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6 min read

Creating a pricing strategy for your new business

By Norm Mclaughlin · December 10, 2020
Hero image of someone paying with their phone, contactless

I started my business, Norm's Computer Services, because I loved doing what I do. I also knew other people would benefit from my services—computer repairs—but I had no idea how much they'd be willing to pay for it. 

In order for your business to be sustainable, you'll need a pricing strategy that generates adequate income for you while also being attractive to clients and customers. I spent a lot of time making sure my pricing strategy worked, and it's sustained me for nearly five years. Here's how I'd recommend creating your pricing strategy so you can hit the ground running.

Norm's pricing page
The pricing page on my website

Market and competitor analysis

Who are your competitors?

A straightforward starting point is to look at what your competitors charge. 

Hopefully you did a thorough market and competitor analysis before you launched your business. This is necessary in order to establish how you might position yourself in the market and understand whether you would be likely to gain adequate market share. I clearly remember something my then-CEO asked me when I was in the early stages of planning the launch of my own business. He said, "What's your point of difference?" In other words, in a crowded marketplace, how are you going to stand out?

Depending on your industry, it may be very obvious who your competitors are. Or it may not be so obvious, particularly if you're in a service industry. There are always likely to be a few large, stand-out players and then a whole host of smaller operators. A great way to determine who your competitors are is to search using keywords relevant to your industry. In other words, what would a potential client type into Google if they were looking for a business like yours?

In my own industry, I quickly found that most potential clients would search some variant of the term "computer repairs." They might add a suburb name to this, or a few more words to clarify what they were looking for. You can use a keyword research tool to determine the most popular keywords for your industry. Then type the search terms you've found into your search engine, and see what you're presented with on the search engine results page (SERP).

Obviously your most significant competitors are likely to be those shown on the first results page. This is where you'll ultimately want to appear as your business develops. You might also want to look at a few pages after the first page in order to get a picture of the whole playing field. By the time you've done this, you should have a clear view of who your competitors are.

Competitor price analysis

It's usually not difficult to find out what your competitors charge—either by visiting their websites or by calling them to ask. In my own industry, I found that the larger corporate/franchise-based operations tended to not publish pricing on their websites, while the smaller operators were more likely to do so.

A pricing page from Marshmallow Streaming, a Zapier customer
A pricing page from Marshmallow Streaming, a Zapier customer

As you begin to gather your competitors' pricing information, it's good to create a spreadsheet where you can record these details, together with any helpful notes. For example, some may charge per hour or part thereof, whereas others may charge in half-hour or quarter-hour segments. Make a note of all these sorts of details.

Once you've gathered enough information about how your competitors charge, you'll have a good idea of the minimum, maximum, and average prices being charged. I've found that there will usually be one or two competitors whose prices are significantly lower or higher than all the rest. I've usually viewed these with suspicion, as there's a certain level below which it's not realistically possible to make a living—and a certain level above which no one will buy from you. For this reason, I would tend to consider these as anomalies and focus my attention on the rest.

Your pricing compared to your competitors

As a new business, you're likely going to need to pitch your prices toward the lower end of the spectrum, at least until you're more established. Or you can decide to undercut your competitors completely and offer a lower price than any of them. If you go down this route, you'll need to consider whether you'll make an adequate income by doing this, and for how long it's sustainable. One advantage of doing this initially, though, is that you're likely to gain clients. And, if you can win their loyalty, they might not mind if you raise your prices a bit at a later stage.

When I formulated my own pricing model, I decided that I would want to be considered competitive but not cheap. That meant that my pricing was on par with my peers but that I avoided the use of any terminology such as "budget," "cheap," or "cheapest" in my marketing.

Pricing options to consider

Should you have an introductory offer?

Introductory offers can be a great way to entice new clients or customers. For example, you could offer a fixed price or percentage off the first job, or a portion of free labor. At least one of my competitors offers a 10% reduction on the labor charge for returning customers. In my view, a better approach to customer retention is to offer them that 10% off the first job—and then do such good work for them that they won't mind being charged the full price for subsequent jobs.

If you do use some sort of introductory offer, you'll need to consider how to promote that offer without cumbersome wording. A simple banner on your home page or landing page is likely to be effective. You'll also want to promote it through your digital marketing channels, such as your social media and pay-per-click (PPC) advertising.

Should you charge a service call fee?

For a business providing services at a customer's premises, one of the things you'll need to consider is whether to charge a service call (or call-out) fee, which is a fee you charge for coming—on top of the actual rate you charge. Again, you can take your cue from our competitors. Or, if most of your competitors charge a service call fee, it could be a good selling point for you not to do so. Of course, you might need to charge a slightly higher hourly rate to compensate for this.

How about offering something for nothing?

One of the things I tried early on was to offer the first fifteen minutes of work free of charge. This meant that if I solved the issue within that first quarter of an hour, the job would have been completely free (since I wasn't charging a call-out fee). 

I don't recall any occasion when this actually happened. 

In fact, clients told me they'd want to pay anyway, as they didn't feel good about paying nothing for a service that involved someone coming to their home. It was quite an attractive offer that didn't particularly impact my bottom line.

Would a fixed-price model work?

Another approach is to provide a fixed-price service, so that no matter how long the job takes, you charge the same price. This has the advantage that you'll potentially make more money on the shorter jobs. But of course, there will also be times when you spend hours on something but won't be able to charge much at all.

If you adopt this model and anticipate that a certain job will be rather time-consuming, you can choose not to take that job on in the first place. You may instead decide to only accept certain types of jobs that you're fairly sure won't be overly time-consuming. In this case, it's likely to be a profitable model.

Of course, when you're just starting off, turning down opportunities is tough, so this might not work if you need every job you can get.

As you start off in business, an important principle to keep in mind is that it's more about building a client base of satisfied customers who will come back to you again and again than it is to make as much money as possible as quickly as possible. Your primary focus should always be on providing outstanding service, rather than on maximizing your return from each customer.

And the good news is that you don't have to get everything right from the very beginning. You can try different approaches and make adjustments as you go until you're achieving the outcomes you want. You're likely to eventually settle into a groove that works for you.

This was a guest post from Norm McLaughlin, founder of Norm's Computer Services. Want to see your work on the Zapier blog? Check out our guidelines and get in touch.

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Norm Mclaughlin picture

Norm Mclaughlin

Norm Mclaughlin is from Northern Ireland originally and moved to Brisbane, Australia in 2019 after living in Sydney for ten years. He launched Norm's Computer Repairs from nothing in Sydney in 2016 and then restyled the company as Norm's Computer Services following the move.


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