Price sensitivity is the degree to which a buyer uses price as a determining factor in his/her buying decision. You want to attract clients with low price sensitivity. These are the types of clients who will pay whatever you charge because they want you to do the work – no one else.

The benefits of attracting clients with low price sensitivity are great:  

  • You can select the highest caliber clients because you know they will pay your rates regardless.  
  • You can set your rates at the top end of the range and clients with low price sensitivity will still come to you.  
  • Clients with low price sensitivity are typically more serious about their needs and will give you the freedom you need to build their system

It is clear that you should use price sensitivity to base your target market decisions.  Once you are certain that businesses with low price sensitivity are part of your sweet spot, you can then make marketing decisions that support your choice.

Now on the other hand if you choose to target clients with high price sensitivity your rates will necessarily have to be on the low end.  This might work for you, although given the choice I’d go for the high prices.  

Clients in micro businesses and home-based business are your typical high price sensitivity clients.  If clients like these are who you would like to work with, then your business model will have to focus on high volume.  You can’t survive with low rates and low volume.

Bottom Line on Price Sensitivity
If you want to charge premium rates you will have to target clients who are low on the price sensitivity scale.  On the other hand if you would like to work with home based and micro businesses you will need to take their high price sensitivity in mind when setting your rates.  Either way you need to make a decision and stick with it – there is not much room for crossing over as a client low on price sensitivity will typically choose high rate providers because of the perceived higher quality, and clients with high price sensitivity will choose based on rates almost all of the time.

In this article, you’ve been introduced to Price Sensitivity. To learn more about how you can improve your knowledge about Price Sensitivity, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.