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Editor’s note: This post is part of our collection on managing multiple WordPress sites.
Clients have to understand and be willing to pay your rates for you to continuously get work.
That may sound obvious, but it can be more difficult to implement than it seems. You have to research and connect with your customers and evaluate their feedback while considering your own costs and competitors.
Pricing according to customers, though, is worth the investment. When you understand how much clients value your WordPress services, you have an accurate, reliable idea of where your pricing should be set.
So how do you price your WordPress management service in a way that attracts customers?
A fair price is a value-based price
Ultimately, you want pricing that maximizes your business’ revenue over time—but there are multiple pricing models to consider for achieving this goal.
The three most common types of pricing are:
- Cost-plus: Your price is based on the costs of your product or service with an added markup percentage.
- Competitor-based: Your price is based on the rates of the same or similar products or services in the market.
- Value-based: Your price is based on what your customers believe the product or service is worth.
With pricing based on cost and competitors, your rates are tied solely to deliverables and don’t reflect the quality of your work. Ultimately, that limits your compensation since customers are willing to pay a higher premium when you include the actual value of your services in your price.
Say, for example, you follow a cost-plus pricing model for your WordPress management service. Your overhead is probably low, especially if you’re the only employee. The cost of building a custom website, given your utilities, rent, and labor, is around $1,000, so you charge $1,500 for the service.
The client is happy to pay this price since they know the custom website is expected to generate at least $40,000 in revenue over the next year. Given this ROI, they might have been willing to pay $10K or even $15K for your service, so you don’t earn as much as you could have.
Or, let’s say you price your service of building a custom WordPress theme at $1,500 because you see that a few other web designers are offering a similar rate. These competitors aren’t pricing experts, though, and in this case, they charged too little: A custom WordPress theme is highly valuable to clients, so they would have been willing to pay up to $5,000. You could have earned more but instead have lower revenue by basing your price solely on competitor rates.
Value-based pricing ensures that you don’t leave money on the table. Your clients don’t care about your overhead, your effort, or any other factors that go into your WordPress service. They care about the value it brings them. The more you align your business with this value, the more you attract clients and maximize your revenue.
4 steps for pricing your WordPress management service
Implementing a value-based pricing strategy requires a mix of customer research and data analysis. You start with feedback from clients and then interpret that input to create a viable pricing strategy for your WordPress management service.
The pricing strategy platform Price Intelligently lays out four clear steps to setting value-based rates that we’ll cover below. Though PI focuses mainly on the SaaS industry, we’ve adjusted their steps so that they’re applicable to your WordPress management service.
Step 1: Identify your buyer personas
Value-based pricing isn’t concerned with just any customer—it’s based on your target customer.
If you know how much your typical client values your WordPress services, you can create a pricing strategy that works widely across your customer base. The first step is figuring out who your target customers are through buyer persona research.
A buyer persona is a profile of your ideal customer. It details their demographics, interests, job title, and more.
Here are a few ways to figure out and build these personas:
- Interview your customers. Have a conversation with your clients to understand the personal and professional qualities of your typical customers.
- Use Google Analytics. The tool allows you to analyze the digital habits and activities of your WordPress site visitors.
- Send your customers a survey. Use a tool like SurveyMonkey to send clients an online survey about their goals, motivations, interests, and more.
After collecting this information, you’ll see common qualities between your customers. Analyze these patterns to create and form your ideal buyer personas. The customers that fit these descriptions are the ones who will help you set value-based prices.
Step 2: Reach out to customers
You’ve pinpointed the clients who are most likely to use your WordPress services. The next step in value-based pricing is learning what these top customers think your work is worth.
The only way to get this info is to contact clients. Even with the deepest understanding of your customers, you can’t read their minds. You have to ask your clients about their price sensitivity directly to actually know how they value your services.
More specifically, here is what you want to ask, based on the Van Westendorp pricing sensitivity meter.
- The too expensive point: At what price would you consider the product to be so expensive that you would not consider buying it?
- The too cheap point: At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good?
- The expensive/high side: At what price would you consider the product is starting to get expensive so that it is not out of the question, but you would have to give some thought to buying it?
- The cheap/good value: At what price would you consider the product to be a bargain—a great buy for the money?
To ask these questions, sending surveys through a tool like SurveyMonkey is a quick and easy way to get responses. Keep in mind, though, that the customer is doing you a favor by responding. In return, consider offering a reward for answering.
Alternatively, you can interview customers via an in-person meeting or a video or phone call. This interaction gives you the opportunity to understand their needs better and how their goals might impact their pricing.
Between surveys and interviews, you can gain a clear sense of how much customers value your WordPress services.
Step 3: Analyze the data
After surveying your customers, you don’t offer every preferred price point that they report—that would, of course, be too many rates for your service to handle.
Instead, analyze your customer responses to find where their preferences overlap. Once you find price ranges that work for most customers, you can set rates for your WordPress management tasks that appeal to all of your clients.
Step 4: Ensure your pricing is viable
Knowing your clients’ price preferences is invaluable. With this knowledge, you can retain and expand your customer base with the exact rates that they want.
At the same time, your customers aren’t all-knowing—they don’t have insights into other business factors, such as your costs, that impact your ability to make a profit. For this reason, it makes sense to compare your range of value-based prices against a few other areas that impact your revenue.
- How do your value-based prices compare to your costs per task? If the profit margin is lower than it needs to be, consider whether you can lower costs. Try to stick as close to the value-based range as you can, but if necessary, increase your pricing to ensure you’re making a profit.
- How do your value-based prices compare to competitor rates? Ask yourself what might differentiate your services from other WordPress developers and designers. Consider lowering or increasing your prices to be closer to competitors if your services seem identical. Lowering is especially important to consider as overly high rates could deter clients.
Evaluating your value-based prices against other business factors gives you peace of mind. You have the insights you need to create a pricing strategy that both serves your customers’ preferences and keeps your business thriving.
How to present your WordPress service pricing
After completing these steps, you understand how much you should be paid for each WordPress management task. The remaining step is your presentation of that pricing. Clients are easily influenced by the way that your price is shown, rather than just the amount. Consider these pricing presentation factors to sway customers towards your services.
Hourly vs. project pricing
Both hourly and project rates can work with value-based pricing.
- Hourly pricing: Setting a price for every hour you work based on the WordPress management task you’re doing
- Project pricing: Setting a flat rate for each WordPress management task
Here are a few pros and cons to consider for each model.
|Hourly||It’s a transparent way to show your work to clients, and it’s easy to account for extra client work.||With value-based pricing, you’ll need to increase your hourly rates as you start to work faster. Some clients, though, may be intimidated by especially high hourly rates.|
|Project||Increasing rates as you get more efficient is less of a problem since project prices are expected to be large figures.||To clients, the baseline for your rate isn’t as clear as with hourly. You may have to make more of a case for the amount of your price.|
Since each pricing model has pros and cons, it often makes sense to use a combination of hourly and project pricing. For example, you might choose project pricing for longer tasks, like designing WordPress themes, and hourly pricing for shorter tasks, such as site maintenance work.
Use charm pricing
Charm pricing is a tactic where you end your service rates in “9” or “99” to make them seem lower and more attractive.
The strategy is based on research about the “left-digit effect” in price cognition. A 2005 study showed that buyers perceive a price to be smaller if the left-most digit decreases ($3.00 to $2.99), but not if the left-most digit stays the same ($3.60 to $3.59).
Apply charm pricing to your WordPress management service rates, and you will likely attract more clients.
Offer ongoing services
Creating pricing packages for ongoing services can benefit both you and your clients.
For your business, the recurring revenue of ongoing services brings stability to your budget. You have reliable income instead of wondering who your next client will be. For your clients, having regular WordPress management with your ongoing services keeps their sites updated and secure.
Maintenance tasks are great to offer as ongoing services, while large investments for clients, such as custom WordPress themes, should be offered as one-time services.
Price towards the value you provide
If potential clients aren’t willing to pay your rates, you can’t grow your customer base and expand your business.
Value-based pricing ties your rates to what your clients want—a strategy that not only benefits them but also helps your business attract and retain customers better. In growing your client base, value-based pricing maximizes your revenue over time.
Image by: Sharon McCutcheon on Unsplash