Nickname: ElphinKnight

Review: Be careful not to look at the competition's pricing and simply try to undercut them. The lowest price doesn't always win. And only a mass marketer like Wal-Mart can make money being the "lowest price" retailer. Don't be Wal-Mart. Your service has value and you should be paid accordingly. Determine what the needs of a potential client are, then work with them to figure out how much your work will save them. They may already have this calculation worked out if they're a number-crunching firm (and most larger ones are). If what you do for them will save them $50,000 a year then you have every reason to charge $25,000. The closing of the sale comes when you show precisely how the investment in your service pays for itself in six months and is profitable thereafter. Don't get into bidding wars. The winner is always the biggest loser. Just the act of understanding their needs and demonstrating a real return-on-investment may be enough to win you contracts.

Date reviewed: Jan 5, 2006 8:51 PM

Nickname: nrichster

Review: I thought that the article focused more on service than on developing a pricing configuration model. Pricing starts with an understanding of how much you want to earn each week, month or year. You'll also have to know your resource requirements -- both human and financial. If the solution is affordable to your customer and profitable, you'll still fail if you cannot sell enough to survive and enjoy a reasonable standard of living. Often, people confuse self-employed status with being gainfully employed. Using your goal earnings as a barameter, calculate your costs (you may need to make some assumptions here) and determine an average and minimum profit margin. Make a listing of products and services and estimate or research the market cost for each service. Separately, determine what it will cost you to deliver the same service. If you can deliver the service for at a profit, it doesn't mean that you are profitable. Price to eat and beat the competition with superior service.

Date reviewed: Dec 22, 2005 12:21 AM