Pricing Strategies 101: How to set, structure & scale your pricing
TL;DR: Pricing Strategies 101: How to set, structure & scale your pricing
Pricing isn’t just about numbers - it’s nuanced and involves a lot of different elements, positioning, profitability, and sustainability to name but a few. Different pricing models work for different stages of business and client types. Whether it’s cost-based, retainers, subscription, project pricing, hourly rates, productised services, or value-based pricing, each has its place. I’ll break them down, help you understand when to use each, how to calculate your rates, and whether you should display pricing on your website.
Pricing Strategies 101:
Pricing is one of the biggest headaches for service-based businesses. Get it wrong, and you either undercharge and overwork or price yourself out of the market. The right pricing model depends on what you sell, your target audience, and where your business is in its growth. Let’s break down the main approaches, when to use them, how to implement them, and how they impact your bottom line.
1. Cost-Based Pricing
This is the simplest model - take your costs, add a markup, and that’s your price.
✅ Best for: Early-stage businesses or those with predictable, fixed costs & overheads.
❌ Downside: Ignores market demand and the true value of your service.
How to calculate it: Add up all costs (labour, software, overheads), then apply a profit margin (e.g., 20-50%).
How to Implement: Ensure you account for hidden costs (like admin, revisions, and VAT) when setting rates. Regularly review your expenses to adjust pricing as overheads change.
2. Hourly Rates
You charge for your time - simple, right?
✅ Best for: Freelancers, consultants, and businesses with variable scope projects.
❌ Downside: Caps your income because you only have so many hours & does not account for value created.
How to calculate it: Take your desired annual income, add business expenses, and divide by your available billable hours. Example: If you want to earn €80,000 and have €20,000 in expenses, with 1,500 billable hours, your base hourly rate would be (€80,000 + €20,000) ÷ 1,500 = €67/hour.
How to Implement: Use time-tracking tools to ensure profitability and avoid scope creep by continuously referring back to the agreed deliverables. Consider moving away from hourly rates as you gain experience and can more easily predict time to complete.
3. Project-Based Pricing
A fixed price per project, based on estimated time and effort.
✅ Best for: Defined projects with clear deliverables.
❌ Downside: If scope creep isn’t managed, profits take a hit.
How to calculate it: Estimate hours, add contingency (20% buffer), and apply a profit margin. Example: If a project takes 50 hours at €75/hour, your base rate is €3,750. Add a 20% buffer (€750) and a 30% profit margin (€1,275), making your total price €5,775.
How to Implement: Clearly define project scope in contracts. Use milestone-based payments to maintain cash flow and protect against unpaid work e.g. 25% deposit, 75% upon completion.
4. Retainers
Clients pay a fixed monthly fee for ongoing work.
✅ Best for: Agencies, consultants, or any business offering continuous support.
❌ Downside: SLA’s & careful management required to ensure communication & delivery expectations are clearly defined and agreed - to avoid last minute demands.
How to calculate it: Determine expected hours per month, set a fixed fee slightly lower than ad-hoc rates to encourage commitment. Example: If your hourly rate is €75, but a client needs 20 hours per month, a retainer at €70/hour (€1,400/month) may make sense.
How to Implement: Offer tiered retainer packages to suit different client needs. Define deliverables & SLA’s to prevent scope creep and unrealistic expectations.
5. Subscription Pricing
Recurring monthly or yearly payments for a set service package.
✅ Best for: Scalable service offerings, such as marketing support, software maintenance or memberships.
❌ Downside: Requires strong systems to handle multiple clients & high volume efficiently.
How to calculate it: Base it on perceived value rather than time. Example: If your service saves a client €2,000/month in efficiency, charging €500/month provides clear ROI.
How to Implement: Automate payments and ensure customer onboarding is seamless with a good CRM. Offer different subscription tiers to appeal to various budgets & requirements.
6. Productised Services
Standardised, fixed-price services with clear deliverables.
✅ Best for: Businesses wanting scalability & predictability without ongoing customisation.
❌ Downside: Less flexibility for bespoke client needs.
How to calculate it: Instead of pricing based on effort, consider market demand and perceived value. Introduce bundled service tiers:
Basic Tier – A streamlined version covering essentials at a lower price (but covering costs and including a margin).
Standard Tier – Mid-range with additional support or features.
Premium Tier – High-end, all-inclusive service for maximum impact.
How to Implement: Clearly define deliverables and SLA’s, streamline & automate delivery to maintain profitability. Develop strong SOPs to ensure efficiency.
7. Value-Based Pricing
Instead of pricing based on time or cost, this model focuses on the value delivered to the client.
✅ Best for: High-impact services that improve revenue, efficiency, or strategic growth – create a very tangible impact.
❌ Downside: Requires a lot of experience, tangible proof of previous client ROI and strong client relationships to justify pricing.
How to calculate it: If your service helps a client generate or save €50,000, pricing at €10,000 provides strong ROI.
How to Implement: Identify client pain points, quantify the impact of your service, showcase previous case studies & client results and communicate results-based pricing. Position yourself as an investment, not an expense.
How to Find Competitor Pricing in Irish & Global Markets
Understanding what competitors charge helps you position yourself effectively. Here’s where to look:
Recruitment Companies’ Salary Guides: Many recruitment agencies publish salary guides that include contract and day rates, giving insight into market pricing.
Industry Reports & Benchmarking Studies: Organisations like IBEC, Enterprise Ireland, and global firms like PwC and Deloitte provide pricing trends.
Competitor Websites & Marketplaces: Check service providers’ websites or platforms like Fiverr & Upwork.
Networking & Industry Groups: Join LinkedIn groups, business networks, or professional associations where peers discuss pricing structures.
Client Insights: Ask potential or existing clients what they’ve been quoted for similar services.
Should You Display Pricing on Your Website?
One of the biggest pricing debates - should you include pricing on your website or keep it off? Here’s when to do it and when to leave it out.
When to Include Pricing:
You offer productised services with clear deliverables.
You want to pre-qualify leads and avoid time-wasters.
Your competitors list their prices, and transparency is an industry standard.
You have set packages and don’t offer fully custom pricing.
When to Keep Pricing Off:
Your services are tailored, and pricing depends on specific client needs.
You want the opportunity to discuss value before revealing costs.
Competitors don’t list pricing, and you want flexibility in pricing negotiation.
You adjust pricing based on the complexity and scope of each project.
Using “From” Pricing as a Middle Ground
If you’re unsure whether to display pricing, a good compromise is “from” pricing (e.g., “Projects start at €2,500” or “Retainers from €1,500/month”). This sets client expectations while leaving room for discussion.
How to Decide?
If you receive too many unqualified leads asking about budget, listing pricing can save time.
If your service requires a sales conversation to explain value, keeping pricing off might work better.
If pricing varies widely, providing example packages with ranges can offer clarity without locking you into fixed rates.
Other factors to consider:
Addressing Common Pricing Mistakes
Under-pricing due to imposter syndrome or fear of losing clients.
Not accounting for non-billable hours, admin, or business overheads.
Failing to adjust pricing as your experience and demand grow.
Offering too many discounts, which erodes long-term profitability.
Psychological Pricing Strategies
Charm Pricing: Using €997 instead of €1,000 can make a price feel lower.
Anchoring: Presenting a high-ticket package first makes lower-tier options seem more affordable.
Tiered Pricing: Providing different service levels (basic, standard, premium) helps clients self-select.
Handling Price Objections
Client: “It’s too expensive.” → Show ROI and how your service saves/makes them money.
Client: “I can get it cheaper elsewhere.” → Highlight expertise and results -not just cost.
Client: “Can you offer a discount?” → Instead of cutting price, adjust scope or offer payment plans.
Final Thoughts
Your pricing model should align with your business goals & market expectations. But pricing isn’t set in stone. As your business evolves, so should your pricing. Regularly reviewing and adjusting your rates ensures they stay competitive & reflect your value. If you’re unsure how to price your services or transition to a better model, we can help you design a pricing strategy that makes sense for your business. Contact us today to get started.