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How to Price Services for Small Businesses When People Aren't Buying

There may come a time when your business takes a hit or faces adversity.

And it may or may not be something you can control.

If it’s challenging to book business, it may be time to consider your pricing strategy.

Pricing your services is so important it’s considered one of the official “four P’s” of marketing (besides place, promotion, and product). It’s also one of the most difficult things to get right.

This article will offer some considerations and strategies you can make to price your service when people aren’t buying.

Understand why your customers aren’t buying

Before adapting a pricing strategy, you first need to understand what the problem is. What are the barriers, the objections that arise when people go to book with your business?
You might have to do some research at this stage (or not if the context is obvious).

No matter what, it’s important to keep in mind that if people aren’t buying, it’s not necessarily because they don’t need or want your service. It might just mean they’re delaying the purchase.

People still need their windows cleaned, their appliances repaired, their hunger satiated.

You need to find a way to position your business as the one to deliver that value, if not now, then when people are ready to buy.

Things you CAN’T control that will impact purchasing decisions

  • Are people holed up at home because of something like Coronavirus?
    If your business depends on people letting you into their homes or offices, or if you depend on people coming to you, then this obviously presents a barrier.
    This doesn’t necessarily mean people don’t want or need your service though.
  • Is cash flow tight for people right now?
    If your service costs more money than people currently have on hand, then they won’t be able to buy from you. Worse, they may look for more budget-friendly or flexible options. If your business doesn’t provide that, then customers will look elsewhere.

Things you CAN control that will impact purchasing decisions

  • Is your pricing too high?
    If you’re charging a premium price for your service, you must actually offer a premium service and have a premium brand to go with it.
    So, if your website needs refreshing, or your marketing materials could be more professional, it’s worth considering matching your brand and pricing strategy so that they are aligned.
    This will help align your pricing strategy in the mind of your customer.

    Alternatively, your customers might not want to pay high prices upfront. For example, when buying a car, dealers often have financing options because they know very few people can pay one lump sum up front or carry the amount of cash needed to purchase a car.
  • Or, is your pricing too low?
    Pricing your product or service too low might cause people to worry about the quality. For example, if you’re offering golf lessons, which people believe should be expensive, you can actually sell more classes by INCREASING your price to be in line with customer expectations.
  • Do your customers understand why they need or should want your product/service?
    Anytime you are describing your business to a potential customer - be it in person, via your website or through your advertising - always start with the high level benefits that your service offers.

    For example, you aren’t just offering clean windows, but a better view or perhaps higher curb appeal for their home. This helps the customer understand why they would benefit from your services as it applies to improving their life.

    Another example is perhaps your marketing revolves around a high-grade carpet cleaner, and the customer does not understand why they need that or why your cleaner is better than the next guy’s.

    Consider the customer’s needs and wants and draw attention to how your business satisfies those things. Then use language and context that will help your customers understand.

How to adapt your pricing when you CANNOT control the fact that customers aren’t buying:

1. Consider temporary discounts, but think it through

  • Avoid devaluing your service
    Be careful and deliberate when discounting your services. You don’t want to fall into a place where customers will wait for you to offer a discount or will start asking for one. Discounting your services could also symbolize a drop in value to customers, and you want to avoid this as well.

    When times are tough and you feel a temporary discount is needed, perhaps consider offering it on a case-by-case basis instead of publicizing it.
  • Consider loss-leaders
    A loss-leader is a product sold at a loss to attract customers.
    If you’re going to offer a discount or special sale, consider doing so on the products or services that don’t bring in much revenue to begin with.

    Focus on what you can afford to take a loss on, and use that to bring in new customers you can later upsell your more valuable products or services.
    Use this as an opportunity to make and build new relationships.

2. Consider adding value instead of reducing price

  • Bundle services
    Instead of reducing the price of your services, give customers more for one price.
    For example: If you’re charging $100 for Service A and charging $50 for service B, consider charging A+B for $100. Then customers will feel like they’re saving $50 by purchasing your bundle of Service A+B and you’ll still be putting $100 in your pocket. Win-win.
  • Work with partners
    Are there any nearby businesses that compliment your services and are currently offering a discount?
    If they’re open to working together, you could bundle your services together offering their discount to your customers.
    Your partner wins new customers and you avoid devaluing your services while increasing sales.
    Look to your local BNI chapter or check out Alignable to find local businesses to partner with.

3. Consider taking bookings in advance

  • Extend your available booking dates into the future
    If your business is riding out a health crisis or economic recession, keep in mind these are often temporary.
    If you are forced to reduce staff or hours of operation, consider extending your booking dates into the future for when you know you can service your clients again. Do this before you shut down entirely.

    If you are weathering a challenging time in your business, you may want to take this  time to build relationships with your customers through marketing.
    Being honest with your existing customers can go a long way. Being active on social media and sharing how your business is being affected, will likely produce understanding and support from your local community. So does helping out in your community during times of crisis. This may even provoke some bookings.

    If you are going to book into the future, consider small down payments, booking or cancellation fees to ensure people keep this commitment.

4. If the customer can’t (or won’t) come to you, go to the customer

  • Go to the customer
    Not every business can do this. But, if possible, it might be worth offering at-home services where you travel to someone’s house instead of requiring they come to you. YourMechanic is a good example of this. If you’re a restaurant or food service, list your business on popular on-demand food services like Uber Eats.
  • Ensure and communicate safety
    If the reason people won’t come to you is for health reasons, such as during a pandemic like COVID-19, then make sure it’s safe to visit a customer’s home and offer extreme caution to ensure everyone’s safety.

    Consider a special statement on your website and social media to communicate the safety measures you’re taking to customers.

    *Please consult official health and safety guidelines if you are to offer services during an outbreak or to anyone with compromised health.

5. Consider payment plans

This also works when you CAN control why customers aren’t buying, but use it sparingly or you’ll run into cash flow issues.

  • Offer financing
    If you’re selling a service that customers are reluctant to book in advance, or a service that can be completed relatively quickly (like fixing a broken window repairing a lock) consider letting your customers pay over time.
    This can actually be more profitable, because you can charge interest on the payment.
    Be sure to have automatic billing setup because collecting payments from customers is highly inefficient and difficult for everyone involved. You can use a service like Affirm to set this up.
  • Offer instalments instead of a lump sum
    If you’re selling something that customers don’t need delivered all at once or takes longer to provide, (such as an ongoing agency service or remodelling and renovation services), consider billing the customer in more frequent instalments. This will keep money coming in instead of waiting to get paid once a project is complete.

How to adapt your pricing strategy when you CAN control why customers aren’t buying:

1. Raise your prices, or better justify them

2. Outcompete your competitors

  • Get more reviews and compete on reputation/service, not price.
    Use software like NiceJob Reviews to become the top-rated provider in your area or industry. People want the best service, and they’re willing to pay for it. Reviews also have many other benefits for your business as well.
  • Differentiate your service
    One of the best ways to be competitive is to simply remove the competition, and you do that by offering something they can’t.

    NiceJob, for example, offers a guarantee that a Convert Website will win you 10% more sales, or your website is completely free until this is achieved. Other providers can’t match this offer.

    Additionally, if there aren’t any services like yours, you can raise your prices since you’ll have less direct competition.
  • Adjust your target market
    Are there other people who might want or need your services who you’re not currently targeting? It  may be time to diversify your client base.

    For example, consider commercial clients if you typically stick to residential or vice versa. Or perhaps there’s a market with less or different competition where you can better stand out from the crowd?

    This could allow you to avoid having to drop your prices to compete, or even allow you to raise them.
  • Avoid starting a price war
    Remember, if you lower your prices, your competitors could too. Then everyone loses as the lower prices become the new normal.
  • Reduce costs without reducing efficiency
    Take a good look at your company’s cost structure. Make sure, however, that when you’re trimming the fat you’re not cutting things that make your business more efficient.

    For example, if you do a lot of paperwork, consider spending time to implement an online solution, such as Quickbooks Online for bookkeeping, a CRM like Jobber or Housecall Pro for keeping track of customers, or NiceJob for getting customer reviews and managing your website.

    The time you’ll save from implementing these solutions is either time you can be spending on marketing and sales or time you no longer have to pay employees for. Either way, you’ll be improving your profit margin.

3. Help your customers see the value your business offers

  • Consider free trials or samples, then charge normal price
    There’s a reason lots of software companies, like NiceJob, offer a free trial.

    People often don’t know they need something until they understand how it benefits their life or understand how it works.

    This isn’t limited to software companies though, most companies can do this in some form or another.

    For example, if you’re a window cleaning company and have a reluctant customer, consider offering a few windows for free. Then, when they see how amazing professionally cleaned windows are, offer them your service at regular price.
  • Make your pricing more transparent & clear
    Be upfront with your prices on your website or if you need to offer a quote, use services like Responsibid to keep transparency high.

It can be tough to face adverse times when all you really want to do is grow your business. And sometimes the reason why customers aren’t biting is within your control, and other times it simply isn’t. Adjusting or adapting your pricing strategy is one way you can weather the storm and work to bring your business back into the black.

Like this article? Here’s a few more that you might be interested in:

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