Pricing your financial planning services as a new start-up can be tough.
Charge too much and you may struggle to get clients. Go in too low, and your fledgling business might not cover its costs.
So how do you choose a pricing strategy?
There are several approaches you can take:
Cost-plus pricing – adding a percentage (say, 40%) markup to your costs
Competition-based pricing – using your rivals’ fees as a benchmark
Penetration-based pricing – undercutting your rivals to increase market share
Penetration-based pricing is generally unsustainable in the long run. Financial planning businesses that take this approach usually have to raise their fees eventually – and hope their clients stick around.
Competition-based pricing takes no account of your costs. And if your rivals drop their fees, you could end up in a race to the bottom – which you can never win.
The best pricing strategy maximises your profits. That’s why, for many financial planning businesses, cost-plus pricing is the way to go.
Want to find out more about the 40% Profit Margin Formula? Contact me at dean.holmes@wealthnetwork.net.au to discuss my programs designed for aspiring financial planning business owners.