Consider this a post from a practically confused entrepreneur.
I have few sets of questions as below -
As a start up (say 3 yr old), should you concentrate on getting more clients on less price per project or focus on getting less clients on higher price per project??
Shouldn't you mind delivering quality work in extra low prices (just because you r a start up)?
Or should you be fine with having various clients from various industries getting added to you work portfolio?
These are some self-realized facts:
We started out doing work at low prices, assuming us to have a great portfolio and then raise our prices with good work to back it.
What we ended up is a boundary/limit which our old clients don't agree to exceed.
Even if we have revised and increased our margins for a sustainable business, we find ourselves trapped in our earlier prices which will take years to be at par with the industry rates.
Finally, if we decide to get strict and think of circulating a mail having our "fairly revised prices", we fear of facing rejection and loosing on our loyal and esteemed client base (as we all know the competition).
Well they were doing the same kind of work, it wasn't a problem. They said no because they stick to their own price.
But I understand its tough to decide sometimes :)
Classic question..I've been in this situation before with my own start-up venture too. A problem solving tool that has proved helpful to me is the Why-Why tree-helps you to address the real root cause behind this phenomenon which you're experiencing. Try to look beyond just the pricing issue and dig deeper into what is ACTUALLY causing it(by asking WHY to each of your hypotheses)-factors within your control and factors not under your control. You'll perhaps be amazed to find that the underlying issue is something else(like delivery times, etc.) and you can manipulate those attributes to differentiate yourself in the marketplace and improve your price-point!
to differentiate services based on factors like delivery or you can say turn-around-time is great! the challenge lies in fulfilling your differentiating factor every time for every project.
But yes, a solution lies in there in your lines. :) thanks!
I would ask you to look into the Cost -- Time -- Effort factor.
1. Generally, do consider the cost in completing the project. This would include both the fixed cost and operational cost. Once you consider this u will be in a better position to decide on the minimum price that you will charge to any client after giving due consideration for your profit.
2. If there are other projects that are in the pipeline, tell the client about the priority that you are giving and the time by which you will deliver the project. If the client expects a faster turnaround then you can surely charge more.
3. What is the time that it will take to complete the given project. Normally if it is an older client, then the time taken even at a creative agency would come down by atleast 20 % since u already know their tastes and what will pass and what won't. Also, consider the effort put in developing new clients, understanding their processes and running around for payments .
the second point..ofcourse, we have tried that. The result varied with various clients. Usually our turn around time has been fairly good. But what it lead to is a disaster.
Most of our old clients now want work to be done in a jiffy. So when we were asked to deliver few significant projects in no time at all, we decided to charge a bit more. Our purpose was to make client clear that 'time is money'. These are the varied reactions below from same client -
- We asked for a day's time instead of few hours - he said, ok leave it, don't do.
- We said we would charge extra for the urgency - he said, ok take your time, but I won't pay extra.
- We said we won't do it - he said, ok don't do it.
In nutshell, nothing worked. It's a learning process, but the cost of learning it is way to high.
You can use the second point only if you have other work in hand. Else it is not worth taking the risk.
Couple of points which comes to my mind:
I wish i knew more about your business as the above points are generic and maybe needs to be customized for your business. Happy to help :-)
this makes me point out yet another issue - you are so badly stuck in fulfilling the requirements of your existing/old ever-demanding clients at low price, that you are unable to move forward and grab some new ones ...mainly due to "small team" issue, where a single person is handling multiple positions.
So, yes, new ones are the answers to the primary issue, but then you find yourself hovering around the initial admirers of your ideas :)
My understanding is that you are emotionally attached to your old clients, which is nice to feel, but there are times in business where you have to take tough decision against your emotions. At the end of the day, you really need to be convinced that you are delivering more value than the price that your clients are paying. At the end of the day it is all a business arrangement between the clients and if they cannot understand your problems, it is better to have new set of clients. Until you take the steps, you will never come to know whether it was the right step or wrong. In a worst case, you can still go back to your old admirers if things dont shape up the way you want.
Again, i wish i knew more about your company or website, but still happy to help :-)
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Once you visit these links you will get to know about our services and other stuffs! :)
happy to converse!!!
Hey Anamika ths is the real dilemma for any startups. To get more client or business we try to prove our self at early stage by giving services @ a price which compels our client to say "WOW!!! is that possible", but once proven and established with our credentials everyone would like to get the revised prices which client's don't except this could be through many reasons. So the real dilemma: " If you increase prices they would probably leave you and if not you wont be happy in serviceng them".
The best solution could be to create "Sub Portfolio" (increase the length )inside your product portfolio category. i.e. if you have say X, Y, Z as products before, now you increase it to X (X1, X2, X3) ans so on for each product, but make it a point to clearly differentiate between the products and service (while you deliver them). If not so your client would feel cheated and would leave you/your services.