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Why you should offer tiered pricing as a freelancer

by Rachel Smith
28 June 2019

Whether you’re buying undies online, ordering dinner in a restaurant or deciding whether you need Foxtel AND Netflix, it’s a fact that humans generally love a choice. Preferably a few choices.

And your clients are exactly the same.

They like to have options and when they’re looking to hire a freelancer many of them will want to shop around. (Even if that drives us nuts.) And how can you ensure that what you’re offering is a little bit more attractive than what your competitor might be serving up?

Good question. We’ve shared tools about how to calculate your rate, and creating a rate card to send to clients (you can grab our free rate card download here and our pay rates report here to get you started). But something even more useful, perhaps, is to consider psychological pricing.

There’s a lot written about it and the different ways you can price your services to make them more attractive to clients. One tactic I’ve used for ages is called ‘price anchoring’, which is when you provide options / packages for clients of varying prices and degrees of value. If you’re putting these packages on a pricing page on your website (which is a whole other post), you might even label one of your packages the ‘most popular’ choice, which is said to ease the anxiety of decision making and provide a handy reference point for clients trying to work out what fits with their budget.

How psychological pricing works with clients

I have quite a few clients who are time-poor and not very online savvy. And say a client rings me up and says, ‘I need two blog posts on XYZ and I’m too busy to do them myself. Can you do those for me?’

And, thinking about how easily I could knock that job over and get paid, I might be tempted to say, ‘Of course! Two posts on XYZ will be $900 and I’ll have them to you on Monday’. Then I would pat myself on the back for landing such an easy job. Ka-CHING!

But I don’t do that. Firstly because I know that two posts on a client’s blog who never posts again because they’re too busy is going to do sweet FA for their engagement and getting them any Google love. And while the temptation is there to take the money and run, I’d see this as the perfect opportunity to make more money on what was initially an $900 project. Potentially a LOT more money.

So I’d tell the client that they’d need to promote those posts, and do some social, and send regular newsletters to their subscribers, and of course write more posts more regularly. All of which is completely true. No porky pies here. And I want to be useful to that client and help them and their business if I can, so it’s worth my while educating them a little bit.

The next words out of that client’s mouth are usually something along the lines of, “Okay… and are you able to do all that too?”

And I say, ‘Of course!’ I then talk to the client a bit about their pain points. What their business goals are. Maybe they want more traffic. Or maybe they’re not sure how to get people to subscribe and need a slick lead magnet. They might want to increase sales. Or perhaps they just literally have zero time for any marketing or content but their business is crying out for a bit of brand awareness. Once you know what your client’s pain points are, you can think up ways to help them – and the knock-on effects are, of course, more $$$ coming in for you.

Tiered pricing and packages

Once you know what your client needs, you can offer to send over your rate card which has tiered pricing for different packages or ‘bundles’. Or even custom packages you’ve designed just for them.

The first option gives them what they’ve asked for, while the slightly more expensive bundles offers up things they didn’t realise they needed, but now do (and subsequently want). The third, most premium option, is expensive but offers the most value to the client and their business (and specifically addresses those pain points).

So you’re upselling them, yes – but you’re also adding value they need, with each package they have to choose from.

So for example, if you’re bundling content services, your packages might look like this:

  • Basic bundle – 1 x blog post, 3 x social teasers = $600
  • Deluxe bundle – 1 x blog post, 3 x social teasers, web-optimised images for blog + social = $750
  • Premium bundle – 1 x blog post, 3 x social teasers, all web-optimised images required + EDM copy = $990

When you position prices next to each other like this, it can makes something look more or less attractive compared to what’s next to it. And you can create a heap of bundles specific to what you do and what your clients typically want. If you get a lot of the same clients – like small or medium businesses who need content – chances are your bundles will appeal to them, too. You could also offer pricing for separate items but make it clear that if they purchase a bundle they get a small discount.

Why tiered pricing works

Going back to the idea that people like choices, you’d hope the client would be tempted to stick around and consider your tiered pricing more than just hiring Joe Blow who sent over a quote but didn’t bother to explain that two blog posts were not going to do much for that client’s business. You’re offering more information, more value and most importantly, a range of choices that show the client you’re sensitive to their budget.

The great thing that can happen from tiered pricing is that once the client has opted for one of your packages and gets used to you writing that monthly blog post and providing teasers and images and handling the EDM, they don’t want to stop doing it. So it can often turn into a retainer (and aren’t regular, stable gigs what we all want?).

Do you do tiered pricing or any other psychological pricing with your clients? We’d love to hear from you in the comments.

Rachel Smith
Find us!

Rachel Smith

As a kid, Rachel used to carry around a little suitcase of pens and paper so she could stop and write stories whenever inspiration struck. These days, she writes for a living, in between running the show at Rachel's List. Some of you may actually believe she looks like a megaphone in real life, but it's not the case. Honest.
Rachel Smith
Find us!

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