What sort of pricing strategies can we use?

You need to decide what your objective is in relation to the activity or service as this will inform the pricing strategy you adopt. Some alternatives:

  • You are entering a new area of activity and are prepared to suffer some losses initially while you build up your portfolio. Hence you may have to offer low prices to undercut existing competition and win the work
  • You have highly specialised skills and your customers are prepared to pay a premium for help with a very difficult problem
  • You want to make the service accessible to all and so deliberately want to keep prices low
  • You want to recover all the direct costs and a fair contribution towards the overhead and governance costs of the organisation. This is known as full cost recovery

It may be useful to explicitly state to customers that you are offering them reduced or subsidised prices. Their perception of the quality of the service will be different if they realise that it is a high value service that they are receiving at a subsidised price. In the realm of charity services, you will probably want to avoid being perceived as either ‘cheap’ or ‘expensive’ and prefer to be seen as charging fair prices that represent good value.

Want to discuss further?

Jonathan Orchard

Partner

Arlene Clapham

Risk & Assurance Manager

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