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    22 Replies Latest reply on Jun 13, 2009 2:05 AM by MyCapital.com

    Can you charge too little for services?

    pdmiller Adventurer

      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
        • Re: Can you charge too little for services?
          Iwrite Pioneer
          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.
          1 of 1 people found this helpful
          • Re: Can you charge too little for services?
            Oracle Newbie

            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
            1 of 1 people found this helpful
              • Re: Can you charge too little for services?
                pdmiller Adventurer
                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
                  • Re: Can you charge too little for services?
                    Oracle Newbie
                    Dear Patty,

                    Averages vary drastically from state to state when dealing with any kind of graphic design. Up here in Alaska where I live, the lowest hourly rate for web-design is $85/hr. all the way up to $140/hr. The majority of companies up here have similar pricing packages but the rate here for web-design is drastically higher than the rate down in the states. I think by going with the prices you have just posted, you can't really go wrong. I do have a question though. Do you do your own web hosting or do you have someone else for that area? If you don't I would possibly look into that just for the fact that you can get into web hosting and charge a decent fee for hosting the sites you make as well as other web-designers can come to you for hosting their sites as well. Plus, you can lower your site fee's just a little bit by offering this service as well.

                    Good Luck,

                    Mitch
                • Re: Can you charge too little for services?
                  LUCKIEST Guide
                  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
                  1 of 1 people found this helpful
                  • Re: Can you charge too little for services?
                    MarketingSpot Newbie
                    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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                    </style>
                    <!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.
                    • Re: Can you charge too little for services?
                      MarketingSpot Newbie
                      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.
                      • Re: Can you charge too little for services?
                        Analysight Newbie

                        Patty,

                         


                        Yes, pricing can turn clients away if it is not done properly. One way to determine if your prices are too high is to conduct a brief survey of both your customers and non-customers who are similar to them. In your survey, you ask them 4 questions about price:

                        • At what hourly rate would you consider web design services so expensive that you would not consider buying them? (Too expensive)
                        • At what hourly rate would you consider web design services to be priced so low that you would feel the quality of the service couldn't be very good? (Too cheap)
                        • At what hourly rate would you consider web design services starting to get expensive, not out of the question, but you would need to give some thought to buying it? (Expensive)
                        • At what hourly rate would you consider web design services to be a bargain - a great buy for the money? (Inexpensive)

                        Once you have your results, plot them on a graph, with the percentage of respondents on the vertical axis and the price points on the horizontal axis. Each of those four questions will be a line curve on the graph. The Optimal Price Point (OPP) will be where the percentage of respondents say it is too expensive equals the percentage of respondents who say it is too cheap. The lines for those two questions will intersect at the OPP.

                        This procedure is known as the "Van Westendorp Price Sensitivity Meter." Keep in mind that different segments of customers may yield different price points. So if you have non-profit customers, manufacturing customers, and retail customers, you might want to find what each of those groups' optimal price points are and adjust your pricing for each segment.

                        Patty, let me know if I can answer any additional questions for you.

                        Good luck!

                        Alex
                        • Re: Can you charge too little for services?
                          MyCapital.com Wayfarer
                          no, i as a client will consider this as a bargain and will continue to use the service, unless the quality is bad.