Tiered Pricing: A Guide to Levels and a Big ‘Secret’ Benefit
Learn how to create 3 distinct pricing packages to increase your client base and revenues — and discover the big advantage tiers will give you
Different clients have different needs, whether the project involves building, designing or landscaping. Some folks need an add-on, a space makeover or a front lawn upgrade versus a full overhaul, and taking on these types of projects as well as larger ones can mean more revenues for your company and more diverse work. That’s where tiered pricing comes in. Here we’ll help you determine a tiered pricing strategy for three categories of service from basic to full, and we’ve included both an example and a worksheet so you can be prepared to address a range of client needs with different professionally presented packages.
Understand Your Categories
There are two ways to define your categories: levels of service and phases of work. Three is the magic number for both, because it’s commonly used and easily understood—the classic small-medium-large model.
Levels of Service
If you’ll be creating your three packages based on types of services and you’re using Bronze, Silver and Gold categories (we’ll cover naming in the next section), it breaks down like this:
- Bronze: The most basic package, usually appealing to clients with a low budget or a narrow need (it should not, however, mean lower quality of service)
- Silver: Includes common upgrades and add-ons (this is usually the most popular option)
- Gold: Your full-service offering, appealing to top-tier clients with a higher budget
Phases of Work
If you’ll be creating your three packages based on phases of work, it might break down something like this:
- Phase 1: Planning, design, and site prep
- Phase 2: Installation
- Phase 3: Finishes or finishing touches, inspections, maintenance
You might also choose phases based on the areas needing work or construction. For instance:
- Phase 1: Whole-home interior
- Phase 2: Patio and outdoor kitchen
- Phase 3: Landscaping
Name Your Levels or Phases
For phases, you can simply use Phase 1, Phase 2 and Phase 3. For services, choose names that clearly convey what each level represents, without any need for explanation. These two groups can be used in any industry:
- Starter, Moderate, and Full—the simplest choices
- Bronze, Silver, and Gold—to convey award-winning quality at any level
You also can get creative or even very specific with your level names, if you think it would appeal better to your client base. For example: Starter, Growth and Full Bloom for a landscaping company. Just make sure the levels can be clearly understood at a glance.
List All Your Services
Write down everything you could offer as a distinct service. You can refer to past work, envision what you’d like to offer in addition to what you already do, and even include ideas for bundled items if you like. Some examples are listed below for three types of businesses to get you started, but you’ll want to write down everything you can think of. (Hint: Imagine you’re working with a client who wants everything done and has an unlimited budget.)
- Interior design: Color consultation, furniture rearranging or purchasing, decor advising or purchasing, holiday decorations, one-room plan, full kitchen or bath renovation, whole-house gut renovation.
- Construction: Plans and/or renderings (drawings, models, virtual 3D), garage or attic conversion, add-ons, site prep, add-on or accessory dwelling unit (ADU), porch or patio, total new build, framing and carpentry, laying a foundation, complete gut renovation.
- Landscaping: front or side yard or backyard, plant choice and design, plant installation, hardscaping, irrigation system installation, full landscape design, maintenance (you can break these out too, such as lawn mowing and weeding, hedging and pruning, tree trimming, mulching).
Create Your Packages
Once you’ve decided on names and listed all the possible services you can offer, it’s time to assign components to your three categories or phases. For packages based on service, create a table with all the components on the left, and then add your three headings next to that, from lowest to highest degree of complexity or involvement—for example, Bronze first, Silver in the middle and Gold at the high end.
The example below uses Bronze, Silver and Gold and is focused on construction, but you can change the components to fit your business.
For packages based on phases of work, it’s a similar idea except instead of check marks, you’ll have three columns, one for each phase of work, and list the components in each category. You can change the components in the example below to fit your business.
Of course, you can customize the actual components of each phase for specific clients and even have more than three phases. It’s all about what works best for you and your client.
Price Your Packages (Example)
While every project is different, if all of your projects tend to fall within a certain overall budget range, you might be able to offer an estimated pricing range for each level or phase. For example:
- Bronze: Less than $50,000
- Silver: $50,000 to $200,000
- Gold: $200,000 and up
Since you’ve already listed all your components above, you might also consider offering services à la carte. But be sure to include a maximum time or other indication of the maximum effort you’ll expend for each. For example:
- Drywall installation, one 12-by-12-foot room with 8-foot ceiling: $300 materials and labor
- Holiday decorating, small porch or entryway: $200 plus cost of materials
- Lawn maintenance, up to 5,000 square feet: $150
Big ‘Secret’ Benefit of Tiered Pricing
Offering tiered pricing or à la carte services will by itself likely increase your client base, simply because some homeowners aren’t looking for a full range of services. But you might enjoy an even greater benefit: bigger projects down the line. Perhaps you build a small deck for someone, and then they hire you later on to add a third story to their home. Or you decorate a client’s powder room, and then they bring you on for a full kitchen renovation.
What’s more, someone you do a small job for might refer you to a friend or relative with a more expansive job and a bigger budget. And regardless, doing smaller projects could mean getting more of those all-important online reviews in a shorter amount of time than if you were to do only full-service work.
Every opportunity to get your foot in the door is a good thing. It’s your chance to shine and make a lasting positive impression. Keep that in mind as you work on projects both big and small, and you’ll be on your way to glowing reviews, more projects and increased income for your business.
Want advice delivered to your inbox?
Unlock industry insights and updates for contractors and design pros
By signing up, I agree to the Houzz Terms of Use and Privacy Policy and that Houzz may use my information to contact me about relevant content, products, and services.