Entrepreneurship · Pricing strategy

How do I price fairly to both tiny and huge companies?

Shel Horowitz I help organizations thrive by building social transformation into your products, your services, and your marketing

Last updated on May 3rd, 2017

My business has served the solopreneur/tiny company market, with most of my clients having 10 employees or fewer. I now see the potential to offer consulting services to much larger companies, even Fortune 50. How do I price fairly to tiny, huge, and mid-sized companies? The larger companies will require much more time and complexity so tiered pricing seems fair for at least certain pieces—but how do I justify charging three times as much for per-hour tasks such as research?

I worry that the price I charge tiny companies will get me laughed out the door at bigger companies, but I also worry about backlash if a large company discovers their price is several times higher.

Your ideas are most welcome. Thanks in advance.

Mike Moran President, Mike Moran Group LLC

May 3rd, 2017

Hi Shel, My business is similar to yours. My simplistic solution is that I don't charge by the hour for anyone. I put together packaged services that are sensitive to the size of the value (and effort, also) to deliver them. If that's not possible for you, then you might need to avoid having published hourly prices, so you can vary the numbers based on the size of the client. I find that to be much harder, because big company procurement departments negotiate hourly rates hard, but have a tougher time arguing fixed package prices. You should be engaging in value-based pricing anyway, because the value of what you do is less for small companies and more for big companies. Packages make them pay for what they get. Just my two cents. Good luck.

Glenn Donovan Vice President of Sales (fractional)

May 4th, 2017

Never once in my life thought about whether a price is "fair" or not. Just whether it was sellable...Of course, you should have a different rate for large companies. Just don't publish your small biz rates on your website or anywhere.

Tom Marino Small Business Branding & Expanding Consultant

May 4th, 2017

Hi Shel, I have to agree with Glenn here. Of course your prices should be different. If your pricing must be published then I'd think they would be the higher end anyways.

As someone who advocates for small business on a few different levels, I certainly thank you for not moving on from us once enterprise came calling Given some of the challenges many of our colleagues face, including from some big businesses who have them in a buy it or build it corner, I don't think you should lose any sleep charging the big boys more. They'll be just fine.

Chris Moser Full stack developer

May 3rd, 2017

Good question. I don't think there's any way you can justify charging a higher hourly rate for services, but there may be ways around it.

One way to do it is not charge by the hour, but per user (Atlassian, for example, charges a minimal fee for smaller organizations, and limit use to 10 users). However, this may not apply to your business.

Another option may be creating a separate brand specific to the enterprise market (different name, logo, website, marketing materials, even phone number). This way, you can tailor the brand to that market, offer more specific types of services, and publish higher rates. There's still the risk that a large company may find out, but if your marketing makes it clear that it's an entirely different level of service, then I think that risk would be mitigated a bit.

Chris Schneider Independent Regional Sales & Business Consultant

May 3rd, 2017

I use to let the client decide how much it is worth for him to get the problem solved or get more successful.

That comes with two benefits:

1. Your client will value your service

2. You know if your client is serious and knows his own goal

Once you know, you can decide having fun doing what you have fun doing for more or less.

I have clients which pay 3 grand per session (can be as short as 5 min) and I have clients I charge 25 bucks per hour.

What I always know is how much they value it.

Shel Horowitz I help organizations thrive by building social transformation into your products, your services, and your marketing

May 8th, 2017

I want to thank all of you who responded. I especially like the idea of moving toward project and or per-employee pricing.