Dealing with one of the Concierge’s Great Challenges: Determining Client Pricing

Determining pricing for your concierge work can be complicated; not only is our industry a niche one, it is also very complex, with an incredibly wide variety of different services offered.

The role of a Concierge and the tasks associated with the daily work and routine can vary from more difficult ones like supplying 30 penguins to mingle with guests at a Black and White-themed party or booking “hard to get” restaurant reservations, to more mundane ones like simply changing your client’s summer tires or running basic errands.

So when it comes to pricing, the initial decisions about a client’s charges can be a bit of a nightmare. Fees have to be simple, straightforward and flexible for you and the client. If not, it can be a turnoff for the client and a huge hassle for you to manage.  How, then, do you manage this, knowing that that one request (like booking a concert ticket) could take anywhere from a few easy minutes to a few grueling hours?

I will say one thing: sometimes you win, and sometimes you lose. But with experience, you will win far more often than you will lose. And you will also begin to understand better the cost structure of a request.  All is not lost, however, as there are plenty of things you can do to develop more effective pricing even before you’ve racked up years of experience.  Let’s do everything we can to make sure you win right now!

Here are five different effective pricing models to consider for your concierge service:

 

  • Bank of hours (à la carte or prepaid package). Under this structure, you can offer different levels and packages. The more hours the client purchases, the cheaper the rate per hour–a bit like a bulk discount. I recommend keeping your offerings to a maximum of three different packages. Sometimes too many choices for the clients can bring stress. Click here for a live example.
  • Fixed monthly fee with a specified bundle of hours to be used each month.  This structure guarantees you a certain number of paid hours per month.  If the client doesn’t use the full number of hours available in the current month, those hours can either be lost or cumulated depending on your flexibility. This assures you of a recurring  income, and it is  also a great way to encourage your clients to make requests and build loyalty. As opposed to some clients that might be discouraged from making requests when they’re charged by the hour. Click here for a live example.
  • Membership fee propose a recurring plan or package that focus on convenience and cost saving for the right client. With that plan, your client pay a fixed fee that guarantee unlimited number of requests,added benefits (such as perks) and a priority access to your service. This is one of my favourite because it encourages your clients to engage with you as often as possible. For clients who are more demanding than the average, it might seems like too much work, spending more time answering requests that don’t convert immediately into cash.  But again, the fees can vary tremendously depending on your niche market, your clientele, and the type of services provided. If you are looking for volume, this could be a great option. Click here for a live example.
  • Commission-based – You charge a percentage of the service provided by a third party. This structure is specific for project or event-based requests. If you are specialized in yachts, villas, weddings, events, etc., this can be a great approach. Most of the time your clients are a one-time shot. You could easily consider a fixed percentage of the total cost added as a service fee that usually vary between 15-20%. Most of the time, the budget will be set at the beginning of the project. Click here for a live example
  • On-demand or ghost pricing: You don’t show your price structures up front on your website. You can make an on-demand decision among the four different approaches as describe above and depending on the nature of the request. This is very complicated to manage but can be useful for new concierge businesses. I might suggest not listing prices on your website as you get started. This will allow you to assess the type of requests you receive. Settle into the profession before committing to something that you might not fully understand yet. Here is a great example of one of the pioneer in the field. On the opposite side, here is another example of a Concierge company that is not choosing a specific pricing strategy. 

 

Still unsure about which approach to adopt? Here are a few things to consider when choosing a pricing model for your concierge business:

What types of requests do you receive? Are they errands and tasks you yourself will be providing, or do you act more as an intermediary, connecting clients with the end supplier? If you are providing services yourself, such as personal shopping, running around to get things done, or doing research, you will want to charge per hour.

How many clients do you have? If your clients are a few primary people to whom you are dedicated and who take up most of your working hours, you could require a fixed monthly fee with a specific bundle of hours, and everything extra will be added to their monthly bill. They should feel like they are winning, and should not be hesitant to call you. So you could suggest a best plan based on their needs.

You’ll realize quickly that with some demanding clients, you might put in more work for less money, but with less demanding ones, you will not spend that much time providing them with the accessibility and peace of mind that if they need you, they can count on you. Note that depending on the type of services, membership can easily range from $30 per month to $20K per month; it all depends on the client’s needs.

Are you providing high-end services? With tasks related to high-end requests like luxury vacations, weddings, or any particular high margin event or service, you might want to charge a commission based on the total amount of the service provided. With more experience you can even directly negotiate a commission with suppliers. This allows your client to pay the normal price, and you get a kickback from the suppliers as an intermediary, which remains cheaper than money spent on advertising for the supplier.

Another option for concierges who want to differentiate themselves from the competition is to provide perks to their clients (instead of the negotiated kickback). So your clients could get free delivery, for example, or a free upgrade.

 

If after that, you are still unsure of what pricing structure to adopt, you should ask yourself the right questions. What are your financial objectives? What are your competitors charging? What are your clients willing to pay?  Make sure to run some tests before committing to a pricing model. Once you decide the pricing, be sure to implement a clear  process  to record, manage and charge your clients.

 

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2 replies
  1. Lisa BrownLucas
    Lisa BrownLucas says:

    Very informative. I haven’t post my rates on my website and I created three ways to pay. So right now most of my clients are hourly, but I’m hoping to expand my market to block time and membership. Thanks again;

  2. Traci
    Traci says:

    Great article! Understanding your niche will also help to select the pricing strategy that best serves you and your clients.

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