How Do You Handle Pricing?

I was talking to the contractor redoing two of our bathrooms yesterday, and he was sharing some stories about clients who weren’t paying him for the work he did. In some cases, they didn’t want to pay the extra costs incurred because of changes they themselves made. In other cases, they simply didn’t pay what they agreed to pay in the first place.

The odd part about this is that his bid for these jobs usually was the highest. But for a reason you probably wouldn’t expect. He priced himself high so that he didn’t have to keep going back to his customers with add-ons. It also allowed him to throw extra things without charging for them.

So I started thinking back to when I purchased my most recent laptop. It started with a basic price. By the time I went through the process of deciding what to include, the actual cost was about 2.5 times the original cost. I remember having mixed emotions about that. On the one hand, I was happy to be able to customize the machine to be pretty much what I wanted. On the other hand, I was disappointed that my ultimate cost was so much higher than what was originally advertised.

How do you handle pricing? Do you start with a base price then add as people customize? Or do you offer a higher price that allows for people to customize, to a point, within that price point?

I’m not convinced that there is a single answer. It’s going to depend on what your customers want and expect. In other words, if they are most likely to customize much of the product, it might make more sense to offer a single price that takes that into account. If, instead, they are more likely to take the product as is, then it makes perfect sense to charge for add-ons and changes.

Think about your pricing and your products. Do you have opportunities to modify your pricing to better reflect how customers purchase from you? What can you do to your products to get you to the pricing that is going to work best for you and your customers?

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