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Greetings!   

 

In this issue, we'll tackle part three of pricing Virtual Assistant administrative support rates and analyzing your competitor prices with the help of industry expert, Robert Brenner.

 

We hope you enjoy this issue, and as always, email us if you have any questions. We will answer your email - We are here for you! Our email is support@virtualassistants.com

Snapshot: Part Three - Analyzing Competitor Prices - Segmented Price Analysis
by Robert C. Brenner, MSEE, MSSM 2012 Brenner Information Group

 

WARNING: This article is based on REAL DATA.

 

Going forward from the previous two articles, I created an Excel database of the first 100 VAs advertising on Guru and entered their billing rates. Then I generated a price distribution chart based on these prices. Here's how I did it.

 

I copied the list of prices and locations into another part of the spreadsheet. Then I sorted the two-column list from lowest to highest as shown in Figure 1.

 

The reason I included the states information is to let me analyze the price distribution by geographic area. For example, sellers in the East may price different than sellers in the West. This is how I produced my Regional Pricing Tables.

 

  

Fig. 2. Frequency of Prices

 

Then I plotted this data and created a chart comparing the number of times each price occurred. Figure 3 shows the chart that resulted from this analysis. This is also called a "value chart."

 

 
Now you have a clear idea what competitors are charging. Let's study this chart. Notice there are three primary groupings of prices represented in the data. One group charges between $8 and $10 an hour. A second group charges around $15 an hour. And a third group prices their work at $20 and $25 per hour.

 

Call these "price segments." Notice that there are three primary markets being served overall with 17 VAs charging prices to unique customers in secondary markets. Also notice that nine VAs are advertising billing rates above $25 an hour. One is serving customers at $75 an hour. 

 

The three segments represent a multi-tier pricing structure. If your prices are within one of these groups, understand that the segment defines and restrict the pricing actions that you can take in your market. Much depends on the perspective and expectations of the buyers. Think of three different buyer groups-economy (budget), standard, and premium.

 

Find out all you can about the buyers in each price segment. Where are they located? What are they buying? How often?

 

Then study the sellers in each segment. What is their business profile? Are they newbies? Are they educated in business? Are they experienced VAs? How many clients do they serve? How much are they charging? How much are they earning in their business?

 

The buyer determines how much you can charge. Low-price economy buyers will gravitate to low-price sellers. They will have lower expectations and be willing to accept less quality work-as long as the price is low. Likewise, upscale buyers will typically shop among the higher price alternatives in the premium group. They will expect and demand better and faster service. They won't quibble about price, but they will be sticklers for quality work and dedicated attention to their jobs.

 

The rest of the shoppers will buy within the mid-priced market. They may purchase selectively down in the budget segment when sales occur or occasionally pay prices common to those in the premium segment. By selecting a price segment in which to compete, you establish the type of client you will target. You also fix the flexibility you have in changing your price based on the segment in which you compete. The marketing strategy that you implement should attract customers who are predisposed to buy in your selected price segment.

 

Essentially, as long as you stay within a price segment, you can vigorously compete on billing rates. For example, charging $9 an hour instead of $8 an hour could add 12.5% more to your bottom line with little risk of losing customers. But shifting your price so it falls within another grouping (i.e., charging $15 instead of $10) will initiate market constraints. You may or may not be successful in increasing sales in this environment. You could actually lose market share. Price is king, and the buyer determines what price will work in selling virtual service. To the VA entrepreneur, its caveat emptor in reverse-not buyer, but seller beware.

 

 

About the author:

Robert Brenner is the president of Brenner Information Group (http://www.brennerbooks.com) and the author of Small Business Guide to Pricing and Pricing Tactics. He can be reached at brenner@brennerbooks.com

 

 

Please note: If you wish to purchase your own spreadsheet for pricing, the price for the populated spreadsheets has been reduced from $49.95 to $24.95 with a minimum of 25 actual price entries for the $/hour and $/job collection worksheets. You can find them at this link:  http://www.brennerbooks.com/firstpage.html

 

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