Insights — Channel Creation & New Revenue Streams — 3 min read
How to Price a Productised Service
Pricing a productised service is not about adding a margin to your hourly rate. It is about understanding the market value of the outcome and the efficiency of your process.
In short
Pricing a productised service should be based on value, not time. You should identify the 'economic impact' of the service for the client and price accordingly, while ensuring the flat fee comfortably covers the cost of standardised delivery. Successful models often use 'Good, Better, Best' tiers to capture different market segments and protect margins against unexpected complexity.
The transition to a productised service offers a unique commercial opportunity: the chance to stop pricing based on what you *do* and start pricing based on what the client *gets*. In a bespoke world, your price is constrained by the client's perception of how long the work will take. In a productised world, your price is constrained only by the value of the result.
However, pricing a productised service incorrectly can be fatal. If you price too low, you won't have the margin to invest in the systems and people required to make it repeatable. If you price too high, you lose the 'low-friction' sales advantage that productisation is supposed to provide.
The 'Cost-Plus' Trap
Many business owners start by asking: 'How long does this take us?' They then multiply those hours by their desired rate and add a standard markup. This is cost-plus pricing, and it is the enemy of high-margin productisation. If your process becomes significantly more efficient next year, cost-plus pricing would force you to lower your prices. Instead, you should focus on the value of the outcome to the client, regardless of how long it takes you to deliver it.
Three Tiers: The Power of Choice
Productised services work best when offered in tiers. This allows you to serve different client needs while anchoring your higher-priced options against a 'standard' version.
| Tier | Description | Pricing Strategy |
|---|---|---|
| Standard | The core repeatable service | Entry-level, low-friction |
| Professional | Core + implementation support | Middle-market, high margin |
| Enterprise | Core + customisation/priority | Premium value, high touch |
Anchoring and Value Perception
A productised service is often sold against the alternative of a full consultancy engagement. If a custom audit costs £10,000 and takes two months, a productised 'Express Audit' for £3,000 that takes two weeks is an easy 'yes'. The client isn't comparing your £3,000 price to your internal costs; they are comparing it to the £10,000 alternative.
Protecting the Margin
Because the price is fixed, you must be ruthless about scope. Every hour of 'unexpected' work is pure margin erosion. Your pricing must include a 'risk premium' that covers the occasional project that runs over, and your contract must clearly state that anything outside the defined scope will incur additional fees.
Evans Sales Consultancy helps you find the 'sweet spot' for pricing through market testing and margin analysis. We ensure that your new productised channel isn't just generating revenue, but is building a genuinely more profitable business model.
Could your business support another route to revenue?
Evans Channel Creation identifies, validates and builds additional revenue channels from capabilities a business already has — B2B to D2C, D2C to B2B, product to service, recurring revenue or partners — and says so plainly when a channel should not be built. Programme from £1,995 + VAT per month over six months.
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