Jun 1, 2023

Pricing Psychology: Understanding How Customers Perceive Value

There are likely to be questions asked, doubts perceived and certain discomfort felt when starting a business.

There was one that nagged at me more than any other.

Although it is not so long ago I have come a long way since the launch of my business in February 2020.

I clearly remember some of the questions I had of myself before I ventured into self-employment.

Should I publish my rates?

How will people find me?

Who is my ideal client?

What will I do if I don’t secure work?

Whilst those questions were real and important to be clear on, I can look back now with the knowledge that I have an understanding how certain things are often overthought.

In answer to the above questions, whilst people may have differing opinions, in brief, what I choose to do is always based on what brings the best value to people.

Publication of rates

I decided to be transparent and publish my rates on my website and social media accounts.

Personally, I have never liked not knowing a price before exploring something further, and I feel it might be a waste of time for both parties if this is missing.

Marketing

For me, a website was important to have from the beginning. It was going to be my shop window for people to come and have a look at a handful of things that I can offer them without feeling obliged to go any further if they do not want to.

I had a very clear idea in that the website should look professional and be easy to navigate so visitors could get a sense of the value they receive from me and I am pleased that people have fed back exactly that.

It makes me smile because my website looks quite corporate and none of my current clients are from the corporate world.

It is, in fact, my senior corporate experience that attracts clients to me and regardless of their background, they feel confident they will receive an efficient service they would expect from such experience.

Audience

I feel fortunate to be able to have a variety of clients.

Many Virtual Assistants choose to have a niche and concentrate on one industry or one particular gender or background to which the client holds.

I, however, I have always enjoyed variety and so my USP, if you like, is being able to fight fires and logically solve problems in a swift and no-nonsense way.

I consciously chose not to choose my audience, rather, we choose each other and provided our beliefs and values align, I enjoy working with a number of different people.

Crickets

I do believe every new business owner experiences self-doubt and worry they might not gain traction, attract a client base or be able to retain the work that is secured for any length of time.

What if…? How can…? Will there be…?

The juggling of matters in a new business can be intense.

The lack of certain stability can send the most secure people into a thought provoking process that raises questions that remain unanswered.

A faith in oneself that things can and shall work out one way or another and that not knowing every minute detail of what that looks like exactly is okay.

Provided that value is not compromised, the ‘not knowing’ at times is an opportunity for creative thinking, growth and development.

The Extra Mile

I grew up with the understanding that it was only through hard work, which brought reward, whether or not that was financial or a feeling of personal achievement.

The perceived value achieved after working hard on something and doing our best leads to the ultimate goal at that particular moment.

I have never had a problem with the notion of working hard, in fact, the biggest criticism I have received in my professional career is that I work too hard and put that above all else in my life.

I do continue to have a good work ethic, strong discipline and personal integrity in what I choose to do and that will not falter.

Money for nothing

During the course and after successfully graduating from university with a BA Hons degree in Hospitality, I worked within the hospitality industry for many years.

The hospitality industry, certainly in this country, is known to be low paid with long hours for those who choose to work within it. The perceived value is pretty low in most cases.

This leads to a whole new subject of how and why the hospitality industry in other parts of the world (south-east Asia springs to mind) is respected and seen as a stable career to have in which the people serving it can be proud of their customer service offering and all the skills it takes to provide first class service to customers in whatever setting they find themselves in. A discussion to be saved for another day.

There was one thing, above everything else, that I did not particularly enjoy doing when I first became a business owner.

My rates were set, transparent for all to see; the first stage of marketing completed and is ongoing; my ideal client is clearer to me now than at the launch of my business and I continue to enjoy working with like-minded, value driven people with similar beliefs and morals to me; and contingency plans were set so that if no traction over a set time was evident, I would be able to utilise the hard work that went in up to that point to earn money in a different way.

My hospitality background might have had something to do with the strongest discomfort I had when I started out as a self-employed Virtual Assistant.

That was taking money for work I had not yet completed.

The Retainer Package

It felt completely alien to me to invoice a client and to be paid before I did any work for them.

For my whole life, up until this point, I had become very much accustomed to proving myself to others and demonstrating the hard work I put in before being paid.

I liked the feeling of earning this way. It was what I was used to.

When I started working as a self-employed Virtual Assistant and offering a variety of packages a Client could choose from, I made sure they would feel confident in their choice and get the best value for their specific requirements.

Admittedly, at first, I felt uneasy, even uncomfortable, because I had been paid by a Client in advance and throughout the following weeks I constantly felt I owed them something and was in debt to them.

It was self-doubt I had that was never proven to be correct but the notion of being paid and not having done the work stuck in my mind.

I still often promote the ‘pay as you go’ option to people first so they receive the service from me before they pay me for the hours completed on a weekly basis.

This is for two reasons:

It allows a Client and me to get to know one another before we wish to engage on a more regular basis (although I do have quite a few regular longstanding Clients who choose to engage with me this way).

It creates an audit of what tasks are completed and how long they take that can be reviewed and analysed to recommend how many hours a Client may require in future months by way of a retainer package.

It often works out this way if a Client is unsure how long regular tasks might take but they need to be completed regularly.

I expect these types of tasks will become quicker over time as I become more knowledgeable and create a process for them to be completed accurately and efficiently.

By working this way, a Client’s trust in me is built and it is with careful review during a period of time that I can ascertain from the detailed and up to the minute timesheets I record whether or not a retainer with a set number of hours each month might better suit them because it will work out cheaper and bring better value.

At first, it was daunting to predict how many hours a Client might need from me during any given month. After all, most businesses will experience peaks and troughs during certain periods.

However, I am reassured by many that my time management continues to be one of my strengths and so my Clients that have retainers with me have never needed to ask for hours to be carried over.

This has come with both the experience I have gained during the decades of working in a corporate environment but also with what I have learnt as a Business Owner and Virtual Assistant.

I am confident with the ‘go to’ packages and toolkits that assist me in getting things done efficiently and accurately for Clients. I know how best to tackle certain tasks and how to logically work through more complex projects.

My project management and organisational capabilities allow me to manage the workload of many so they never feel their requests are less important than anyone else’s. In fact, I pride myself on the fact that Clients have said they feel like they are the only person I am working with.

I feel more confident now in offering Clients retainer packages.

The value my Clients receive from a retainer with me is always driven by integrity. Their business becomes my pride and anything I do for them has to include providing the best quality and value.

It may still feel odd to me that I receive money from a Client before I undertake their work with logical planning but maybe that is the reason why they put their trust in me.