WHY YOU SHOULDN’T RAISE YOUR PRICES IF YOU DON’T WANT TO! Pricing is a tough one for business owners and entrepreneurs; it’s something we seriously struggle with anytime it comes to creating a new product or service, and like it or not: it’s an ongoing process every time we release something for sale. Now, here’s the mistake I see getting made over and again that results in people NOT making any sales at all - I’ve done this myself more times than I care to remember, so if you take any advice from me, let it be this. I see so many entrepreneurs out there just sticking a number onto their things and hoping for the best. Usually they’ve put this price on it because someone has told them that’s the “going rate” or that “no-one will take you seriously if you charge less than that.” Sorry, but I call bullshit on that one. No one has the right to tell YOU how much you get to charge. When it comes to setting and raising your prices, you get to decide how much. But if you’re still struggling, then here are the most important questions to ask yourself when coming up with your magic number: How much time will you have to spend creating and/or delivering this product? What is that money for? Who is this product/service for? Now, obviously coming up with a price requires a bit more than answering these questions, but they will certainly be a good starting point, so let’s look at each one individually: How much time will you have to spend? You definitely need to be earning money in your business - otherwise it’s just an expensive hobby, right? So that means that you need to be making money at least equal to the amount of time you spend. Yes, this seems like a trading dollars for hours model, but like I said: it obviously goes a lot deeper than this and you can structure it to make it work for you. The main point to keep in mind is that you should be making money for every hour you spend working on something. How you calculate that at the end is ultimately up to you. What is the money for? This is one that so often gets overlooked when coming up with pricing, but I cannot stress enough how important it is. When you’re simply slapping a number onto something, either because someone told you that’s what it should be, or because you’re just thinking it sounds good, then you’re not aligned to it at all - and when you’re out of alignment with it, it’s almost impossible to achieve. Believe me - I’ve tried. Here’s a personal example of a situation I was recently in: I had decided to launch my 1:1 coaching packages, and because this was the first time running them, I decided to offer them to a small beta group at a highly reduced price in order to determine if the structure was good, if I enjoyed working this way, and to get some testimonials. So, I asked myself the above questions and set myself a goal of how much I wanted to earn and then I came up with a reasonable price of $300. I felt good about this; it was a nice starting point for me, it was affordable for those who were signing up, and it helped me generate a nice income that month. That all changed when I had a consultation with a lovely lady (not meant in a sarcastic way - she really is lovely) who told me that she was shocked at the low price - even for the beta group, and that if I wanted to sell these, I would have to raise the price because no one would take me seriously. I started to panic and think she was right; now maybe she is right - but that doesn’t mean it was the right TIME for me to increase these prices. Taking on board her advice, I started offering people the package at the price she had suggested: $1,000 (that’s a bit of a difference, right?) What do you think happened? Not bloody much! Keep in mind that before I raised my prices, I had already sold half of my target amount of packages - until this point I was feeling pretty great about it. Now that I raised them, no one was buying. So here’s the thing: people might say, “oh, now you’re only encouraging the freebie or bargain seekers with those prices.” Or, “you’re undervaluing your work and also the work of other coaches.” You might even think that, too. And that’s cool. But for me, it’s not about believing in the value or not; it’s about being able to start somewhere - and for everyone that’s completely different. I was able to sell my $300 packages - not because I was attracting cheap-ass clients (these ladies rock, and are so driven to succeed with their businesses), but because I was aligned to the amount I was charging. It felt good for me and it was attached to something I could visualize - that money was intended for something. On the other hand, when I tried to charge $1,000, it was completely out alignment with my goals, and it’s not that the people I was speaking to couldn’t see the value there, but I wasn’t able to really convince them, because I wasn’t able to convince myself; it was just a number that didn’t represent anything. Who is it for? Again, this one is so important - and often overlooked. When you’re setting your prices, you really have to take into consideration who your ideal clients are. For example, if your ideal client is a stay-at-home mom or a student, they’re likely not going to have a massive cashflow that can be put into things like coaching or online programs and products. Does that mean they have to miss out on something that could improve their lives? You have to consider your branding and what you represent. Your core beliefs, and ultimately, your goals. I actually spoke with one of my lovely clients the other day about this very issue and she really hit the nail on the head by saying that “I just want to make an honest living and pay my bills while doing what I love and create some freedom for myself and my family”. This lady is a Life Coach who teaches other coaches fresh out of their training how to build their business and get clients But she knows her audience and she knows that they probably are not overly flush with cash, so she won’t charge them obscene amounts - even if she could; she’s just not the type. What she says is so true. You really have to understand where the people are who you want to serve and then come up with ways to help them in a way that’s accessible for them, but that also helps you grow your business in a way that feels good. Screw what everyone else is telling you to do: just do your thing and you’ll soon see that it gets a lot easier and more enjoyable. Yes, should always be looking at raising your prices (I recommend every 3 months or so). I have also raised the price of my package to $500 - and again, I’m in alignment with that, so I have no problem selling it. But you have to raise your prices when YOU feel it’s right. Don’t let yourself be bullied or made to feel like you’re bringing down the value of your industry. There is an abundance of clients out there - all at different stages in their life and business - all with their own personal stuff going on and individual situations. Not everyone wants luxury clients - so just focus on who you want to serve, and go and find them. :)
Posted on: Thu, 30 Oct 2014 08:51:34 +0000
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