In an attempt to simplify pricing for both the business and customer, many service companies look to package-based pricing. It’s convenient for customers who have a clearer expectation of cost and saves the business time by eliminating the need for individual quotes on certain projects. Sounds like a win-win right? It can be if you avoid some common pitfalls.
When Packaging Services, Avoid Common Pitfalls
Think Efficiency. Most businesses have an opinion of what their time is worth – a combination of cost and value. But determining the amount of time dedicated to doing the work is often more of a challenge. When it comes to packaging, experience and efficiency matter – for you and those in your company who do the work. It allows you to deliver value at a price that is competitive while optimizing margins due to efficiency.
If you have a system or proven method to ensure consistent repeatability and quality results, then packaging may be a great option. If not, your package-based pricing may erode margins or hurt sales opportunities.
Define What Is Included. Set clear expectations on what the package includes or the scope of work. What do you plan to do, how often? What is the deliverable? What services, if applicable, will be extra. Be specific to avoid confusion that can lead to unhappy customers or “unpaid’ work.
Stay True to Your Target. Packages are not ideal for every customer. Some will need or want more than your package includes. Build your package with a specific target in mind and be willing to say NO when it is not a good fit. If a prospect needs a custom solution or wants more, create a unique package (aka proposal) for them with the appropriate extras or be willing to let them go. Otherwise, you erode margins or end up with unhappy customers!
Good-Better-Best. Some customers like choices. Because packages are pre-set and pre-priced, they are less flexible by design. You can address this with multiple package options. Think good, better and best and be clear on differences between packages. It provides customer choice and up-sell opportunities for your business.
Balance Quotes and Packages. If you offer a variety of services to a wide range of customers, use a combination of packages and proposals. Develop packages for some common, simple projects or certain types of customers. Use your proposal or quote process for more complex projects or customers who require custom solutions. This provides flexibility to meet customer needs and maximize profit.
Service Packages Make Selling Easier
When done right, service packages can save you time without sacrificing sales and profit. For many, they can open up additional sales opportunities. With training and a good system, even non-sales team members can help generate sales!
I saw this first hand when we implemented this strategy with a client who owned a residential and commercial cleaning service. By establishing packages for homeowners, his assistant was able to close sales and leave him and others to focus on higher-profit commercial work that required on-site visits and proposals. It was a win-win!
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