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22 Replies Last post: Jun 13, 2009 2:05 AM by MyCapital.com

Can you charge too little for services?

Feb 8, 2009 11:36 PM

Click to view pdmiller's profile Mogul pdmiller 43 posts since
Feb 5, 2009

I have a question... Is it possible to charge too little for services and turn people away?

I own a web design business and our prices are VERY competitive, yet people seem a little apprehensive about what we are offering. Could it be that we've priced ourselves too low and that turns people away? I'd like to know your thoughts on this. The name of our business is Affordable Web Design and Graphic Solutions. I don't want the prices to be too high because that doesn't fit with our company name and motto. Yet, I don't want people to be turned away because they think we aren't a high quality firm because our prices are low.


Any suggestions. Pricing for web designers is all over the place if you check out companies on the web and the pricing guides don't fit our motto of being affordable for small businesses and non-profit organizations.


I appreciate any feedback you can give. Thanks.


Patty Miller, owner

www.awdgs.com

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Click to view Iwrite's profile Mogul Iwrite 1,100 posts since
Dec 29, 2007
1. Re: Can you charge too little for services? Feb 9, 2009 12:02 AM
Patty,

Yes, you can charge too little. It is a delicate balance we are all striving to achieve - between what the market will bear and what we need to make a living. Maybe your focus should not be on the price but the services you provide? I mean, create a message that projects quality at an affordable price. You already have your name and that should not change but you can focus on a quality story without contradicting your name.

Please read, Lighthouse's comment on another post I started, "Should I lie to you to get your business." He has an interesting insight into the type of clients or customers service industries should be going after.

People often think that having a high price is a curse to growing a business but a low price can be perceived as being low quality. I think the fact that people will spend more money on two or three hours of accounting or legal advise than they will on a website (that will be out there constantly representing their business to the world) speaks volumes.
Click to view Oracle's profile Professional Oracle 8 posts since
Feb 9, 2009
2. Re: Can you charge too little for services? Feb 9, 2009 4:06 AM

Dear Patty,

I too own a small Graphic Design company that does websites, and I have had my company for just over a year now. One thing that worked for me was I went out and did my research on the average price for a website. I then gave discounts for being a new "Grand Opening" company that in the end was charging the clients less than average prices for my websites which then made me the "Affordable Web Designer" as well as it gave me a marketing stragety that I could use as being afforable. All the while if someone would look up my pricing list they would see that I was about average with all the rest of the other comapnies, and so that didn't comprimise my "look" of being poorer quality. After I started gaining clients I slowly faded out my "Discounts" and just lowered my prices to that amount. I had enough clients and reputation by then to show the quality for the dollar that I charged. I could show new clients my portfolio and show the price I charged and a very high percentage went with me as their web-designer. That was what worked for me. I hope maybe it can give you some possible ideas on making your business grow.

Mitch Palmer, owner

Click to view pdmiller's profile Mogul pdmiller 43 posts since
Feb 5, 2009
3. Re: Can you charge too little for services? Feb 9, 2009 5:42 AM
in response to: Oracle
I guess it's hard to really find an "average" price for web design. I guess I haven't had as much luck with that. There are people who advertise $199 for either 3 or 5 pages and there are people who advertise $600 for 3 pages and some people are higher than that.

I did find a helpful book titled "The Graphic Designer's Guide to Pricing, Estimating and Budgeting" by Theo Stephan Williams with Allworth Press. In the book it gives some formulas to help you figure out your hourly rate, etc.

I guess I want to know if what I'm charging is too low, average or too high... maybe you can help anwser that?

Up to 5 custom pages - $475 or $40/month for 12 months
Unlimited pages with no e-commerce - $950 or $79/month for 12 months
Unlimited pages with e-commerce (all bells and whistles) - $3,290 with various payment options available for 12, 18, 24, or 36 months.
Monthly Maintenance - $50/month

My hourly rate: $47.00
Click to view pdmiller's profile Mogul pdmiller 43 posts since
Feb 5, 2009
4. Re: Can you charge too little for services? Feb 9, 2009 5:44 AM
in response to: Iwrite
Thank you for your response. Yes, the image is important. I can see where pricing myself too low could be damaging. I will research the topic more to discover an appropriate price and still be competitive.
Click to view LUCKIEST's profile SCORE LUCKIEST 7,933 posts since
Aug 6, 2007
5. Re: Can you charge too little for services? Feb 9, 2009 8:04 AM
Can you charge too little for services?? Welcome Patty

YES, it is possible that a company can charge too little for their services.
First we have to define "too little". I agree that prices are VERY competitive.
Maybe, you have to think about quality and not price.

Tell me more about your company. How long have you been in Business?? How many people work for the company?? Do you have a Sales Department?? Do you have an Accountant.

If you are looking for feedback, this is just the start.

Good luck, LUCKIEST
Click to view MarketingSpot's profile EXPERT MarketingSpot 22 posts since
Jan 12, 2009
6. Re: Can you charge too little for services? Feb 9, 2009 8:36 AM
Patty, I took a look at your website. One of the problems I see is that there is no
personalization. I don't know who you are or where you are. Your site is absent
of faces, people, personality. Personalize it with your team and your physical
address. Yes, you are cheap, but who are you? Businesses want to know before they start filling out web contact forms and handing off the keys to their site.
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<![endif]--> Also, your price presentation is inconsistent. I only see a price
for the Standard plan... and that price is too low. If a customer perceives your
price as too low, they think "What's the catch?"

To add power to your site, my advice is to personalize it, consistently present your prices, and raise your price. Best wishes for your business.
Click to view MarketingSpot's profile EXPERT MarketingSpot 22 posts since
Jan 12, 2009
7. Re: Can you charge too little for services? Feb 9, 2009 8:43 AM
Let's see if this looks a little better....

Patty, I took a look at your website. One of the problems I see is that there is no personaliztion. I don't know who you are or where you are. Your site is absent of faces, people, personality. Personalize it with your team and your physical address. yes, you are cheap, but ho are you? Businesses want to know before they start fillin out web contact forms and handing off the keys to their website.

Also, your price presentation is inconsistent. I only see a price for the Standard Plan. And that price is too low. If a customer perceives your price as too low, they think: "What's the catch?"

To add power to your site, my advice is to personalize it, consistently present your prices, and raise your price. Best wishes for your business.
Click to view pdmiller's profile Mogul pdmiller 43 posts since
Feb 5, 2009
8. Re: Can you charge too little for services? Feb 9, 2009 11:35 AM
in response to: LUCKIEST
Thank you for your response.

I've been in business since 2004. I'm a sole proprietor - only me doing everything.
Click to view pdmiller's profile Mogul pdmiller 43 posts since
Feb 5, 2009
9. Re: Can you charge too little for services? Feb 9, 2009 11:38 AM
in response to: MarketingSpot
Thank you for your responses.

I took off my prices from the website, because after Iwrite's comments about being too cheap I realized that my prices gave the wrong impression.

Do you think it's better to list the prices on the website or to have a client fill out a form and then give them the prices personally?

I listed my new prices in a previous response - let me know if you think the new prices are too low as well.

Thanks
Click to view MarketingSpot's profile EXPERT MarketingSpot 22 posts since
Jan 12, 2009
10. Your prices and your personality Feb 9, 2009 11:49 AM
in response to: pdmiller
You being a sole proprieter is an advantage. You should let your personality show through in your brand. High light the fact that you do all the work. You could even create an intro video on the website talking about your process and why you decided to work alone.

Yes, put prices on your website. Look at it from the perspective of the potential client. Filling out web request forms takes time and it's an unknown.Businesses will be suspicious of your motive. Businesses want to know what they are getting up front. Define your package, set your price, and have it clearly visible. You will gain trust and respect.

But raise your prices before you do. Personal attention is worth more. You may even consider changing the meaning of your web address acronym. Drop "affordable" and take the emphasis off price. Put the emphasis on you and the individualized personal service and your personality.
Click to view pdmiller's profile Mogul pdmiller 43 posts since
Feb 5, 2009
11. Re: Your prices and your personality Feb 9, 2009 11:55 AM
in response to: MarketingSpot

Great ideas. I'm not a writer though and have a hard time coming up with what to put on the website.


So you think my new prices are too low?


$475 for up to 5 pages

$950 for unlimited pages - no e-commerce

$3290 for all the bells and whistles

$50 monthly maintenance


I offer payment plans to make it more affordable.

Click to view MarketingSpot's profile EXPERT MarketingSpot 22 posts since
Jan 12, 2009
12. Re: Your prices and your personality Feb 9, 2009 12:03 PM
in response to: pdmiller
No, I apologize, I did not see your new prices. That is a big jump from the middle to the big package.
Click to view pdmiller's profile Mogul pdmiller 43 posts since
Feb 5, 2009
13. Re: Your prices and your personality Feb 9, 2009 12:16 PM
in response to: MarketingSpot
Good point.

Should I raise the middle price or lower the big package?

I'm thinking that I could offer the big package for $1995.00. Is that too low for all the bells and whistles?
Click to view MarketingSpot's profile EXPERT MarketingSpot 22 posts since
Jan 12, 2009
14. Re: Your prices and your personality Feb 9, 2009 2:18 PM
in response to: pdmiller
I don't think that is too big of a jump as long as you clearly justify what you offer.
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