Do you angst over your charge rates most weeks? Are you charging enough? Are you charging too much? Are you charging a fair fee for what it is you do?
The mental games you play with yourself over what and how to charge for your time, your products, your services and your programmes can go on for hours, days and weeks. If pricing was a sport, there’s every chance you’d get a Gold Medal, isn’t there?
Most people who read my articles and subscribe to my newsletter sell themselves. So I am guessing that you do too.
And when what you offer is intangible – you can’t touch, smell, feel or hold what you offer – so it can be a challenge working out how to price what you do so that you – and your client – profit. As there are very little in the way of raw materials, distribution or labour costs to take account of, working out how to charge for the time you offer in your service based business can feel like waving a wet finger in the air at times.
Because, let’s be honest here. It’s not about charging the highest price you can possibly stretch to. Plucking a big figure out of the air and then expecting someone (just anyone!) to pay at that high price, just ain’t going to work.
The price that you charge has to profit you … and it has to profit your client too. If it’s not a win win and the results and experience that you client gets does not exceed the money investment, then you are going to be in a business for a very short while.
Profitable pricing has to work for both parties and it’s not as simply doubling, tripling or quadrupling what you current charge.
So how do you go about profitable pricing?
1) Stop charging by the hour.
Most coaches, therapists, designers and consultants set themselves up with a clear price per hour or price per session. Whether that’s £35 for a 30 minute treatment or £70 for a coaching session or £60 an hour of design time … you will always get stuck as you get busier and busier. Your profitability will start decreasing and you will find yourself working harder and harder just to keep your income increasing.
Bolt on holidays, days on your sick bed or even deciding to take the odd day off here and there, and you will soon start to realise that your income will always be capped.
Yes, you can put your hourly rate or price per session up but when your charge rates are based on your time, your clients will always have a maximum they will be prepared to pay for that hour. They WILL compare you to what they pay their cleaner or the tutor for their kids or who ever else they pay by the hour.
2) Start charging by the programme or product.
What ever you do for your clients, I highly doubt whether you can fix your client in one, single hour of your time. Your clients may come to you initially for a quick fix, but for most of you there will always be an opportunity to take your clients onwards and upwards either by up skilling them, supporting them through implementation or change taking place or even taking them up to the next level.
Your clients want to be fixed and if you explain that there is a journey – a start point and an end point – that they will need to go on, it makes sense to bundle up your time to fulfill that journey.
After all, if your car was stranded on the shoulder of the motorway, would you really be happy to take just a quick fix to get you home, knowing that it would break down again the very next day? You may take the quick fix there and then, but there’s every chance you will follow through by booking it back in with the garage for the recommended replacement parts and service.
Not only are you able to sell more upfront to each new client and thus reduce the stress of having to sell each and every time your client comes back to you (and if they come back to you!), your client is happier knowing what budget they are working to and the length of time they expect their problem to be fixed.
3) Know that it makes no odds how YOU feel about the price … it’s how your clients feel about it that counts.
I have lost count of the number of conversations I have had with clients who were unsure whether to go for one price or another. And the difference between each price they are debating is negligible. “Should I go for £295 or £275?” … “Should I charge £3,995 or £3,445?” It makes no odds … so always go for the higher of the two.
If you do your job as a marketer right and help your potential client truly understand the benefits and results that they are going to get as a result of working with you, then whether they pay £295 or £275 makes no odds. They will either want to buy … or not. £25 is neither here nor there.
4) Be confident in what you charge.
One of the problems I see in many of my clients is that they want to charge higher prices before they are ready to accept them. What I mean by this is that they don’t feel worthy of the price they want to ask for.
If you are at all unsure or you begin to question whether you are “not enough” for the price you set, then bring it down a peg or two. If you don’t feel it inside, then you are going to come across as unconvincing and chicken out of conversations that will bring you clients. So make it easy on yourself and charge at a price that you can roar!
5) Know that there will also be times that you will HAVE to step up.
Being confident and playing safe are two different states of mind. Over time, your confidence at one level of pricing will begin to melt in to complacency. As you gain clients, become more well known in your field, you must remember to check in with the value you give your clients.
There will come a time that you will need to re-appraise your prices, take a deep breath in and take them up a level to reflect the level of work that you do right now. Playing safe will lead to mediocrity. And mediocrity may well eventually kill your business.
Pricing is a game. A game you play with yourself and sometimes you win and sometimes you don’t. Your clients will pay what you believe you can charge. There will be times that you will want to build up your confidence and there will be times that you will want to scare yourself silly to step up to the next level.
When you have a business that is not as easy of costing out the raw materials, costing out labour and adding the appropriate percentage mark-up … you have to play the game.
And knowing that it is usually YOU that gets in the way of how profitable you can be, allows you to be in control over what you can charge.
Do you struggle with knowing what to charge? Or perhaps you know this game and have set your rules already. Leave a thought, comment or observation below. I would love to hear from you.