Pricing

It’s important because it has a direct impact on your margins, but it also is a signal of quality, and how easy a company is to deal with. Here’s some tips on the ‘art’ of pricing:

1. Break the price down to smaller ‘units’ – i.e. per day, rather than per week or month. Presenting a live-in care package as £194 per day rather than £6,014 per month changes perceptions of cost. An hourly rate would look extremely good value.
2. We’ve done it in the example above – use specific numbers and avoid rounding. Studies show that people trust specific numbers over round numbers and it just looks like less arbitrary.
3. ‘Charm pricing’ (or .99p pricing) works – studies show that it increases purchases without reducing perceived quality. If it works for a premium brand like Apple, it can work for us.
4. Don’t discount for no obvious reason. Maybe if you’re a cheap and cheerful offering it might work, but a blanket 20% off everything, forever, gets people wondering what’s wrong with it.
5. If you do discount, frame it. An example from another sector was a US car dealership that offered $450 off the asking price at one location and a free $250 petrol card at another. The petrol card was 2x more effective, despite being of lower value. Why? Tangible benefits can be more compelling than cash discounts. The world is your oyster in terms of how you can exploit that in your care business.

The science of pricing has a critical impact on your business, and is something we spend a lot of time discussing with our franchise partners too. We have proprietary costing models that make life easier, but the Homecare Association has a very detailed calculator you can play around with as well.

As always, if you’d like to find out more about homecare start-up, franchising, or GoodOaks, simply book a call with me here.

Best wishes, Ben.