How to Price Your Services? 17 Best Service Pricing Strategies & Example Use Cases

In a study done by PWC in 2013, more than 40% of survey respondents rank ‘more effective price structuring’ as their first or second choice strategy for increasing profitability. Pricing isn’t just about covering costs—it’s a powerful lever for business growth.

Yet, many service providers struggle with it. Charge too much, and you risk scaring off clients. Charge too little, and you undervalue your expertise. The key? Finding the perfect balance between perceived value, market demand, and profitability.

This guide breaks down 17 proven service pricing strategies—along with pros & cons, and do’s & don’ts—so you can confidently choose the best strategy for your service business.

Article Highlights:

• The pricing of services should reflect what your service is worth to your clients—not just what it costs you to provide it.
• If clients get a high return on investment, they’ll pay more.
• If your service is rare or specialized, you can charge premium rates.
• If you position yourself as an expert, you won’t need to compete on price as much.
• The best pricing strategy depends on your service type, industry, target audience, and business goals. Don’t be afraid to experiment—test different models, gather feedback, and adjust your pricing over time to find the sweet spot.
• The way you present your pricing matters just as much as the numbers. A strong value proposition, persuasive copy, and smart design can make a huge difference in conversions.

How to Price Services Step-by-Step?

Let’s start with the things you should do before choosing the exact pricing model you want to go for.

1. Define Your Costs

Before you can set a price, you need to understand what your service actually costs you. Otherwise, you risk underpricing and running at a loss.

So, list out everything:

• Labor costs: whether you pay yourself a salary or charge per hour, figure out how much your time is worth. If you have a team, include their wages and any benefits too.
• Overhead costs: these are the business expenses that aren’t directly tied to a single project but are still necessary (e.g., office rent, software, utilities, internet, insurance).
• Direct costs: these costs are specific to delivering your service—things like materials, tools, or outsourced help.
• Indirect costs: these expenses support your business but aren’t tied to a single service. Think of marketing, website maintenance, subscriptions, and professional development.

💡The key difference between overhead and indirect costs is that overhead are specifically related to maintaining the business’s general operations, while indirect costs can include any costs that aren’t directly tied to a specific product or service.

2. Research the Market

You don’t operate in a vacuum, so you need to know how your service fits into the marketplace. Pricing too high might scare customers away, while pricing too low can make people question your credibility.

Key things to include in your market research:

• Perceived value: what do potential clients think your service is worth? A logo design from an amateur won’t be priced the same as one from an experienced branding expert.
• Market trends: are prices going up or down in your industry? Look at competitors and identify where you fit in. Nearly 60% of survey respondents in a study done by PWC, said that their pricing approach included simple rules such as cost mark-up or matching competitors.
• Scarcity/niche factor: if your service is highly specialized and hard to find, you can charge more. If it’s widely available, competitive pricing might be necessary.

✅ Tip: study your competitors’ pricing, but don’t just copy them. Position yourself based on what makes your service unique.

3. Identify Your Value Proposition

Your pricing should reflect the value you bring, not just the hours you put in. What makes your service stand out? The stronger your value proposition, the better you can justify your price.

Ask yourself these questions:

• What problems do you solve? A service that saves clients time, money, or stress is more valuable than one that’s just a convenience.
• What makes you different? Experience, skills, a unique approach, or outstanding customer service can justify premium pricing.
• What’s the ROI for your client? If your service helps a business make more money or achieve a major goal, pricing higher is reasonable.

4. Compare Different Pricing Models Against Your Service

Not all services should be priced the same way. Different pricing models work better depending on how you deliver your service.

• Hourly rate: ideal for work with unpredictable scope or ongoing support. However, it can cap your earning potential.
• Flat rate (project-based): best for well-defined projects with clear deliverables. This model allows you to charge based on value, not just time.
• Subscription: works well for ongoing services, like coaching, social media management, or consulting retainers. It provides stable, recurring revenue.
• Performance-based: great for services tied to measurable results (e.g., sales commissions, marketing campaigns). You earn more when your client succeeds.

5. Test & Gather Feedback

Pricing isn’t a “one-and-done” decision. You’ll need to test your rates and see how customers respond. Sometimes, you may find yourself changing pricing even once every quarter.

Here’s how to validate your pricing:

• Soft launch: start with a few clients at your target price and observe their reactions.
• A/B testing: offer different pricing structures to different customer segments and compare results.
• Introductory pricing: offer a discounted rate for early adopters, then adjust based on feedback.

✅ Tip: Consider various ways to present your new pricing, including using different copy and design tricks. Ideally, test each variant on your target group.

6. Adjust & Optimize

As we already established—pricing isn’t static. The value of service pricing should evolve as your expertise grows, market conditions shift, demand increases, or based on results from the A/B testing mentioned in the previous step. 😉

There are a few ways to refine your pricing over time, for example:

• Review customer feedback: are people saying your service is a steal, or are they hesitant about the price?
• Assess profitability: make sure your prices cover costs and leave room for growth.
• Watch the competition: if industry rates are increasing, you may need to adjust yours.

17 Best Pricing Strategies & Examples

Here’s a breakdown of the most effective pricing models for services, along with pros, cons, do’s and don’ts. Dive in and choose your fighter smartly!

1. Hourly Pricing

Hourly pricing is a pricing model for services that charge based on time worked—simple and transparent. This model works well for freelancers, consultants, and professionals offering specialized services. However, it can limit scalability since you’re trading time for money. We all have the same 24 hours in a day, after all.

Example use case: independent contractors, coaches, designers, and legal consultants.

Pros:
✔️ Easy to calculate and justify to clients.
✔️ Fair compensation for time spent.
✔️ Great for flexible, ongoing projects.

Cons:
❌ Limits earning potential—your income is tied to time.
❌ Clients may push back if they don’t understand why a task takes longer.
❌ Encourages trading time for money instead of delivering results.

✅ Do’s	🚫 Don’ts
Track your time accurately to ensure fair billing.	Rely on hourly pricing if your work delivers long-term value beyond time spent.
Be transparent with clients about estimated hours.	Undervalue your time—factor in admin work, revisions, and meetings.

2. Project-Based Pricing

Rather than billing per hour, you set a fixed price for the entire project. This provides clarity for clients and allows you to price based on the value delivered rather than just time spent.

Example use case: web designers, branding agencies, copywriters, and marketing consultants.

Pros:
✔️ Predictable income for both you and the client.
✔️ Allows for higher earnings if you complete projects efficiently.
✔️ Encourages pricing based on value, not time.

Cons:
❌ If a project scope expands unexpectedly, hello scope creep, you could lose money.
❌ Harder to price accurately without experience.

✅ Do’s	🚫 Don’ts
Define clear deliverables to prevent scope creep.	Accept vague project scopes—always clarify expectations.
Price based on the value the client receives, not just effort.	Undercharge out of fear of losing a client.

3. Fixed-Fee Pricing

Fixed-fee pricing is similar to project-based pricing but is ideal for well-defined, repeatable tasks with clear deliverables. Clients appreciate the predictability, and service providers can optimize efficiency.

Example use case: accountants, consultants, copywriters, and legal professionals.

Pros:
✔️ Easy for clients to understand and budget for.
✔️ Saves time compared to hourly tracking.
✔️ Encourages efficiency—if you work faster, you earn more.

Cons:
❌ If a task takes longer than expected, your profit margin shrinks.
❌ Doesn’t work well for complex, unpredictable projects.

✅ Do’s	🚫 Don’ts
Set clear terms on what’s included (and what’s extra).	Underestimate the time required—build in a buffer for unexpected work.
Offer tiered pricing for different service levels.	Forget to revisit pricing as your expertise grows.

4. Retainer Pricing

Refers to the business model where clients pay a fee in advance to secure ongoing access to specific services for a specific period (typically monthly or quarterly, but sometimes in irregular manner). If cooperation flourishes, payments are usually renewed.

It is similar to subscription pricing, but the fees here may change in the subsequent periods. Also, the frequency of payments may not be so regular. For example, parties may agree to suspend cooperation for a month and then resume it.

This model often ensures stable income and long-term client relationships. Clients, on the other hand, can benefit from flexibility.

Example use case: agencies, legal advisors, consultants, and IT support firms.

Pros:
✔️ Predictable revenue.
✔️ Builds long-term client relationships.
✔️ Reduces the need for constant client hunting.

Cons:
❌ Clients may underuse or overuse your services, leading to imbalances.
❌ Requires ongoing value delivery to justify the cost.

✅ Do’s	🚫 Don’ts
Clearly define what’s included in the retainer to avoid overwork.	Offer retainers if your service doesn’t require ongoing work.
Offer different retainer levels to suit various needs.	Overcommit—ensure you can deliver consistently.

5. Subscription Model

Customers pay a recurring fee (monthly/annually) for continuous access to services. This model is common for SaaS, coaching programs, and membership businesses, providing predictable revenue streams.

Example use case: online learning platforms, business mentorship programs, and content subscriptions.

Pros:
✔️ Stable, predictable income.
✔️ Encourages customer loyalty.
✔️ Scalable—more clients doesn’t always mean more work.

Cons:
❌ Requires ongoing value delivery to prevent churn.
❌ Clients may cancel if they don’t see immediate benefits.

✅ Do’s	🚫 Don’ts
Offer a free trial or limited-time discount to attract new subscribers.	Overcomplicate pricing—keep it simple and transparent.
Continuously provide new values (e.g., exclusive content, updates, or perks).	Ignore churn rate—monitor why people cancel and improve retention strategies.

6. Value-Based Pricing

Instead of charging based on cost or time, you price according to the perceived value your service provides. This model works well for premium services with high ROI for clients.

Example use case: high-end consultants, premium coaching, and branding agencies.

Pros:
✔️ Maximizes profitability.
✔️ Rewards expertise rather than effort.
✔️ Clients focus on results, not just price.

Cons:
❌ Harder to justify without strong positioning.
❌ Requires an understanding of your market’s perceived value.

✅ Do’s	🚫 Don’ts
Communicate the ROI your service delivers.	Price too low out of fear—position yourself as a premium service provider.
Charge based on impact—higher pricing for greater transformations.	Ignore market research—ensure your pricing reflects customer expectations.

7. Performance-Based Pricing

You only get paid if your service achieves the desired results. This model aligns incentives and can be lucrative, but it also carries some risk.

Examples: sales consultants, marketing agencies (e.g., pay-per-lead models), and legal firms (contingency cases).

Pros:
✔️ Aligns incentives—you only get paid when you deliver.
✔️ Can be highly profitable if results are strong.

Cons:
❌ Risky—you may work hard but not get paid if results aren’t achieved.
❌ Hard to control all variables that impact results.

✅ Do’s	🚫 Don’ts
Set clear KPIs and define what counts as a “successful result.”	Agree to performance-based pricing without clear measurement criteria.
Use hybrid pricing (base fee + performance bonus) to minimize risk.	Take on projects where external factors impact success.

8. Tiered Pricing

Offer multiple pricing levels, each with different features or services. This gives clients flexibility while encouraging them to opt for higher-value packages.

Example use case: SaaS companies, business coaching programs, and consulting firms.

Pros:
✔️ Increases conversion rates by offering choices.
✔️ Encourages upsells as clients move to higher tiers.

Cons:
❌ Too many options can overwhelm potential clients.
❌ Requires careful structuring to ensure all tiers are valuable.

✅ Do’s	🚫 Don’ts
Offer 3-4 tiers with clear differences in value.	Overcomplicate the options—keep it simple.
Make the middle-tier the most attractive (the “Goldilocks” effect).	Price the lowest tier too cheap—it should still be profitable.

9. Cost-Plus Pricing

Calculate your costs and add a desired profit margin percentage to ensure profitability. While simple, this model may not always reflect your service’s true value in competitive markets.

Example use case: manufacturing services, productized service businesses, and traditional consulting.

Pros:
✔️ Simple and easy to implement.
✔️ Guarantees profitability with a consistent markup.

Cons:
❌ Doesn’t account for market demand or customer value perception.
❌ May not work well in highly competitive or value-driven markets.

✅ Do’s	🚫 Don’ts
Monitor costs regularly to keep your prices aligned with expenses.	Ignore customer value—focus only on costs.
Ensure your markup is realistic and profitable.	Overlook market trends or competitor pricing.

10. Pay-What-You-Want

Clients decide how much they want to pay, often with a minimum set price. This model can create strong customer loyalty and works well in community-driven businesses.

Let customers decide the price (often with a minimum). Effective for community-driven or experimental businesses.

Example use case: artists, nonprofits, and early-stage service businesses experimenting with pricing.

Pros:
✔️ Increases customer engagement and goodwill by giving them pricing freedom.
✔️ Attracts more customers by lowering the barrier to entry.
✔️ Encourages generosity and social responsibility, leading some to pay more.

Cons:
❌ Risk of underpayment, leading to potential financial losses.
❌ Unpredictable revenue makes budgeting and forecasting difficult.
❌ Customers may perceive the product as low value and hesitate to pay fairly.

✅ Do’s	🚫 Don’ts
Set a minimum price to ensure sustainability.	Offer a “pay-what-you-want” model without a clear minimum.
Encourage donations or tips to boost revenue.	Leave pricing entirely to the customer—some guidance is key.

11. Sliding Scale Pricing

This model adjusts prices based on a client’s financial situation or specific needs. It allows you to serve a broader audience, making your service more accessible. However, it requires careful balance—undervaluing your work could lead to financial instability.

Example use case: therapists, coaches, nonprofit organizations, and healthcare providers.

Pros:
✔️ Expands client base and improves accessibility.
✔️ Builds goodwill and trust within communities.

Cons:
❌ Can be difficult to sustain without clear pricing structures.
❌ Clients may undervalue your service if they always expect lower pricing.

✅ Do’s	❌ Don’ts
Clearly define eligibility criteria for sliding scale discounts.	Don’t offer discounts without a structured approach—this can lead to financial strain.
Set a minimum price to ensure sustainability.	Don’t undervalue your expertise just to attract more clients.
Use a tiered system for easy adjustments.	Don’t assume every client will be honest about their financial situation.

12. Freemium Model

A pricing strategy where you provide a free basic service while charging for premium features. This attracts users easily but requires strategic upselling to make it profitable.

Example use case: SaaS businesses, email marketing tools, platforms with online courses, and digital products.

Pros:
✔️ Low barrier to entry—attracts users quickly.
✔️ Encourages customer loyalty and trust.

Cons:
❌ Requires high conversion rates from free to paid users.
❌ Free users may drain resources without upgrading.

✅ Do’s	❌ Don’ts
Offer genuine value in the free version to build trust.	Don’t give away too much for free—people may never upgrade.
Make the paid features compelling and necessary for growth.	Don’t make the free version useless—it should still provide some value.
Track conversion rates and optimize upsell strategies.	Don’t rely solely on freemium without a strong upgrade funnel.

13. Package Pricing (or Bundle Pricing)

This strategy groups multiple services together at a reduced rate, making them more appealing to customers while increasing overall revenue. It encourages clients to purchase more at once, boosting your earnings.

Example use case: marketing agencies, fitness trainers, beauty salons.

Pros:
✔️ Increases perceived value for customers.
✔️ Encourages larger purchases and boosts revenue.

Cons:
❌ Can lower perceived value if discounts are too steep.
❌ Clients might hesitate to commit to bundled services if they don’t need everything offered.

✅ Do’s	❌ Don’ts
Bundle complementary services that enhance each other.	Don’t force unnecessary add-ons that don’t provide value.
Offer different tiers to cater to various client needs.	Don’t discount so much that your profits suffer.
Clearly communicate the value of the bundle.	Don’t make the bundled price higher than the sum of individual services.

14. Contingency Pricing

A results-driven model where you only get paid if specific outcomes are achieved, often seen in legal services, like fees when a lawyer wins a case. This works well in high-stakes industries but carries financial risks.

Example use case: recruitment agencies, legal firms, high-stakes consulting, and performance-based marketing.

Pros:
✔️ Clients love the low-risk approach.
✔️ Can lead to high payouts if success rates are strong.

Cons:
❌ No upfront payments mean financial unpredictability.
❌ Success may not always be within your control.

✅ Do’s	❌ Don’ts
Clearly define success metrics and payment terms.	Don’t rely solely on contingency pricing—mix it with other models.
Set a fair percentage to compensate for risks.	Don’t work with clients who have unrealistic expectations.
Ensure legal protection through contracts.	Don’t undervalue your expertise when structuring deals.

15. Dynamic Pricing

This strategy adjusts pricing based on demand, seasonality, or client-specific factors. It’s a smart way to maximize revenue but requires careful market analysis.

Example use case: event planning, consulting services, high-demand coaching, and travel-related businesses.

Pros:
✔️ Maximizes revenue during peak demand.
✔️ Provides flexibility to adjust based on client needs.

Cons:
❌ Can be unpredictable and alienate price-sensitive customers.
❌ Requires real-time data tracking and strategy adjustments.

✅ Do’s	❌ Don’ts
Use data-driven insights to adjust prices strategically.	Don’t make prices unpredictable without explanation—customers may lose trust.
Offer discounts during low-demand periods to attract more clients.	Don’t change pricing too frequently—it can confuse clients.
Be transparent about pricing changes.	Don’t overcharge during peak times without added value.

16. Hybrid Pricing

A flexible approach that combines multiple pricing models. For example, a business coach may charge a retainer with performance-based bonuses.

Example use case: high-ticket consulting, business coaching, digital agencies, and service-based businesses that need flexibility.

Pros:

✔️ Allows for custom pricing tailored to different clients.
✔️ Balances risk and reward more effectively.

Cons:
❌ Can be complex to structure and communicate.
❌ Clients may struggle to understand multiple pricing components.

✅ Do’s	❌ Don’ts
Clearly outline how each pricing component works.	Don’t mix too many pricing models—it can confuse clients.
Ensure hybrid pricing maintains profitability.	Don’t make it overly complicated—simplicity wins.
Test different combinations to find what works best.	Don’t forget to regularly review pricing effectiveness.

17. Promotional Pricing

This is a strategy where you’re offering discounts or limited-time promotions to attract new clients or boost sales. While effective in short bursts, relying too much on discounts can hurt your brand’s perceived value.

Example use case: SaaS businesses, consulting firms, seasonal service providers, and service-based businesses launching new offers.

Pros:
✔️ Drives short-term sales and customer acquisition.
✔️ Encourages urgency and quick decision-making.

Cons:
❌ Can train customers to wait for discounts.
❌ Frequent promotions can make your service seem less valuable.

✅ Do’s	❌ Don’ts
Use promotions strategically—seasonal, new launches, or limited-time offers.	Don’t discount so often that clients expect it regularly.
Bundle high-value services to make deals more attractive.	Don’t lower prices to the point where you lose profit margins.
Experiment with different promotional formats (e.g., early bird pricing, referral discounts).	Don’t overuse promotions as a crutch for weak sales strategies.

There are also other models like usage-based pricing (charging based on actual consumption or utilization of a product or service) or cost-based pricing strategy (charging based on production or material costs increased with a profit margin), but these are more obvious, so let’s leave that for another story.

Design a Winning Pricing Model with Zendo

Choosing the right pricing strategy ain’t simple. But whatever you want to choose or test, you can get it just right with a little help from technology. Take Zendo as an example. This client portal software can help you set up:

• Subscription services: from setting up tiered pricing, to highlighting the best plan to choose, adding free trials, discounts, and more. You’ll set up your subscriptions in minutes.

• One-time, fixed-fee services: with Stripe-powered payments, customizable intake forms, and service descriptions, you’ll easily set up one-offs too.
• Custom, project-based services: first chat with the customer using a dedicated chat and then issue a quote once you decide on the final project. Heck, you can even charge in parts if scope creep comes in.

But setting up your offer and enabling selling options is just the beginning of the story. To take it to the next level, with Zendo you can also:

• create a professional service catalog to showcase your services and let customers actually purchase them, choosing whatever fits their needs, and ordering independently with a custom-made form you’ve created—providing every bit of information (or payment 😉) you may need to deliver the service,
• issue quotes, invoices (even automated ones!), and collect payments with various methods, from self-service, like Stripe, bank transfer, or directing customers to any external payment type your business is using.
• set up workflows to automate the repetitive parts of your work, making sure everything important happens exactly at the right time—for example, set up automated messages to customers once they purchase a service of yours or submit a request or trigger automatic status changes after crucial parts of the workflow happen—letting your customers know of the progress easily,
• manage projects and service work with notifications, table, list, and kanban views of the submitted requests and orders, and so much more.

• create a completely custom client portal and team portal, different for your customers, different for your teammates, offering everything they need on a silver platter.

Check out what Innovatiana, an AI-focused French-Malagasy Impact Tech startup, says about elevating their work selling productized services with Zendo:

“We now have more time for interactions with our team, clients, and to focus on our branding and marketing efforts. Our daily operations are more organized, and our goals are clearer and more achievable.”

– Aicha Camille Jo, CEO of Innovatiana

Start a free trial of paid Zendo plans or set up your services completely free of charge with a free Essentials plan.