First of all, good show for actually thinking about putting some pricing strategy into place. I’m pretty much convinced that most firms use the, "I don’t know… what do you think we should be charging?" method. Combined, of course, with whatever "what’s the competition charging?" info they can find.
Before making any serious comments on a premium pricing strategy, I’d want to know what your current pricing model is. Is it primarily by the hour? Or on a per-project basis? If you’re already doing project-based billing (often called "value based pricing"), then you already have a system in place. You just charge more for those projects that qualify as "premium," and do a better job of establishing the higher-value those services provide.
The basis of value-pricing is an agreement up front as to the value of the project to the client. There are a number of fantastic benefits to this kind of pricing. First, you immediately identify yourself with the solution rather than the price tag. You also get all the nasty money questions out of the way at the get-go, so you can all concentrate on the job.
Clients will also feel more comfortable calling and asking questions, since they know they’re not on the clock. You want that; trust me. The more they call, the more projects they’ll find for you.
Next benefit — and your CFO will love this — you can bill for some portion of the project up front. Some firms charge 50% at start, 50% on completion. I suggest that you offer a discount for paying the entire fee up front. Make sure you offer this AFTER you’ve established the price. Let’s say you agree that the job is valued at $10,000. After they’ve agreed to that price, ask if they’d like to save 10%, shaved right off the top. Tell them that if they’ll pay $9,000 up front, you’ll give them a 10% break. Many companies have policies in place that encourage or even REQUIRE that they take advantage of price break options like this. You book the dough up front, don’t have the worry of collections, and you can get to work on the project with that nice, warm feeling that comes from having a negative entry in your WIP.
I’m a big fan of value-based pricing. Can you tell?
If you’re charging by the hour, though, you’ve got a harder row to hoe. The whole point of hourly billing is that you are, supposedly, paying for the time of the professional. Asking for a higher rate for some types of work begs the question, "Can I get a lower rate from the same guy for work that’s more routine?" It amounts to telling people they have to pay more to see a good movie. OK, then. Can I get my money back if it’s a dog?
You also run the risk of making your "non-premium" customers feel like they’re getting the short-end of the stick. There will be an implied "off the rack" quality to the standard services. Again, this isn’t an issue if you use value-based pricing. People will feel OK paying less for a more routine task, if the price is based on the client’s view of
acceptable value.
Another up-side to value-based pricing is that it almost always, when done correctly yields better profits. People work better, faster and smarter when they are goal-focused instead of clock-focused.
The only two down-sides to value-based pricing that I acknowledge are, A) that it’s kinda spooky and uncertain from a planning perspective. It requires a shift in thinking that not all people are comfortable with. B) It requires trust, on both parts. But, then again, so does the old hourly rate, eh?
If you’re comfortable talking about premium pricing, you should use that as a starting point for discussing project-based, value pricing strategies.
Stumble it!