Blog

It is not easy to run a business, much less if you are self-employed and you must do everything alone. Many times in the attempt to win more customers than the competition, it will have occurred to you to lower the prices of your products/services.

In today’s post, I’ll show you that lowering the price can often make you lose clients instead of increasing their number. And I’ll give you examples of what to do to make your customers feel happy even if you don’t offer low prices like the competition.

Income vs Benefits

The first thing that should be clear to you is what is the difference between income and benefits because it is not the same. Income is all the amounts that appear in the total of your invoices. The benefits are the difference between the income minus the expenses you have had related to your activity.

Example:

You make an invoice of € 1000 to a customer. But to provide this service, you must invest € 100 in transportation and various management costs. So your income is € 1000, but your benefits would be € 900. That is a rough example, regardless of whether the invoice carries VAT, withholding or other taxes.

 So, to increase your benefits, you could do it in two ways: increasing your income or reducing your expenses. Ideally, you could increase your revenue without this translating into increased costs. Something that, for example, the company Apple has managed to apply sagely.

 We all know Apple products, and above all, we all know that they are not cheap. They are one of the most expensive technology products on the market. When a mobile phone can cost you between 100 and 200 euros, an iPhone can cost you three times more.

··················

How does quality influence price?

You may have heard this that the lower the price of a product, the higher its demand. That is the basis of the so-called law of supply and demand, which is not that it is a real law, but statistical data supports it. Many freelancers believe that this is their line of business, especially when they start a business. What they do is see the prices of the competition and offer an even lower one.

 The danger is that if you are not clear how far you can lower your price, you may be practically “paying” your customers to buy from you, and this would not be profitable in time.

 The other drawback is that your clients’ perception of your cheap products/services is that they are not of quality. Let’s go back to the example of the iPhone. Why would you pay for an iPhone € 600 when you can buy a mobile from another brand for € 200? Because everything that surrounds the Apple brand intrinsically means quality. Think of Apple when you decide what your products/services are worth.

··················

Define your prices

If you sell products, it may be easier to define at what price you will sell them. But if you sell your services, you should value them thinking about what the following is worth:

Your time

Perhaps at first you don’t appreciate it as much, but the work of a professional should not be worth 10 euros/hour as many estimate it. Not only does it look like you’re doing a botched job, but your competition is going to take its toll on you.

Discounts

We all like discounts and especially if they are made specifically for us. If you have very tight prices without being able to discount anything and a client comes to you who is governed by discounts, you have lost him. Always leave a margin of 5 or 10% to be able to offer it to this type of client, and he will be at your side.

After-sales

Ideally, customers are 100% satisfied with your services, but this is not always the case. Studies estimate that an average of 25% still has some type of criticism, or there is something that they would improve to feel satisfied.

If you have to redo some of your work, it would be at no additional cost to your client, but not to you. Because again, you will invest your time, and perhaps this work or project does not turn out profitable. The best option is to take it into account in your price. That way, you wouldn’t stay in the red numbers as soon as you start your business.

··················

Keep your customers happy

That may seem very easy to say. In theory, we all work to make our customers happy and so they will never leave us and go with the competition. Here I leave you with some proven tips on how to make your client feel more satisfied:

Make your client feel important.

Empathize with him! The simplest thing is that you ask him how he is, congratulate him on the holidays, ask about his family. Ideally, you should use a CRM that helps you write down all these details that you can include in another conversation. 

I recently did an online course at a company in the United States. The girl who was attending me added in her email: “I am so glad to hear that you are enjoying the course I also couldn’t help notice that you are from Málaga! One of my favourite places in the whole world after I studied abroad there for some time :)”. Of course, this does not mean that she really studied in my city, but she broke the ice.

Ask your customers what they want, not what they need.

From a marketing course, I learned that you cannot ask a client what he needs because many times he does not know it himself. What everyone is clear about is what they want when they hire your services. In my case, what everyone wants is to forget about taxes and not have problems with the Treasury. 

If you are not sure, I recommend using Google Forms to create a survey. Don’t be afraid to do it. The simple fact of asking a client what they think of your services makes them feel that their opinion is valued.

I usually use a survey of only three questions that I send to my clients one month after signing the contract. In my email, I explain how much I need your opinion to improve my services and I ask for less than 1 minute of your time to respond. Everyone does it and I get important information about which part they like the least. Also, they typically react because I do the survey anonymously so they can answer honestly.

Say or write “thank you”.

When I was a child my mother taught me to thank you for everything. I suppose your mother did that too. It is something that does not cost anything and the other person feels really good. When I started living in Spain (I’m from Bulgaria), my friends were surprised at how much I said thank you. It caught their attention because, in the hustle and bustle of everyday life, people have forgotten to say thank you. 

When was the last time you thanked the supermarket cashier? We take it for granted. Since she works there, she doesn’t need you to thank her (It is not discrimination, a male cashier has never attended me :O). I have friends who say they don’t thank them because what if they don’t respond? What difference does it make? Say thank you for your own satisfaction. You fill yourself with positive energy and you can transmit it to your clients too.

Know well what you offer. 

Clients like to deal with someone who knows what they are doing. If you provide a type of service and they ask you about any particularity that you do not know, find out. Don’t say it’s not in your speciality. Next time you will find someone who is more willing to help you.

Reward your best customers. 

Yes, those who do ask how you are. The ones that do not waste your time and value every second that you dedicate to them. Even to those who are not yet customers and want to pay you for “having made you spend time”. The reward does not have to be in the form of a discount or money. You can simply remember them when you see a piece of news that would help them in their business, and you can give it to them in a scoop.

··················

To summarise, my advice is that you try to calculate all contingencies so that they do not influence your prices, but above all, treat your clients as you would like them to treat you. If they’re well cared for, they wouldn’t mind buying an iPhone instead of a cheaper phone.

Related articles

How to Get Paid on Time if You Are Self-employed

Calculate Invoice Taxable Base

How to Calculate The Price of Your Product?