The Painter’s Guide to Value-Based Pricing: Stop Undercharging and Start Thriving

Are you a painter who’s frustrated with inconsistent income and the nagging feeling you’re undercharging for your hard work? You’re not alone. Many painters fall into the trap of using outdated pricing models that focus on costs rather than the true value they deliver to clients. It’s time to break free and embrace value-based pricing — a strategy that can transform your business and your bottom line.

Why Traditional Pricing Models Fail Painters

Let’s start by debunking two common pricing approaches that often lead to undercharging:

1. Time & Material (Cost Plus) Pricing: This involves calculating your time and material costs (materials, labor, etc.) and adding an “industry standard” markup to an average hourly rate. While it seems logical, it ignores the fact that clients don’t care about your costs — they care about the results you provide. It also punishes the customer with a higher price if your team is slow, or it punishes the company if your team is fast because the price is derived from how much time it takes. Not what the value is they are getting.
2. 50% Gross Profit Pricing: This rule of thumb suggests doubling your costs to cover expenses and profit. The problem is, it can lead to either overpricing or underpricing, depending on your specific business and market conditions. You might have a rival with lower costs than you do, but if you are both shooting for 50% markup, your rival will undercut you and leave money on the table for themselves.

Both of these methods neglect the crucial factor of value. Your clients are willing to pay more for a high-quality, stress-free painting experience that exceeds their expectations. Value-based pricing taps into this willingness to pay, ensuring you get fairly compensated for your expertise and the unique value you bring to each project. This approach is supported by research in various fields. For example, a study published in the Harvard Business Review found that companies that focus on customer value creation outperform their competitors in terms of revenue growth and profitability [1].

Understanding the Supply and Demand Tension

Think of your painting services like a bottle of water. In its most basic form, water is abundant and practically free. But we gladly pay more for bottled water due to convenience, branding, and perceived quality (See Video).

The same principle applies to painting. While anyone can slap paint on a wall, your skills, experience, and the overall client experience you offer create a demand that justifies higher prices. By understanding the supply and demand tension, you can position yourself as a premium service provider rather than a commodity. Research in behavioral economics demonstrates that consumers are often willing to pay a premium for products and services that they perceive as high-quality or exclusive [2].

Calculating Your True Break-Even Point (Marginal Cost)

To price effectively, you need to know your marginal cost — the minimum amount you need to charge per project to cover all your expenses and break even. This includes:

• Cost of Goods Sold (COGS): Paint, materials, labor, and any direct costs associated with each project.
• Overhead Costs: Rent, insurance, marketing, and other expenses not directly tied to a specific project. Divide your total overhead by the number of units sold you typically complete in a period to get your overhead cost per unit.

Your marginal cost is the sum of your COGS and overhead cost per unit. Any amount you charge above this is profit.

Building Perceived Value

Once you know your break-even point, you can focus on building perceived value to increase your prices and profits. Here are some strategies:

• Craft a Powerful Brand: Develop a strong brand identity that communicates your expertise, professionalism, and unique selling points.
• Deliver Exceptional Service: Go above and beyond for your clients, providing clear communication, meticulous attention to detail, and a stress-free experience.
• Amplify & Customize Your Full Offer: Draw attention to your complementary services like color consultations, wallpaper removal, or minor repairs to enhance your value proposition. In addition, highlight the quality of products you use and why they matter. Don’t forget that customers often value a bargain as well. Customizing the offer to include more economical options to choose from can enhance the price/value alignment that your customer is looking for.
• Showcase Your Expertise: Share your knowledge and experience through blog posts, social media, or client testimonials to establish yourself as an authority in the field.

Creating Scarcity and Urgency

Another way to increase demand and justify higher prices is to create a sense of scarcity and urgency. This can be done by:

• Limiting Availability: Only take on a certain number of projects at a time to create a sense of exclusivity.
• Offering Time-Sensitive Discounts: Provide early booking discounts or limited-time promotions to encourage clients to act quickly.
• Highlighting Your Unique Skills: Emphasize any specialized skills or techniques you offer that are not easily found elsewhere.

Embrace Value-Based Pricing and Thrive

By adopting value-based pricing, you’ll not only increase your income but also attract the right kind of clients — those who appreciate your value and are willing to pay for it. Remember, painting is more than just a service; it’s an art form that transforms spaces and enhances lives. Charge what you’re worth, and watch your business flourish.

To Be Continued…

Torlando Hakes

1 Anderson, J. C., Narus, J. A., & Van Rossum, W. (2006). Customer value propositions in business markets. Harvard Business Review, 84(3), 90–99

https://www.chegg.com/homework-help/questions-and-answers/anderson-j-c-narus-j--van-rossum-w-2006--customer-value-propositions-business-markets-harv-q85343510

2 Gourville, J. T. (2006). Eager sellers and stony buyers: Understanding the psychology of new-product adoption. Harvard Business Review, 84(6), 98–106.

https://journal.doba.si/OJS/index.php/jimb/article/view/JIBM.2021.13.2.2