3 Pricing Strategies That Also Work for Talent Acquisition

Pricing. Price change. Price increase. Inflation. Historically, the word “price” is not part of everyday conversation, but that’s been changing as of late.

It turns out that pricing concepts can apply to markets that extend far beyond goods and services. For example, the same principles used to help businesses defend and communicate the value they create can also help with another relevant challenge: hiring and retaining employees.

For simplicity, in this article we’ll focus on industrial and commercial services as an example. Pricing projects within blue collar businesses encompass a spectrum of activities that include:

• Price setting: “What should we charge for equipment repair?”
• Service offering: “Should we offer these three technician services as a package?”
• Price/sales enablement: “Hey, while I’m here would you like me to fix this other thing and add it to your invoice?”
• Price monitoring: “Services A and B were performed, but for some reason Service A was discounted and Service B wasn’t always charged.”

The following are three examples of applied pricing concepts. Each item demonstrates how a best practice that is traditionally applied to pricing and sales can also apply to talent acquisition.

Approach to Competitive Markets

Selling Blue-Collar Services

News flash: customers are more price sensitive to some items than others. For example, hourly labor rates may be the key item that customers ask about when choosing a blue-collar services provider, but they may pay less attention to your materials/parts prices or how travel time is charged. In these situations, it’s helpful to have a more competitive base hourly rate, even if other products or services are less competitive.

Talent Acquisition

Similarly, candidates may be sensitive to specific pieces of compensation like hourly wage or base salary or schedule, but less sensitive to others (such as holiday pay, dental coverage, or educational benefits).

For example, in our company’s professional services industry, candidates increasingly voice the importance of flexibility, so over the past decade we’ve responded by evolving to a fully remote company with a self-directed vacation policy.

Bundle to Win

Selling Blue-Collar Services

Creating bundles of two or more products or services allows customers to make a single decision to efficiently meet their needs, while reducing price negotiation over individual bundle components where the seller lacks understanding of their customer’s willingness to pay for each specific item.

A great example of this in everyday life is at fast food restaurants. The $5 combo meal might be a best seller, and the restaurant doesn’t need to worry whether you value the burger at $4 and the fries at $1, or whether your friend values the burger at $2 and the fries at $3, because they get to sell the $5 bundle to each of you.

Talent Acquisition

Companies also pitch the components of their value proposition to candidates. Rather than individually negotiating items of wage, schedule, and other benefits one at a time, it’s common practice to offer candidates a complete package that includes all terms of employment. Since it’s not always obvious which component candidates care about most, this approach allows them to evaluate the offer holistically. Sometimes, a candidate may choose a company based on their preference for non-wage factors such as schedule flexibility, company responsiveness, or team member rapport.

Differentiate Your Approach

Selling Blue-Collar Services

Customers expect that prices will be different during peak seasons or overnight hours, if a project is specialized or complex, or if they’re committed to you via contract vs. calling out of the blue for spot work. Assigning prices in this way allows you to provide preferential treatment to your most important customers while protecting your ability to manage your capacity, especially during periods of high demand.

Talent Acquisition

Like customers, candidates expect that market characteristics will influence the terms of their employment. For example, candidates may appreciate that a long-term employment agreement has benefits that go beyond a project-based rate for a specific job. Employers should adjust their approach to employment arrangements based on their need for long-term stability vs. near-term flexibility, or attract workers in a tight labor market, or to incentivize performance via alternative measures.

The field of pricing bridges analytical rigor with human dynamics and psychology. Applying pricing best practices to other organizational issues allows us to leverage those perspectives to build healthier, more profitable, and more stable businesses.