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Most people put a lot of thought into pricing their services. They worry about whether they’re charging enough to cover costs, earn a good living, and hit their income goals. Then they panic about charging too much and alienating people. But there is one vital element to pricing that is often overlooked, simply because we don’t realise just how powerful it is.


In business, perception is everything. How your clients and potential clients perceive you and your brand can often carry more weight than the reality of your company. Perception and reality are seldom perfectly aligned, and when they are it doesn’t happen by accident.

When it comes to pricing your services you not only need to consider elements like:

  • covering costs,
  • reaching your goals, and
  • turning a tidy profit.

You also need to think about how your prices affect the manner in which people perceive your business, your services, and you.

How do your clients currently perceive your business?

How much of that is a result of your prices?

Are you happy with their perceptions of your brand?

Do you need to tweak your prices in order to tweak the impressions your clients and prospects have of your business?

Pricing depends on Perception

How Pricing Affects Client Perceptions Of Your Brand

There is a strong mental component involved in shopping, purchasing services, and outsourcing things to a paid professional. People are excellent at doing ‘mental accounting’ while they shop, browse, purchase, and make decisions regarding the service providers and professionals they will choose to fulfil their needs.

This may be conscious, like walking around the supermarket and mentally calculating how much everything is going to cost, to ensure you stay in budget. But it’s often unconscious, like clicking away from a website because you can’t easily find prices.

You think you’re doing it because it’s proving too much hassle, but it’s far more likely you have made a subconscious assumption about the price, which has put you off before you’ve even learned what it is.

In order to maximise your profits, you need to learn how to capitalise on client perceptions of pricing.

Related Post: Fixed Pricing – Should I Use It And How Do I Begin?

The Reasonable Price Scale

We mentally evaluate prices according to our own personal, internal scales, and judge a brand or business on multiple things based on nothing but price:

  • Affordability
  • Reliability
  • Quality
  • Expertise
  • Exclusivity
  • Luxury Level

Price your services too low, and people will make negative assumptions, such as:

“What’s wrong with it/you?”

“They can’t have much experience.”

“The quality must be poor.”

“There won’t be much support.”

“They must be really desperate if that’s all they’re charging…”

Price them too high, and they will make more negative assumptions, like:

“Wow. It takes a special level of egotism to think you’re worth that much!”

“I’ll never get a good return on that investment, even if the service is amazing!”

“They’re out of their mind!”

The trick is to find the perfect balance between the two, and find a price that gives people all the positive assumptions you want them to make, while ensuring they don’t make any of these negative assumptions.

As a result, your prospects use an internal ‘reasonable pricing scale’ to figure out whether or not they will buy from you. This may seem like a bad thing, as if you have to convince people you’re worth the price you’re asking, but it goes both ways.

Are you charging a reasonable amount for the work involved?

This is an important question because if your prospect feels you’re undercharging they assume your skill level or quality level is lower than they would want it to be.

Is this a reasonable amount to pay for the benefits provided?

This is the question we assume is foremost in people’s minds when they’re judging pricing. Will they see a good ROI?

Is the problem this service solves bad enough that paying your price to solve it is reasonable?

Pricing for your true worth

Finding Your Balance

It isn’t easy to balance the reasonable pricing scale, and it’s different for everyone and every business. It’s also not static – the right price for you right now may not be the right price for you a year from now. This is partly because of people’s perceptions of price change according to current economic and social factors, but it’s largely due to the fact that your business is going to grow, and as it does the perceptions you want to create will change.

There is no one-size-fits-all answer to ‘How should I price my services?’

There are, however, some effective ways of determining the best price for your services in order to give clients and prospects the perception of your business that you want them to have, such as:

“They’re clearly an expert in their field.”

“They’re selective about their clientele, and that makes me feel special!”

“This must be an effective service if they can sustain these prices.”

“This is a luxury brand, and I want the best!”

Your Clients Likely Have Inaccurate Price Awareness

Before we dive into exactly how prices affect perception it’s important to get clear on a few things. The first is this:

Your clients’ awareness of what constitutes reasonable and fair pricing for your services is likely inaccurate.

Studies of supermarket shoppers have found that more half of the people who regularly buy common grocery and household products are incapable of accurately estimating their price within 10%.

And these are everyday items that people buy on a weekly basis.

Their ability to accurately estimate the price of services they think about infrequently, or have never paid for before is likely to be considerably less.

Related Post: Value Pricing – Where Do I Start?

Fair and reasonable pricing for your business

The Question Of ‘Perceived Value’

Every product or service has a perceived value – the amount prospective clients believe an item to be worth.

If your prospects are not familiar with inner workings of your industry it’s very likely that they will not have an accurate understanding of how much it genuinely costs to produce an item, or deliver a service.

Rather than basing their perceptions on factual understandings of the time, effort, skills and materials involved in creating and delivering something, they use a kind of internal barometer to decide if your stuff is overpriced.

Your marketing strategy needs to reflect the perception you would like prospects to have about your services. If you want them to happily pay high prices, you need to create the perception of a high-value service and brand.

Perceived value isn’t a problem as long as you are aware of it, and effectively leverage your marketing collateral to educate your tribe on:

  • the true value of your services,
  • the return they can expect to receive on their investment, and
  • the extent to which your offering provides a perfect solution to their pain.

Multiple Factors Affect Price Perception

Beyond the poor awareness your clients and prospects may have of pricing in your industry or niche, there are a wide range of other factors that will affect the manner in which they perceive your prices.

Exactly what constitutes a ‘reasonable’ prices is greatly affected by factors like:

  1. Scarcity
  2. Convenience
  3. Size

For example, supermarkets work on the principle that people are happy to pay more for something if it means obtaining it quickly and easily. This is why you can go in two versions of exactly the same store, buy precisely the same product, but pay more for the item bought in the city store compared to in the suburbs.  

Likewise, local petrol stations frequently charge more at peak traffic times because people like to be able to fill up their car on their way to or from home, without going out of their way.

Beyond the perceptions people have relating to the manner in which they see your service itself, there are other factors that can change the way people perceive your prices. And as a business owner, many of these things are outside your control. For example:

  • Client experiences with a similar service in the past
  • Client knowledge of what other people are charging and paying for services like yours
  • Client perceptions of the quality of your service and brand
  • Client knowledge of your niche, industry, and what is realis