pricing packages

Why You Should Always Offer Several Pricing Options in Proposals [2020]

Agencies, consultants and freelancers put a lot of time and effort into pricing the services in the proposals they present to clients.

What are the factors that go into the proposal pricing equation?

1. difficulty of project
2. time it will take
3. quality of work
4. value to client
5. market competition
6. how much client will pay

To get a more detailed explanation of how to price web design and digital marketing projects, click here.

Whichever method you choose to come up with pricing for your project, you’ll most likely always feel nervous about presenting it to your potential client.

The reason is simple: you’re afraid they’ll say no.

You don’t want to end up charging too much and scaring the client away. You always know that you’re probably competing against a lot of other folks who might be willing to work for a lot less than you are.

So you feel like you’re in a no win situation.

On the one hand you know the value you bring to the project and how much you should be charging. On the other hand you don’t want to pass up the opportunity of making money, even if it is less money than you feel that you deserve.

So you come up with your best guesstimate, put it in your proposal, present it to the client and cross your fingers, hold your breath and pray that he’ll say YES.

Now the truth is that it’s quite possible that the client can come back to you to try and negotiate your price. But in many cases, if the client isn’t happy with your price, he’ll just move on to a different service provider and just not get back to you.

The idea that you have one opportunity to get the client or lose the business can wreak havoc with your nerves.

The problem with this whole scenario is that you’ve forced your client into making a yes or no decision. He can either accept your price or not.

No one wants to be forced into choosing between all or nothing. When faced with that decision, many client will leave the table unless they are 100% sure they want to accept your price.

Is anyone ever 100% sure? Rarely.

That means that more often than not, the client will bolt and you’ll lose the business.

Pricing Options

Consulting guru Alan Weiss teaches to never frame your pricing as a “yes” or “no” choice; instead, present your clients with a choice of “yes’s.”

In other words, don’t force your client into choosing between YES and NO. Give them the opportunity to choose between YES, YES, YES or NO.

Everyone loves having choices. You walk into a clothing store and there are a dozen different kinds of jeans or shirts. You aren’t just presented with one style to take or leave.

You want to have options. It makes you feel like YOU are in control of your destiny, instead of the person selling to you.

Consulting company McKinsey has compiled statistics over the years that show how providing “different flavors of the same thing” can improve your firm’s chances of selling in a solution by at least 30%.

How do you create pricing options?

The simplest way is to first decide on the service that you’d ideally like to provide and that you believe to be optimal for the client. Make that option 2.

Then strip off some of the features of option 2 until you have the barest bones version, which is the minimum service level that you are willing to provide. That’s option 1.

Finally, add extra features onto option 2 to come up with your dream plan, which you would LOVE to provide your client — and you’ve got option 3.

The statistics say that your client is most likely to choose the middle option — #2 — in which case you’ve succeeded and gotten exactly what you hoped for.

The existence of option 3 makes option 2 look cheaper, so the client feels he’s getting a better deal. At the same time, the existence of option 1 makes the client feel like he’s getting more value (which he is) by choosing option 2.

 

pricing options

 

Here’s an example from website design and development:

When a client asks you to build a website for him, he looks at the project as a single entity with one deliverable.

But you know that building a website contains many different components including strategy, structure, design, development, content, seo, special features, optimization, launch, training and support.

What you need to do is break out these component and then combine them into your 3 options.

The first, and cheapest, option would contain just a website without any content or seo services. Even though you know that you could add tremendous value by providing the client with content and seo services, in the event that the client either doesn’t have the budget for or simply doesn’t grasp the importance of these vital services, you still have the opportunity to get the business with your option 1 pricing plan.

Your second option is going to include content and SEO, and possible other elements that you deem relevant. You’ll price this option at the number you ideally expect to make for this kind of project.

Then you’ll create a third option that includes extra features or additional content and seo or addition support and maintenance or a combination of any or all of the above. This is your exclusive plan that is more expensive than option 2. It’s the plan that you’d love to get, but you’d still be happy if you just got option 2.

Now it’s the client’s choice. And you win with whatever plan the client chooses.

You might initially think that offering pricing options won’t work for your particular service. But you should think twice, because while it might not work for every service, it will work for most. All you need to do is be a bit creative to come up with various options by breaking down your service into smaller pieces.

Bottom Line

Including a few pricing options in your proposal will increase your chances of winning the project by giving the client choices — which everyone appreciates.

If you want a simple and quick way to add pricing options to a proposal, please check out Propfire.com, where we make the process super easy and intuitive.

 

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