Ever wondered how to 
price your SEO services? Your products? Have you  set your prices at a point where you can get the best possible returns?
Pricing seems simple, but there's a bit of an art to getting it  right. 
In this article we'll take a look at different ways to price, a few  strategies to use, and why you might want to avoid charging everyone the  same price. 
Why Pricing Strategy Matters
Obviously, if we get our pricing wrong, we'll miss out on business. 
In order to increase profits, we could devise new services and  products. However, by adjusting our existing pricing strategy on goods  or services we already provide, we can squeeze out extra revenue with  little effort. 
To get greater returns from pricing, companies typically find ways to  charge different prices to different customers.  
Cost Plus Pricing
Cost-plus pricing is a common pricing method. Pricing of a good or  service is determined by working out the total production cost, then add  a 
profit margin. There's nothing wrong with this method - 
cost-plus  pricing is widely used - however it does present a few problems. 
One problem is that cost-plus pricing doesn't take into account the  role of competitors. If we offer a SEO service at $15,000, arrived at by  the cost-plus method, but our competitors offer the same service for  $10,000 then our pricing clearly won't work. We must price in accordance  with the market.   
Cost-plus pricing doesn't take into account fluctuating demand. If  demand for your products/services suddenly goes through the roof - say  because you've been interviewed on nationwide television - they become  scarce, and price should rise to reflect this scarcity. 
Another problem is that it doesn't take value, as perceived by the  customer, into account.  
Imagine that you've created a widget that enables a machine to work  at twice the output it did before. The value to the customer is  considerable, as they can now double their output with little extra  investment. The total cost of building the widget may be low. Cost-plus  pricing would typically underprice such a widget. 
Value based pricing  would charge in line with the total value it creates for the customer  i.e. the increased value of their output. 
In terms of SEO, are you charging enough for your services if you  charge a few thousand dollars, whilst your clients make millions?  Thinking of pricing in terms of value provided to your customer is a key  to increasing profits. 
Let's look at a method to accurately calculate a price for your goods  or services. 
Pricing Calculator
In the 
The  Art Of Pricing, you can find the following method for setting  prices. 
Step One: Price & Availability Of Substitutes
Are there any substitutes for your product?
If so, how are they priced? 
Step 2: Characteristics Relative to Competitors
What features do you offer that your competitors do not, and vice  versa?
Do you customers value these features enough to pay extra for them?
Do customers value other characteristics, such as brand, established  service levels, reputation, locality etc?
Step 3: Income
Can your customers afford your prices?
Are they less able to afford your prices than they once were?
Are there times of the year they can afford it, and other times where  their purchasing power is constrained? 
Step 4. Price/Strength Of Demand For Related Products
What are the associated overheads of owning your product? For  example, if you sold cars, there are other costs involved that make up  the 
total cost of ownership, including running costs, insurance and  maintenance. 
Step 5 - Market Environment
Has your product suddenly become high profile?
Has demand increased/decreased considerably in a short period of time? 
This type of approach takes into account a number of variables when  setting price, namely affordability, value, market conditions, and  competition. 
Some Issues With Value Pricing
Pricing, without taking into account overall 
business strategy, is a  mistake. 
For example, say there is a natural disaster where people lose their  homes. A hotel may jack up the rates to ridiculous levels because it  knows demand will surge, however the long-term value of the brand may be  damaged if the hotel gets a reputation for 
price gouging. 
Some companies may want to price at a level that gains them clients,  but not revenue. For example, in order to build a reputation in the  market, new SEO agencies sometimes provide services at a discount, or  free, in order to get a few big name clients on their books. 
Pricing Tricks
Let's take a look at a few common 
pricing methods in practical terms.  
The Law Of Three:  If you go into a shop to buy a washing  machine, you'll likely be faced with a range of models. Nothing odd  about this, of course. The shop is trying to cover all bases.
However, there is often something more subtle going on. Most people  will buy middle of the range. The middle of the range feels "safest".  So, a shop will often have a ludicrously expensive model, and a very  cheap model. The actual model they want to sell you is the priced in the  middle of those two extremes. If the shop didn't offer a ridiculously  expensive model as a basis for comparison, the middle option becomes the  expensive option, and you're more likely to set your sights lower. 
When you offer SEO services, try doing the same. Offer a bells and  whilstles version that is highly priced, a mid option, and a cheap  option. Typically, your customers will select the middle option. If you  only offer two options, people typically choose the cheapest.  
Auctions: Perhaps not applicable to SEO, but if you're selling  products, the auction system can be a great way to achieve better  prices. Entire books have been written about the psychological effects  of auctions, but it all boils down to the fact that people place  different values on products based on their own needs. Those who want  the product the most, pay the most. 
Versioning - Offer slightly different versions of the same  thing. See Apple and their 
iPad pricing. The 
cost of production of each  model is probably near identical across the range, but by offering  different versions, they can figure out who is prepared to pay more. 
Versioning can often be more extreme when setting a wide price range.  Conferences tend to offer coupons off retail price for early attendees,  but so long as the full price has been seen publicly by some folks,  this lends a perception of value that can be used in subsequent  marketing & packaging. Some companies might run an in-person  conference which charges thousands of dollars, and then afterwards, sell  you a download version of it for a few hundred dollars, all the while  anchoring on the "fact" that you just saved $1,000+ with your purchase.  The "crucial" networking & intimacy benefits which were used to  promote the in-person event soon disappear and the concepts of value and  convenience (instant download, no travel required, etc.) are brought to  the fore. 
Segmented Pricing - Perhaps your buyers can't pay the entire  cost up front, but they can buy using other arrangements, like a monthly  fee. Some clients might prefer bundle offers where everything is done  for them, whilst others want to mix and match parts of your service.  Offer different options so your client can fit their budget to your  offering.  
Differential Pricing - Offering coupons can grab those buyers  who are very price sensitive, or looking to buy only if they perceive a  genuine bargain. Your other customers won't bother with coupons, so you  can successfully run two different pricing strategies, one discount and  one full price, by using coupons.   
Markdowns - Obvious, but powerful. You advertise the usual  price, but a line through it, and offer it at a reduced price. What's  not so obvious is 
when markdowns should be used. Markdowns don't  work so well on luxury items, as this can compromise their exclusivity  value. Not much point owning a high-end garment is everyone has one. 
Notice that luxury items either don't display their price, or, if  they do, its typically stated in rounded figures i.e. $1500. Budget  items price in dollars and cents i.e. $39.95 or slightly under the next  increment i.e. $99 as opposed to $100. The format of the price signals  exclusivity, or lack thereof. 
But Is This Fair? 
Offering one price to one group, and another price to others may seem  unfair. This is something you'll need to weigh up for yourself. 
However, keep in mind that if the differing price points reflect  different levels of value, then the customer is deciding what they value  most. If they want the full service, they should expect to pay  full-service prices. If they want the lowest price, they may be prepared  to wait or sacrifice some features. The customer decides what they  value, and votes with their cash. 
And they can always say "no" :)