentially be harming your business.
The Problem with tiered pricing
Tiered pricing puts your agency and your offerings into a small box.
If you are considering this approach, you should first consider a few questions:
- How do you deal with additional needs as they come along?
- What do you do when clients have capable internal resources that can handle certain components?
- How do you scale up only some of the elements from fast to faster and determine the correct pricing?
- How do you present yourself as an agile and scalable resource when you only have three options?
Another major problem I recognised was that the tiered pricing system didn't really fit well with what I understand about the sales cycle.
I have a background in sales and had previously represented companies before that had similar pricing models, so I understood the difficulty this structure caused in the sales cycle. Obviously, this prior knowledge didn't stop me. I was a bit starstruck. I respected the agencies that were clearly successful running this system. And I wanted to be just like them.
Do you think you might be on the wrong pricing track? To find out more about how tiered pricing might be holding you back and what you can do instead, read Eric Pratt’s full article on the HubSpot Agency blog here.
And for more tips on staying on top of your finances and boosting your organisation's revenue with Inbound Marketing, download our free ebook below.
