How To Create Package Pricing For Your Online Services

Written by Tammy Durden

I have found that most of my clients, after starting their business, find that the most difficult process is creating your packages and pricing. When I began 16 years ago I invoiced clients at the end of the month for all the hours I accumulated over the entire month of doing tasks for them. In other words, I billed after the fact. One day I found a community where the discussion was around packages and billing in advance. This changed my world! Let me share a few lessons I’ve learned over the years about how you create package pricing for your online services.

The one thing these definitions do not say, however, is that it is common practice to invoice for these services at the beginning of the month before services are provided to the client. That’s right, you collect upfront before you do any tasks for your client. This was a completely new way to do it for me. And one that I was grateful to find as I had recently been trying to collect from a client for months (more on that later).

“Package pricing, also known as \”bundling,\” is a marketing strategy that involves selling multiple products or services together as one combined package. This approach can be highly effective for businesses looking to streamline their offerings, increase customer satisfaction, and ultimately boost sales.”

SHAREBIRD

As I said I was so glad to find an alternative way to offer services and invoice clients. When I came upon this community online I was in the middle of trying to collect a large balance from a client.

Years ago (probably 13 years now) I worked with a client whose business began struggling financially. She continued to tell me she would pay me soon. The worst part is that I was too nice (and naive) so I continued work for the client because they needed it for an upcoming event! When I finally stopped working on tasks for her, she had accumulated an invoice due of nearly $2,000. That’s a lot for an online service provider, especially in the early 2000s. And if you are wondering, no I was not ever paid.

As hard as this lesson was I was grateful for it as I was forced to change how I invoiced clients afterward. I knew I had to do something different after this situation.

So, when I found a community discussing packaging and charging in advance for your services I was intrigued. Then they said their clients were happy to pay this way. That’s all I needed to hear – I was in! I wanted to figure this out and how I could implement it right away. Unfortunately, it wasn’t that easy. And I made many mistakes along the way.

To begin creating a package you will want to do some competitive and market research to see if others are charging clients this way and how they may package their services. You want to also look for a unique angel or something your competitors may not include with their services as this can give you an advantage.

Next, you consider the types of services you provide to clients. Are there common services that could be packaged together?

Let’s discuss a few different types of packages you can offer clients.

Most online service providers when transitioning from billing hourly after the fact start by lumping a bulk number of hours together for a set rate. You may offer 10 hours monthly for $350 (this is only an example and not meant to offer the rate you should charge). This is how I started at first.

I created three packages and offered them with differing numbers of hours. The highest package I offered at a slightly discounted rate because they are purchasing so many hours ahead of time.

This is a good way to transition from billing after you provide hours to invoicing before you provide services until you feel confident in grouping types of services.

The downside to this package is the rollover hours (I will discuss more on this below in “Rollover Hours”).

Another way to package services (often the most preferred) is to group by type of services offered. If you offer general administrative services you can probably break it down into email management, phone calls/answers, document typing, and much more. If you only wanted to offer email management and document typing you could group those two together and price it out.

[Please note all pricing given is only as an example and is not attempting to price this package, service, or the hourly rate]

After you decide which services will be packaged together you have to establish what your prices will be for your package(s). It is best to offer two to three different price points.

Trying to decide on pricing often comes back to estimating the time it will take you to do the tasks listed. If you know email marketing once a week will take you five to eight hours monthly and your rate for this is $40/hour you will multiply the estimated hours (plus a cushion of an hour) by the hourly rate. This will give you $360/month for these services.

1. Do your market and competitive research.

2. Estimate the hours it will take you (for types of services grouped) to provide the services in each package.

3. Add at least one hour to your estimate to give a cushion. Some months it may be less and other months it could be slightly more. The cushion accounts for this overall within a year.

4. Be confident in your package and pricing and list it on your website.

5. Evaluate and analyze again – at least yearly but I recommend every 6 months.

Online service providers who offer digital marketing services will package each type of service. They may package email marketing as one and list what is included. They will price it by doing research (market and competitor) and estimate the hours to do the tasks listed (using the steps above). Each package is given a slightly higher price point and adds more services under that task (see examples below).

Example Package 1:

  • 1 Email Sent Monthly
  • Set Up the Client’s Email Marketing Program
  • Client Writes the Content
  • Create Graphics for Each Email
  • 1 Update to Lists Monthly
  • Report Provided 24-48 hours after Email Sent
  • $150

Example Package 2:

  • 2 Emails Sent Monthly
  • Set Up the Client’s Email Marketing Program
  • Set Up All Automation
  • Client Writes the Content
  • Create Graphics for Each Email
  • 1 Update to Lists Monthly
  • Report Provided 24-48 hours after Each Email Sent
  • $250

Example Package 3:

  • Weekly Emails Sent
  • Provider Writes the Content
  • Set Up the Client’s Email Marketing Program
  • Set Up All Automation
  • Create Graphics for Each Email
  • 1 Update to Lists Monthly
  • Report Provided 24-48 hours after Each Email Sent
  • $695

Note the differences in packages by those in bold.

Notice items in bold change with each package offering. This is only an example and is not a complete list of everything offered in an email marketing package.

They could, of course, vary depending on all you want to provide clients. You will want to include as many bullet points to describe your package as possible. No matter the type of service you provide you would do the same with each service. So, if you provide social media management you would do the same for this service by listing out each task you provide while providing social media management for your client each month.

Below are a couple of examples to help you visualize packages and pricing. You should do your research according to the type of services you will provide for your clients.

WebFX example of packages offered

As you can see the pricing is widely varied and can depend on your experience as well as the hourly rates you would charge multiplied by the estimated number of hours you would spend doing the tasks.

Logical Position has a very unique way of packaging services (see below).

Another example is someone who offers social media management. Rather than invoicing hourly after doing a client’s social media management all month, you would package the services of “social media management” and invoice at the beginning of the month before work is provided for the client.

In this type of package, you would likely include all bulleted points of tasks that are included within the package. Include this list on your website detailing the services you provide by doing social media management for your client. It could look similar to the following:

Social Media Management Package A

  • Manage 2 Client Social Media Platforms Including Facebook and Instagram each month
  • Check each (of 2) platforms twice daily
  • Like and Share Other Influencer Posts (non-competitors)
  • Share #X (number) of content created by the client
  • Analyze monthly via social analytics to determine growth patterns and what posts are working best
  • Provide Reports each month from analytics
  • Formulate a strategic plan for the next month (if different)
  • Meet for a Monthly strategy session to determine if the current strategy is working and if not, then to present a new one
  • Investment Pricing: $XXX

Example: Social Media Management Package B

  • Manage 4 Client Social Media Platforms Including Facebook, Instagram, LinkedIn, and YouTube each month
  • Check each (of 4) platform twice daily
  • Like and Share Other Influencer Posts (non-competitors)
  • Create and Share #X (number) of quote posts each month
  • Share #X (number) of content created by the client
  • Analyze monthly via social analytics to determine growth patterns and what posts are working best
  • Provide Reports each week from analytics
  • Formulate a strategic plan for the next month (if different)
  • Meet for a Monthly strategy session to determine if the current strategy is working and if not, then to present a new one
  • Investment Pricing: $X,XXX

You invoice the amount at the beginning of the month. Each month you invoice the same amount at the beginning of the month. You perform your services as long as you are paid or until the client cancels.

As discussed one of the ways you can start invoicing as a package is to create bulk hours of general virtual services (possibly administrative). I started this way as a transition to package pricing. The downside, however, is the rollover hours.

You have to consider rollover hours if you provide this type of package. If a client purchases bulk hours but does not use them all what will you do with those hours? Prospective clients will ask these questions so be prepared.

Below are some options to consider if you want to offer bulk hours.

Option 1: Rollover Hours

All the unused hours will roll over to the next month and are available to use first the next month. Each month the client may have more rollover hours. It could look something like this…

Month 1: The client purchased 10 hours and uses 5 hours this month.

  • They have 5 hours left over that will be added to next month.

Month 2: The Client has a total of 15 hours available (5 from Month 1 + 10 purchased this month).

  • Month 2 they only use 3 hours.
  • Now, they have 10 hours left over in Month 2 and 2 hours rolled over from Month 1 [because they had 5 rollover hours less 3 hours used = 2 rollover hours plus 10 hours not used in Month 2 = 12 rollover hours].

Month 3: Now the client has 22 hours available [12 rollover hours + 10 hours purchased this month]

  • During Month 3, they use 8 hours.
  • End of Month 3, the client has 2 extra hours not yet used this month but still has 12 rollover hours.

Month 4: The client has 24 hours [14 rollover hours from Month 3 plus the 10 hours purchased this month].

You see how this can be difficult to keep track of with one client let alone more. I think you know where I am going with this.

This option is a plan where a client may roll their hours over only into the next month and they do not accumulate. The rollover hours are used first.

Month 1: The client purchased 10 hours and uses 8 hours this month.

Month 2: 12 Hours are available to use (2 hours rolled over + 10 purchased for month).

  • The client uses 1 hour by the end of the month
  • Take the 1 hour from the 2 hours on month 1 and no hours to deduct from month 2 so there are 10 rollover hours.
  • You do not roll over the extra 1 hour from Month 1, that hour is now gone and unable to be used.

Month 3: Client has 20 hours available this month (10 rollover hours + 10 purchased).

This option does not allow any rollover hours to the following month. Whatever hours are purchased must be used or they are lost.

Example: Let’s say the client purchases 20 hours at $XXX. At the end of Month 1 the client has used 18 hours. Then on Month 2 the client has a total of 20 hours they can use. They do not receive any rollover hours and that means you do not need to keep track of rollover hours. The client’s available hours to use are the hours purchased.

Of course, there can be many variations of this type of package pricing with hours. These are the most common package pricing strategies in the beginning. If you are going to package bulk hours I suggest not allowing rollover hours.

The best option, however, is to package by your type of service. Create three packages that increase in price as you add more refined services for your clients.

One last word of warning before we end our discussion.

One word of warning with invoicing upfront before services are started. I learned not to count my chickens too quickly.

One of the lessons I learned about package pricing for my online services was not to count on using the money right away. When you need a quick influx of cash it’s easy to spend the money before you begin providing services. Please hold on and do not spend that money immediately.

I suggest waiting until you’ve started providing services for the client. A client can cancel before even starting, yes even after paying you. This means they will want a refund. If you’ve already spent the money how will you refund them?

Keep in mind, that this discussion does not take into account the income level needed of the service provider. That, in itself, is an entirely different discussion (hint-hint) for a later time, my friends.

Until Next, To Your Continued Success!

with love from Tammy Durden of Fearless Business Boss

Schedule a FREE 20 Minute Mini Session with Me! I’d love to meet you and help you with your packages and pricing strategy. Just click the button below. Hope to see you soon!

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