Optimal Pricing in Your Proposals
When a proposal lands in your hands, the price will be the first thing to catch your attention. Your clients feel the same way. During pricing, two common problems can arise: pricing too low or conversely, pricing too high.
Pricing too low often aims to win the client, but you achieve the opposite: you might not be profitable, you attract low-quality clients, and it's difficult to build lasting relationships with them. On the other hand, if the price is too high, the entire project could be at risk.
How can you set the ideal price in your proposals?
Before you start pricing
Clarify your own expectations! Do you want to form partnerships? Are you only thinking short-term? Do you calculate based on performance/project or rather hourly, daily, monthly rates?
If you charge on a project basis, break down the project into sub-tasks and price them separately. For example, if you're a marketer and they ask for a quote for social media management, indicate in the proposal how much it costs to create creatives, write copy, set up ads, measure results, etc.
If you base your pricing on time invested, break down the entire project into daily or hourly tasks, and also indicate the human resources and time needed for completion in your calculation.
It's worth involving the project team in pricing, as they may have suggestions that don't necessarily occur to you.
Get to know each other
If your proposal is the first one the client encounters, there's a good chance they'll be put off by the prices and ultimately accept someone else's proposal.
Therefore, take time to gather information about the client, their expectations, and their budget before preparing the proposal. Then familiarize them with your work and what they'll get in return for the price. The more information they have about you and your values, the less they'll focus on the numbers.
Choice options
Clients appreciate having the option to choose between prices. Therefore, it's worth offering multiple alternatives in your proposal. For example, you can offer different packages, detailing what each package includes. It's common practice to present three packages, in which case clients usually choose the middle one. However, be careful not to offer too many choices, as this can easily overwhelm the client and be confusing for them!
Agile methodology
You can also apply agile methodology to pricing, as this can help better manage project costs. The essence of the agile approach is breaking the project into smaller parts, so-called sprints. You plan each sprint separately and create a budget for it. This way you can avoid the project exceeding the budget, since the client pays after each completed sprint, and only then does the new phase begin.
+5 rules
Now we'll show you 5 important pricing rules that can help you during proposal preparation (from István Weiser's book "The 48 Laws of Pricing").
1. Low price and impotence
Discounts or lower prices physically reduce the effectiveness and potential of your product or service.
2. The law of anchor pricing
In buyers' minds, most products have an associated anchor price, against which their minds continuously compare and evaluate.
3. The law of narrowing
The narrower the group whose problem your product or service solves, the greater profit you can realize from the sale.
4. The law of displaying prices
Display the original price first, then follow with the promotional offer.
5. The law of story power
Every significant discount should have a story, otherwise your credibility suffers, and they won't buy your product/service.
Pricing can therefore present a real challenge, as you need to win the client's trust while keeping your profit in mind. This is undoubtedly one of the most difficult parts of proposal preparation. But the more consciously you build your proposal – considering the client's perspective, the value of your work, and the rules of price communication – the better your chances of creating agreements that are beneficial and sustainable for both parties.