04 Dec Pricing and Market Shifts
The market shifted. All of a sudden, my profit margin started becoming narrower and narrower.
The total amount I paid my team, and the price we charge our clients ratio soured. Price analysis is something that most small businesses fail to do correctly.
Here are my tips.
One of the crucial lessons I’ve learned at Coca Cola was pricing.
The first thing I do for my clients when it comes to advising is helping them improve their analysis.
Through extensive trial and error, I’ve come to acknowledge three simple ways to do pricing.
Method 1: Observe the Competition.
Markets in general are quite competitive, but Virtual Assistant market is one that has gone sprawling in a flash.
Offer too much, and you’re at loss. Offer too little, and you’re deprived of quality content.
By carefully watching your competition, you’ll get an idea of what consumers are willing to pay for your product. You’ll also be able to work out how to price your product so that you aren’t too comparatively expensive.
Method 2: Value.
What is the value of the work you want to be done? According to value, VAs dictate the price of their work.
Another variable comes into action here, and that is time. You dictate how fast you want something to be done, and price changes accordingly.
Method 3: Willingness to Pay.
Experimenting with your prices will show that what level of alteration will bring large profits and attract more customers. You’ll also work out the point at which customers just aren’t willing to pay for what you’re offering anymore.
Who doesn’t risk, doesn’t profit, right?
The key to ideal pricing is be a blend of all these ways. When it comes to other, subtler aspects of pricing, I have to mention costing.
People miss out on costing all the time, and that can be a big sinkhole for your budget.
What my Coca-Cola career taught me is that you should always find the core cost of a VA, and apply it to all of your VA team members.
Back in the day, I always knew the cost and knew the market. I’ve made sure that there’s a profit margin in it.
Basically, my train of thought was this: I’ll hire you for ~3000$ per month, even if I’ll spend half the amount, or even less, on someone who charges per hour; the only requirement is that you provide constant value.
Additionally, the costing of training and support was decided up front, removing all potential disagreements between them and me.
Then, the market shifts.
No matter how good VAs are, the actual profit margin went too slim for comfort.
The VA market developed rapidly, and the competition got the hang of VA business. But technology shifted with the market, and automation appeared in its present form.
At this point, it was more profitable to hire a team of developers to design you a platform where virtual assistance was automated, work delegated, and time saved even more.
VAs were rendered obsolete to me. With a developer team, delegation is never more efficient and the system was never more organized and systemized.
Automation, via developers team, with increased value over long time, costs approximately $10 000, and yields very little risk.
Outsourcing, where we first started, costs $20 000 annually for a business of the same size, and allows medium risk of malfunction.
Hiring local staff, the traditional mode of dealing in business, costs $50 000-$100 000, much more than you’d likely prefer…
The market shifts, that is evident.
Adapt or perish, it’s that simple.
I knew what I had to do.