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    10 Replies Latest reply on Dec 14, 2008 6:20 PM by Elite1

    Product/Service Pricing

    Elite1 Adventurer
      I run an accounting office/tax service in a rural town. I have been very competitive with my pricing. Generally, my prices are half..or less than half of what the major competitors charge. Of course, their prices are the same nationwide. I set my prices low, since the members of this community don't have a lot of money. I wanted to make my services affordable. I think my prices are reasonably suited for the services provided. I often thought the others were way over priced.

      Someone recently told me that by offering low prices, people view your business as cheap...quality included and that's the type of customers you will attract as well. I would like to know what you think about pricing your products/services against competitors. Do low prices devalue your business?

       

      Tanya
      Elite Financial Services, LLC
        • Re: Product/Service Pricing
          Elite1 Adventurer
          Wow..I just found another thread similar to this by IWrite. Will read through that one. Sorry.

          Tanya
          Elite Financial Services, LLC
          • Re: Product/Service Pricing
            LUCKIEST Guide
            Product/Service Pricing

            Think positive. You are NOT CHEAP.

            How do you know your prices are half of your competitors. If they are do something about offering low prices,
            (NOT CHEAP prices). Either raise your prices (closer to your competitors) or advertise that you have low prices,

            There is a difference between LOW and CHEAP.

            LUCKIEST
              • Re: Product/Service Pricing
                Elite1 Adventurer

                I am aware of their prices. I have seen the invoices on the returns they have prepared that come in my office.

                 


                And that's exactly my point. I don't consider myself cheap. I give quality service. I am committed to preparing everyone's financial documents as if they were my own...taking every legal deduction possible to maximize the benefit. I also believe I need to factor in the economy of my area.

                My plan is to raise my prices a little this coming year and offer free e-filing (since my cost for this is reduced this year). In the end their cost will be about the same or slightly more and my revenue will increase.

                What do you think?

                Tanya
                Elite Financial Services, LLC
              • Re: Product/Service Pricing
                Lighthouse24 Ranger

                I think people who use a tax prep service do so because (a) they perceive that doing it themselves would be too complex, (b) they fear the IRS, and using a professional tax preparer creates a perceived "buffer," and (c) they hope they'll end up paying less in taxes. I don't think your average client is shopping for lowest price as much as other things (e.g., convenience, personal service, etc.) for a competitive price.

                Like most enterprises, tax prep is a business where keeping an existing customer is a lot cheaper than finding a new one, and where word-of-mouth/customer referrals are valuable. In a rural area, these factors probably have an even greater impact than they would in an urban area with lots of migration. Also, a tax prep service doesn't provide a lot opportunity to add value for the customer. It is what it is.

                Considering all that, I'd be inclined to keep prices lower than your competitors, but not as much lower as it sounds like they are now. Your most effective and profitable strategy would seem to be "match or beat" pricing on all of your services, the same guarantee/assurance of quality and accuracy as your big name competitors, a more personal and friendly "local business" way of dealing with customers, plus any value-added bonuses you can offer (such as free e-filing) -- even if those "bonuses" are things everyone does for free anyway (they create a perception of greater value).

                In order to raise your prices without hitting your existing clients with a huge increase, you could offer them a "loyalty discount" of some kind -- which alerts them to the fact that your fees have gone up, yet keeps them from seeing such a dramatic jump compared to last year.

                Hope that helps. Best wishes.
                  • Re: Product/Service Pricing
                    Elite1 Adventurer

                    Lighthouse,

                    I agree that I may have priced my services low. However; I cannot change the past. I will implement a small price increase for 2009 (can't hit them hard all at once). As you already know, the economy has been bad. There have been a lot of layoffs here. And there are more layoffs already in the works. So, I think I should keep it small (I'm considering 5%-10% increase). Also, I charged for e-filing in the past. Once this fee is eliminated for them (and me), the price increase will be minimal. BTW..My competitors do charge for electronic filing.

                     


                    A loyalty discount is an excellent idea! I believe Luckiest suggested that too (over the phone). Great minds think alike? I have been tossing around various discount ideas...senior citizens, specific industries, those willing to file early. I've also considered implementing another price increase for those who wait until April to have their returns prepared. I'm not sure if this is ethical, though.

                     


                    Thank you for your advice. It's greatly appreciated!

                     


                    Tanya

                     

                    Elite Financial Services, LLC
                  • Re: Product/Service Pricing
                    val_cards Scout
                    Dear Elite: Price is never what people buy...people purchase from people they trust. People purchase based on perceived value & quality of the goods and or services being offered. People purchase from confident sales people who can assure them that they are dealing with the right person. If you do not create value for your services it will not matter what you charge because they won't buy it.

                    I've sold a product to thousands of people not because it was less expensive when they bought it from me but because it gave them what they were looking for when we came in contact. I've been told repeatedly why folks have bought from me. # 1 reason they gotta like you. Firstly you must make your clients feel comfortabe working with you. They have to feel confident in your abilities and they need to know that you will be there for them long after the sale. This method of doing business will insure a steady stream of referrals. Be loyal to your customers and always treat them as you wish to be treated. Let them know exactly what will happen at each step of the way and make sure that it does.

                    http://www.thesaintclub.com
                      • Re: Product/Service Pricing
                        Elite1 Adventurer

                        Val,

                        You're absolutely right. My clients need to trust me, respect my judgement, etc. They have to reveal confidential information with me and expect me to keep it that way. A trusting relationship must exist.

                         


                        I know they must trust me and respect my judgement. They keep coming back and bringing a friend. Thank you for your input. I always welcome advice.

                         


                        Thanks again,

                         


                        Tanya

                         

                        Elite Financial Services, LLC
                      • Re: Product/Service Pricing
                        val_cards Scout
                        PPS Make sure you believe in your abilities, product and or services and so will your customers. The instant you lose faith in the company you represent so will your clients and they will see exactly how you feel and they will not become customers.
                        • Re: Product/Service Pricing
                          val_cards Scout

                          Elite: something really funny happened to me a few weeks ago. I thought I would get in touch with our local water authority in the interest of helping to conserve one of our nations most precious resources, sometimes also known as WATER. Living in an area that has very little rainfall...less than 5 inches annually. I thought how approproe to offer a product that would alert consumers of water leaks. after doing some research and learning who is in charge of our water authority I got in touch with all of the commissioners. One responded three merely referred me to a website. When the commisisioner took the time to write and refer me me to the appropriate party should run again he will definitely get my vote.

                          I waited patiently to meet with the various department heads of our water authority. I demonstrated my product to them. They liked it and felt it did its job effectively. I was given examples that they had experienced from water damage caused by water leaks in their homes.

                          I did extensive research for over a year. It is my understanding that they will post my product on their web site this spring if I am willing to offer a discount to folks purchasing it when referred by them. I have to work out those details http://www.affordablewateralarm.com Cool!