Pricing. Its a huge topic and often’s bamboozles us in business. There are many variables, different strategies for setting your pricing for different industries or products or services. For example if you’re part of the finance industry, Regulators have set the fees and margins for commissions and earnings. Pricing is not something that these businesses need to think much about. Pricing is crucial to get right as its one of the factors for your business success or failure, but lets be clear, it is not pricing alone that drives sales, ( this is a topic for another post)
I’m asked so often about how to go about setting prices, and I have met many people who have underpriced their work. I also have learnt the long lesson about underpricing my work, or undervaluing myself. I’m still a work in progress. In talking with the hundreds of business women that I do every year, here’s what I have learnt from everyone about why we must stop undervaluing ourselves:
- De-valuing your work and industry – Overall your not doing your industry any favours and even more importantly you’re undermining your own work and reputation. Your work will not be appreciated or valued the same way
- People who only care about price make for awful customers. (note that I said ‘only’, it’s perfectly fine to shop around) You have all experienced the person who argues every price, wants to barter, argue, or openly criticises prices are not going to be pleasant customers.
- You will eventually overwork yourself or burn out. When you are not priced correctly, you will be delivering or working on jobs longer and cutting corners to recoup your costs – Its just not worth it.
We all know product prices can vary enormously. You can purchase a watch from a range of pricing starting at $10 right up to … well, depending on the materials such as diamonds and carats in the watch, several thousand or hundreds of thousands of dollars. But what of products like jeans or T-shirts? a range in price of $10 to several hundred dollars is available, but the material is the same isn’t it? The brand identity, the brand story – all of these things affect the outcome. Clearly there are people that buy all variances. The marketing is also a major factor here, and thats a conversation for another time.
Whilst I will share some sample formulas in part 2, there is an element that was not covered when I was doing my research. I feel strongly that it needs to be included. In setting your pricing, you must check in internally with ‘how it feels’ or how it ‘resonates’ with you. This is especially true when you are pricing ‘you’ when you offer a service or based on your expertise and time. You should feel GOOD about your pricing!. I have discussed this at length with intuitive consultant, Barbara Callan, who often councils people grappling with this For example, A great example of this was a clinician,
Love yourself, Make sure it feels good.
lets call her Jenny, was providing a service and a business coach advised Jenny that she put her prices up from $120 to $350. Now at $350 Jenny just couldn’t do it, it didn’t ‘feel’ right. I’m not talking about being out of your comfort zone. I’m talking about energy and resonation. If you’re so far out of your comfort zone that you can’t connect at all, thats not going to work. You need to check in about how and what ‘feels’ right for you. In this case when Jenny sought counsel, she settled on a price increase to $220 for her service and that resonated better within her.
Its worth a mention here that checking in with your pricing, being bold or making sure your pricing correctly, will not mean that much if you are ‘undervaluing’ yourself in general. Im talking about a deep seated belief of not deserving, or having a poverty consciousness, For example believing that there is never enough. If this is the case for you, then shifting your subconscious beliefs in this area will be nothing short of enlightening.
Back to resonation – Another example of being bold and setting pricing correctly, was the story of the hairdressing salon, who opened in a large country town filled with salons that had $10 haircuts. He was incredibly passionate about his craft, he built a super funky salon along with a bar, and an out of this world service. His haircut price started at $35. even for male haircuts. He was pilloried by some of the locals and even the local paper, and when he opened, for the first couple of weeks not much happened. To his credit he stuck to his guns, and as word got around about how good the service was alongside the champagne and gourmet beer that was served with their haircut and the spectacular head massages, the $10 enquirers eventually started coming along too. The whole standard of the hairdressing in the town was also lifted as other salons followed suit and put their prices up.
Before we do some number strategies, it is also wise to do your research and use the information to help shape your final decision on your pricing:
• Do your research – what are the going rates or what is the marketplace currently dictating. ( If there is a large variable, dig deeper and find an average)
• Look at hidden costs, or different methods of delivery. A course that is only delivered by a video that has been recorded one time will be priced differently to a live training, so you cant compare them
• Know your customers, and what they are looking for and are paying for your products and services. Look at the information this gives you. For example, when I had the gift hamper company, we tried to sell our hampers at a market. We didn’t sell one. The pure fact was that customers were looking for bargains at this market. They were not going to pay for our time and packaging and it just wasn’t our market.
• What are your competitors charging? Knowing your point of difference and being clear is key here.
• How is your company or products perceived in the marketplace?
Next week we will look at the different formulas for working out pricing.
Until next time have a great week
Andy x
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