If you are the owner of a small service business then you’ll probably recognise that some customers demands are quite different to others. We all have those customers that very much appreciate prompt service and are only too happy to pay your invoice at the end of the month. Then we all have customers that demand immediate attention, imply that the service you are giving them is a ‘favour’ and not a ‘service’ and so to invoice them would be a rather unfriendly thing to do.
When I started my first proper business, I was in my early twenties. Wet behind the ears and keen to please any customer that walked through our door. I seem to recall we started out with an hourly rate of £15 per hour and felt rather guilty at upping that price to £17.50 a few months later. Fifteen years on of course I’ve had plenty of time to reflect that I am running a business, not a charity, and while I still want to please every customer, every time, we’ll only do so for those customers prepared to pay a fair price.
For domestic customers (we only take a handful of these on) we’ll charge £25 per hour because usually their demands are limited, fixes are straightforward, the response times aren’t usually urgent and the lower hourly rate allows us to support people that need help but don’t necessarily need a high level of business-class expertise.
For business customers we charge between £35 per hour and £55 per hour and this varies based upon the size of the customer and the nature of their computer system. Some microbusinesses will be charged at the lower end of this scale because they appreciate our help, have limited demands, but still need to tap into our experience and expertise. Larger businesses or those businesses with multiple sites and a complex infrastructure or mission critical requirements might need a faster response are charged towards the upper end of this scale.
I am now very comfortable with this flexible pricing strategy and our customers are happy with it too. Customers can fit into three broad categories in terms of their demands and this is reflected in that pricing strategy. But what bothers me (and here is the point of the article) is when someone asks you to do some work and suggests that the work is ‘easy’ and can therefore be done ‘quickly’ and ‘cheaply’. It would be true to say that some work is more challenging than other work – but those less challenging jobs are only ‘easy’ because we have a great deal of experience and expertise at our fingertips and can do it ‘more easily’ that a different solution provider. And to do that work ‘quickly’ implies we’re sitting around with not much else to do.
For the benefit of those kinds of customers and for the benefit of those other small business owners who are struggling to set up a pricing mechanism, I offer this business pricing matrix for the small business:
A bit tongue in cheek that one… rant over!