WHAT ARE PRICING LEVELS?

Price levels depend on several factors:

-Growing economy

-Increase in money supply

-Government regulations

-National debt

-Exports

-Production costs

-Technological advancements

TYPES OF PRICE INDICATORS

The primary price indicators used are:

-Consumer Price Index (CPI)

-GDP deflator

-Producer Price Index (PPI)

CONSUMER PRICE INDEX (CPI)

ADVANTAGES:

The advantages of using CPI include:

-Measuring inflation

-Measuring deflation

-Finding real wages

-Calculating the cost of living

DISADVANTAGES

The disadvantages of using CPI are:

-CPI only considers selected items included in the basket of goods and services and may not include
other essential commodities that consumers use.
 -CPI focuses on urban populations without offering separate estimates for different demographic
groups, which leads to an uneven accuracy factor.

-CPI doesn’t factor in the quality of goods and services and cannot measure the quality improvements
over a period.

GDP DEFLATOR

ADVANTAGES

Below are some advantages of using the GDP deflator:

-It helps economists compare the economic activities of a country between various time periods.

-It considers the entire basket of goods and services, which makes it a more reliable indicator to
measure inflation.

-It measures the buying power of a nation over a period.

DISADVANTAGES

Below are some disadvantages of using the GDP deflator:

-It doesn’t account for the quality of goods.

-It doesn’t consider unpaid volunteer work and services such as open-source software.

PRODUCER PRICE INDEX (PPI)

ADVANTAGES

Below are some advantages of using PPI:

-It serves as a leading indicator for CPI, which helps investors make informed decisions.

-It allows economists to understand why there is an increase in CPI and proposes necessary changes to
reduce inflation.

-It helps international organizations to monitor the economies of countries.

DISADVANTAGES

Below are some disadvantages of using PPI:

-It doesn’t consider all the industries in its calculation.

 -Volatile elements such as food and energy may skew the data, resulting in miscalculations of PPI.

The 4 Major Pricing Strategies for service businesses

#1 Hourly Rates

#2 Retainers

#3 Flat Fees or Lumpsum Pricing

#4 Variable Pricing

No One Size Fits All Solution, but here are some of the tactics we use at ScaleTime

1. Figure out the market you want to cater to ranging from accessible to affluent.

2. See what your competitors are charging in that market. There will most likely not be too keen to give
out pricing to you, but you can always have a friend or associate ask for pricing on competitive services.

3. Insert yourself in the market and start putting your price point in the hands of potential clients. If
there is no pushback, you are probably pricing too low. If there are no buyers, chances are your price is
too high for your offering or market.

4. If you are not comfortable saying your prices, your leads will know, they will smell blood and they will
pounce.

Pricing formula for services: Step-by-step guide

1. Calculate your costs

1. Labor and materials
2. Overhead
2. Assess your competitors and the market
3. Come up with a reasonable profit margin
4. Add up your costs

How to price your services

1. Understand service costs and their impact on pricing.

2. See what your competitors charge for their services.
3. Understand your conversions and metrics to price your services.
4. Price your services higher than you expected — but not too high.
5. Consider inflation when pricing your services.
Types of pricing strategies to consider

Consider the following standard pricing strategies when determining your service pricing structure:

 Penetration pricing
 Price skimming
 Hourly pricing
 Economy pricing
 Psychological pricing
 Product line pricing
 Optional product pricing