Set Your Prices, EasilyOct 04, 2021
Let’s talk about pricing. It’s an important conversation.
Your prices have an impact on more than just your profits. In addition to playing an important role in your bottom line, getting your pricing right makes sure you’re maximizing your profits, staying true to the brand you’re creating and getting compensated for the value you bring to the table.
While important, determining your pricing can be difficult and. In fact, most business owners will say pricing can be one of the most difficult and uncomfortable things we do in our businesses. I know I’ve struggled with it myself! But it’s necessary to take a close look at your pricing.
It’s best to remember that setting prices is a process. Avoid the mistake of the set it and forget it mentality. Instead, think of determining your prices as something you’ll tweak over time. Don’t feel pressured to get it right on the first try!
When looking at my pricing levels, there are 5 Steps I use to arrive at my prices with ease.
1. Get Comfortable
Mindset is important in, well, everything. Pricing your services is no different. Get comfortable with asking for money for what you’re doing because you bring value to the table. Know your worth and be confident in what you have to offer.
One mistake I see (and have made myself) is paying too much attention to the competition. If you focus on the value and services you have to offer instead of what everyone else is doing, the stress of what is “right” goes away. Focus on your value, not your competition.
2. Know what you’re selling
You can’t price what you don’t know. Know the exact services you’re offering and how many people you can serve. If your services are a high level, time intensive service, you can’t charge discount prices sustainably. On the other hand, the more clients you have to serve reach your revenue goals.
Your price should reflect the value of your services. What problem are you solving? Hint: The bigger the problem, the bigger the price should be!
3. Know who you serve
Your ideal client is out there, but you won’t find them if you don’t know who you’re looking for. Your pricing will play a big part in attracting the type of clients you want to serve. Some things to consider include:
- Is your ideal client looking for high ticket or discount services?
- Does your ideal client need entry level or high level services?
Remember, none of the options are wrong. The important thing is to be specific so you’re crystal clear on whom you serve.
4. Do your research
Learn your numbers, your industry and your market. Metrics can help guide you. Your numbers are the perfect starting point to help you establish a pricing strategy. You need to consider:
- What does it cost you to run your business and serve your clients? You need to be aware of how much you need to cover your costs in order to have a sustainable profit.
- How many clients can you serve? Be realistic in forecasting your capacity.
- Know your market, but remember not to over compare to others. The market will have a bearing on whether you can set your prices high or low. However, remember that you are PART of the market, so there is room for you to push the boundaries if you feel like you have the value to do so.
5. Set your goals
Now let’s play with the numbers. Remember there is no right or wrong in this! Set your income goals. How much do you want to make? You can think of this in terms of annual, quarterly or monthly revenue? Knowing how much you want to make is important so you understand the relationship between your sales revenue and prices.
Once you’ve gone through all of the steps, it’s time to take pen to paper (or keyboard to spreadsheet to make things easier) to consider your pricing options.
- List your services
- Determine a few price points (I usually start with three).
- Analyze how each price point affects your sales and goals.
- Will you reach your sales goal?
- Will you cover your costs?
- How does your pricing compare to your direct competition?
- Most IMPORTANTLY, how does each price point feel to you? Confidence in your pricing will make the sales process so easy for you and your clients!
After you’ve determined your prices, you’re not done. Once you’ve landed on a price that you feel good about, start using them. Then track the results and make adjustments. Pricing is an ongoing process so tracking and adjusting will ensure you are honing into the perfect price point for you and your clients.
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