How to Choose a Pricing Strategy for Your Process Service Business

Author:  Richard Farrell, program administrator with extensive experience in training and education development at the PROServer CENTER, a legal professional organization whose mission is to set a national standard for the process service industry in the United States. 

It’s no secret that small businesses like process service play a vital role in the US economy. However, revenue for process serving businesses can be scarce. For instance, small businesses that do not have any employees average just $44,000 a year in annual revenue with two-thirds of these companies earning less than $25,000 per year. While various factors can affect a business revenue potential, one of the most important factors is the pricing strategy that its process serving business owners utilize. Whether you're just starting out in process service or you’re ready to begin advertising to drive sales, now is the time to learn what role pricing plays in the bigger picture. Once you have a firm understanding of what a pricing strategy is, you can start reviewing the various approaches and choose the best one for your process serving business.
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What is a pricing strategy and why is it important to process servers?
In short, a pricing strategy refers to all of the various methods that small businesses use to price their goods or services. It’s an all-encompassing term that can account for things like:

• Market conditions
• Actions that competitors take
• Account segments
• Trade margins
• Input costs
• Clients’ ability to pay
• Operational costs
• Variable costs

Pricing strategies are useful for numerous reasons, though those reasons can vary from one process service business to another. Choosing the right price for your process service business will allow you to maximize profit margins if that’s what you want to do. Contrary to popular belief, pricing strategies aren’t always about profit margins. For instance, you may opt to set the cost of a process service at a low price to maintain your hold on market share and prevent other process serving competitors from encroaching on your territory. 

In these cases, you may be willing to sacrifice profit margins in order to focus on your process serving business competitive pricing. But you must be careful when engaging in an action like this. Although it could be useful for your business, it also could end up crippling your process service company. A good rule of thumb to remember when pricing services is that your clients won’t purchase service of process if you price it too high, but your process serving business won’t be able to cover expenses if you price it too low.

Here are ​10 different pricing strategies for your small process serving business to consider:
As we’ve just identified, project management and strategic, actionable decisions go into setting the price of a your process service. Here are ten different pricing strategies that you should consider as a small process serving business owner.

1. Pricing for market penetration
As a small business owner, you’re likely looking for ways to enter the process serving market so that your services become more well-known. Penetration strategies aim to attract clients, like attorneys, paralegals and law firms by offering lower prices on services than other process servers.

For instance, imagine a process server sells a service for $100. You decide to sell the product for $97, even if it means you’re going to take a loss on the sale. Penetration pricing strategies draw attention away from other process serving businesses and can help increase brand awareness and loyalty, which can then lead to long-term contracts.

Penetration pricing can also be risky because it can result in an initial loss of income for your process serving business. Over time, however, the increase in awareness can drive profits and help small process service businesses stand out from other process servers. In the long run, after penetrating a market, process serving business owners can increase prices to better reflect the state of the service’s position within the market.
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2. Economy pricing
​This pricing strategy is a “no-frills” approach that involves minimizing marketing and operational expenses as much as possible. Used by a wide range of businesses, including process servers, economy pricing aims to attract the most price-conscious clients. Because of the lower cost of expenses, process serving companies can set a lower sales price and still turn a slight profit.

While economy pricing is incredibly useful for large companies, the technique can be dangerous for small process serving businesses. Because small businesses lack the sales volume of larger companies, they may find it challenging to cut operational costs. Additionally, as a young process serving company, they may not have enough brand awareness to forgo custom branding.

3. Pricing at a premium
With premium pricing, process serving businesses set costs higher because they have a unique service or brand that no one can compete with. You should consider using this strategy if you have a considerable competitive advantage over other process servers and know that you can charge a higher price without being undercut.

Because clients need to perceive services as being worth the higher price tag, a process serving business has to work hard to create a perception of value. Along with providing a high-quality service of process, process server business owners should ensure that the consistency of the high value over time, the professionalism and reliability associated with their process service all combine to support the premium price. An example of premium pricing is a PROServer List member who has differentiated himself from other process servers by obtaining the designation of a Certified Process Server and by joining this exclusive group of process servers who all maintain the highest quality of professionalism in the process serving industry.

4. Price skimming
Designed to help businesses maximize sales on new services, price skimming involves setting rates high during the initial phase of a service. The company then lowers prices gradually as competitor services appear on the market. An example of this is seen when a process server is initially the only provider of process service in a certain local area. Once another process server joins the same local market, the process serving business owner gradually lowers his service fees in order to prevent being driven out of the area.

One of the benefits of price skimming is that it allows process serving businesses to maximize profits on early adopters before dropping prices to attract more price-sensitive clients. Not only does price skimming help a small business recoup its development costs, it also creates an illusion of quality and exclusivity when you first introduce your service and your process serving business to the marketplace.
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5. Psychological pricing
Psychological pricing refers to techniques that marketers use to encourage clients to respond based on emotional impulses, rather than logical ones. For example, setting the price of a process service at $199 is proven to attract more lawyers and paralegals than setting it at $200, even though the actual difference here is quite small. One explanation for this trend is that clients tend to put more attention on the first number on a price tag than the last. The goal of psychology pricing is to increase demand by creating an illusion of enhanced value for your process serving business clients.
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6. Bundle pricing
With bundle pricing, small process serving businesses offer multiple services for a lower rate than clients would face if they purchased each item individually. A useful example of this occurs when a process server offers service of process, legal documents filing and skip tracing. When marketing each of these services individually, the price may be higher than if combined as a group. For example, a process serving business may set their fee for process service at $50, filing of paperwork at $75 and skip tracing at $40. At the same time the business may offer a bundle of filing and service at $110 or skip tracing and process service at $70 in order to attract more clients to their process serving business.

Not only is bundling services an effective way to increase sales, it can also increase the value perception in the eyes of your clients. Paralegals and attorneys feel as though they’re receiving more bang for their buck. Small process serving business owners should keep in mind that the profits they earn on the higher-value items must make up for the losses they take on the lower-value services. ​

7. Geographical pricing
If you expand your process serving business across state or national lines, you’ll need to consider geographical pricing. Geographical pricing involves setting a price point based on the location where it’s sold. 

Another factor in geographical pricing could be basic supply and demand. For instance, imagine you offer service of process in an area where you are the only process server.  In this case you may choose to set a higher price point than in another area where you have competition from other process servers.
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8. Promotional pricing
Promotional pricing involves offering discounts on a particular service. For instance, you can provide your process service clients with vouchers or coupons that entitle them to a certain percentage off another service, like filing of an affidavit with the court or locating an individual who has moved.

Promotional pricing campaigns can be short-term efforts. For instance, you may run a promotional pricing strategy over an extended holiday, like Memorial Day Weekend. By offering these deals as short-term offers, process serving business owners can generate buzz and excitement about a service. Promotional pricing also incentivizes clients to act now before it’s too late. This pricing strategy plays to a client’s fear of missing out.
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9. Value pricing
If you notice that sales are declining because of external factors, you may want to consider a value pricing strategy. Value pricing occurs when external factors, like a sharp increase in competition or a recession, force the small process serving business to provide value to its clients in order to maintain sales.

This pricing strategy works because clients feel as though they are receiving an excellent “value” for the service of process. The approach recognizes that clients don’t care how much a service costs a company to perform, so long as the client feels they’re getting an excellent value by purchasing it. This pricing strategy could cut into the bottom line, but process serving businesses may find it beneficial to receive “some” profit rather than no profit.
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10. Keep track of business revenues
​Once you determine the right pricing strategy for your process serving business, your profit margins could increase. You’ll want to make sure you’re using reliable accounting software to keep track of relevant data. Such software makes it easy for you to monitor relevant sales data and manage cash flow in one place. This data allows you to continually evaluate your pricing method so that you can make price changes in real-time, grow your process serving business, and improve your client success.

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Do you own a process service business? If so, you know that figuring out how to price services isn’t always easy. To make sure your  business is profitable, try these tips for pricing your process services. 

PRICING TOOLKIT

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