What is the right price for this service?

[Dien Rice]

Originally Posted by frankpansin

Hello everybody,

Thank you in advance for your opinion.

I've developed a little marketing tool that is proven
to deliver for my existing clients, roughly between $5,000 and $10,000
a month in revenues.

My direct costs are under $700. Right now I'm charging only 30% as
an "agency fee" So the bill for my clients is $1,000, $700 for marketing and $300 for me.

Now I want to add more accounts and I'd need to hire
a sales rep. But I have no margin...

Would you ask $ as one time sign up fee? How much?
Would you ask $500 or more as a consulting fee?
What do you perceive to be the value of $5K to 10K a month,

I offer no guarantees, the outcome is stable but not guaranteed.

What do you think?

Thanks

Frank

Hi Frank,

I don't know what profit margin your customers are making on the revenue, but I think that's important. (Profit margins on different products and services can be as low as 1%, to almost 100% - so there's a big range!)

The reason why I think it's good to know that is then you have an idea of how much the customer would be willing to pay. Of course, they'll stop paying if they don't make a profit - so if their profit margin is very low, there may not be much room to move on your prices and still have customers. But if their profit margin is very high, you can probably charge more, and most customers will still stay...

Personally, I would probably charge a higher rate rather than a one-time sign-up fee, since the sign-up fee might stop people from "trying" out your marketing tool in the first place - but it also depends what your competitors (if any) are doing... You really have to assess these things in the light of your competitive environment.

Sorry if that sounds "wishy-washy" but I think it's hard to give a good answer without knowing more about it...

Best wishes,

Dien