Approaches to pricing


In the current uncertain circumstances, a lot of businesses are finding clients reluctant to sign contracts and proceed with projects. And to judge from discussions on local networking conference calls, this has led a lot of businesses to wonder whether they should be considering working pro bono.

The idea is that pro bono work would show solidarity and support for existing clients who are feeling the pinch, or that working for nothing would help them engage with organisations they haven’t previously worked with, in the hope that, when things return to normal, these businesses will go on to become paying clients.

This is perhaps a not unexpected reaction in the creative sector, where spec work is already far too common and quantifying artistic value is always a tricky issue; but the coronavirus crisis is affecting all businesses, and the idea of providing free services is being raised by consultants in other sectors. It’s worth stopping to consider other options.

Although there are circumstances when pro bono work or discounted prices can be a good idea, a number of possible problems arise:

  • It is always hard to raise prices, and converting a non-paying client to a paying client is likely to prove difficult.
  • If you offer to work at cut-rate prices for an existing client now, they are sure to want to know why you can’t give them a similar discount in the future.
  • It’s not only your clients who are feeling the pinch; what will the lasting impact of working pro bono be on the sustainability of your business?

So, before you go down the pro bono route, there are a number of other approaches to consider first.

Discounted payments

Rather than leaping straight to a zero-rate for your pricing, you might consider offering a discount. If you do this, remember to make it clear to the client that this is a temporary offer due to the exceptional current circumstances. And make sure you start by specifying the price you would normally charge, so the value you place on the service or product is clear.

Deferred payment

Perhaps you can maintain your usual prices, but accept payment at a later date. This will keep you busy and also help your clients carry on with their business. Whether this will work will depend a great deal on your business’s financial position as it will clearly have a detrimental effect on your cash flow. It’s worth bearing in mind, too, that not all businesses will weather the storm, so some of the deferred payments may never materialise.

Staged payment

In order to avoid that last problem, where you risk unintentionally working for zero payment, a staged payment system may help. Here, you’d agree an up-front payment, with the remaining monies to be paid later, in one or more instalments. You may agree on 30% up front, 40% on completion of a mile-stone in the project, and 30% on delivery, for example, or 50% up front and 50% on delivery. The final payment may, of course, be deferred still further to ease the burden on the client. Unlike the previous example of deferred payment, staging potentially enables you to cover your immediate costs and certainly avoids the risks of no payment at all.

Perceived value payment

Although one would hope that pricing in some way reflects the value of what is being sold, it might be worth asking the clients what they think. Particularly with some of the online training and informational sessions that are suddenly very popular, rather than putting an entry price on a session that you would be running anyway, you might think of asking the attendees to pay what they can afford, or in accordance with the value they think the session offered them.

Retainer fees

Charging your client the same amount each month for an agreed period, maybe six months or a year, usually in exchange for ready access to a set number of hours of consultation, avoids large one-off outlays and smooths the expense curve for the client. It also guarantees a basic level of monthly revenue for your business. Many organisations are grateful now to have retainer agreements in place with clients, which will help tide them over the worst of the lockdown period.

Re-scoping of projects

Another option is to think about dividing a project into smaller, more affordable, segments. Rather than asking for commitment on a large project, you could offer to start with a feasibility study to ensure that the project has been correctly defined and budgeted. Such studies may also provide an insight into how to divide up the later project stages into separately chargeable units that can be undertaken as monies become available to the client.

Adapting to budget

While we should be clear what our services are worth, it’s also important to take into account the actual budget available to the client. Having a detailed discussion of why they are considering undertaking a particular project and what they hope to achieve – what success looks like to them – may allow you to offer solutions that are less costly and maximise the results while minimising spend. This also helps avoid the problem of carrying out an unnecessarily expensive project that doesn’t actually achieve the desired results.

In conclusion, there are many ways of looking at pricing and many ways to work with your clients to reach agreements that suit both you and them. Just remember that the first, sometimes panicked, reaction to a crisis isn’t necessarily the best way to go.

Gwyneth Box
Phone: 0798 661 3437

Gwyneth Box is director at Tantamount, a full-service agency with international experience in brand creation and development. Working across sectors for both print and screen, Tantamount specialises in creating outstanding designs and inspiring digital experiences that communicate corporate values and engage with customers and other stakeholders, turning them into fans and advocates for your brand.

Gwyneth would like to thank Rob Pearce of Response Consulting for his thoughts on pricing and value, which inspired this article.