How to Earn More on Every Project with Tiered Pricing

Don’t miss Ilise Benun’s talk, “The Worst Negotiating Mistakes and
How to Avoid Them,” at HOW Design Live this year!
 

When a client asks you for a price on a project, do you just give it to them and pray it’s not too high? Or, do you go above and beyond to make recommendations and give them a few options or “packages” to choose from (aka, tiered pricing)? It’s a simple question but can make a huge difference to your bottom line.

The simple concept behind tiered pricing is that when a client asks you for a price, you give them two or three instead. Why? Because they actually don’t know what they need, and you do. Smart clients don’t want the cheapest option. But if you only give them one and it’s low, you are limiting your own income. When you give them two or three — low, middle, highest — you increase your potential income.

Also, by offering more than one option with tiered pricing, you are actually providing expert advice and tailoring your recommendations to suit the client and the circumstance.Good clients will take the middle option, not wanting the cheapest. And the best ones, the ones who value quality and are  therefore more likely to pay what you’re worth, will take the highest, and that means you’ll earn more.

tiered pricingimage from Getty | MirageC

This is the most profitable pricing strategy I’ve seen creative professionals using lately. And sure enough, they’re earning more on higher quality projects. Here are some examples:

  • For branding, the basic tier includes a logo, business card and stationery. Add a website for the middle tier, and as the top tier, offer a comprehensive discovery process with standards manual.
  • For web design, the low tier consists of a five-page website, add additional pages for the middle tier, and for the highest tier, include training on the CMS plus ongoing maintenance.

Believe me, it’s much less stressful to wait for them to choose from your options than to wait for a “yes” or a “no.”

Why aren’t more designers doing tiered pricing?

It surprises me that more designers and agency owners don’t practice tiered pricing. The steps are relatively easy once you know them. It’s the mindset that doesn’t seem to come as naturally.

To make this work, you must position yourself as an “expert” making recommendations. Those recommendations separate higher dollar designers from the order takers who make less money. Which one do you want to be?

Not only that. Tiered pricing practically forces you to take a leadership position in your business and with your client. You must consciously shift from an “employee mindset,” in which someone else is in charge (in this case, the client) to a “business owner mindset,” where you are the one in charge.

That attitude must be firmly in place first in order to suggest and successfully sell tiered pricing to your clients — especially the top tier. But even more important is the fact that your pricing is shorthand for the way you think about your own worth. It speaks volumes about how you value your own services. And a low price broadcasts low value, loud and clear. In other words, if you don’t value yourself, then you’re not giving the client any reason to value you.

Your pricing is also an aspect of your brand. According to HOW Design Live 2018 speaker and marketing professor, Michael Solomon, author of Consumer Behavior: Buying, Having and Being, “All things being equal, consumers use price as an indicator of quality.” The more you charge, the stronger your promise that you will deliver quality. Good clients will recognize that and respond positively. You can leave the rest of them behind.

Successful and stress-free pricing takes practice. Experiment with different ideas, different strategies, different options, and you’ll figure out the ones that work for you. It is a process of trial and error. And when you make an error, don’t worry. There are plenty of prospects out there and the next one is right around the corner.

Just keep trying and this will not only build your confidence, but also earn you respect. It’s a virtuous cycle, where each positive experience reinforces and feeds the next, even if you don’t win every project.


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