One of the most critical parts of any marketing or business strategy is getting the pricing right. Especially for smaller business owners where issues around fear of losing business and ‘self worth’ often get in the way of charging what the job – or the person – is worth. Getting your pricing right is key.
In my experience, most business owners start with the worthy idea that they will work less hours, for more money and spend more time doing the things they love – with the people they love.
However, this rarely turns out to be the case! With most earning less and working longer hours than they ever did before! If you’re not charging enough you will always be pushing water uphill – why ever would you want to work twice as hard for half the money?
Pricing can be a complicated area and it’s worth reviewing my top strategies and ask yourself if you’ve got your thinking 100% right – making your ‘dream lifestyle’ a much more likely prospect!
Have value added packages that customers can buy
This is really important if you are a consultant where you are essentially selling time for money – which can be a minefield if you are struck with thoughts ‘why would anyone pay me £x for my time?’ The outcome is almost always massive under-valuing of what you offer and the skills you bring. After all, don’t assume because you find it easy, so do they.
Packages have a massive benefit to anyone selling ‘themselves’. We Brits in particular struggle with saying ‘I’m worth £2000 a day’. But it’s much easier to say, ‘this is my X process – and it costs £2000’. It just so happens that it takes a day of your time but you’ve added in some extra bits and pieces that the customer really values – and that you can deliver easily – and suddenly you are selling IT and not YOU.
Value-added packages work just as well for people selling services, as well as products both online and offline.
Multiple price points make for easy selling
People will often ask to pay less for what you do but, by having multiple price-point offerings, you can say, ‘OK, if the budget is £x, then I suggest you go for the Y package’. Don’t just give away your best stuff – for less!
And remember, 20% of your market will buy a premium product – something with more options and service. The ‘we’ll erect it for you’ shed service, for example.
Don’t allow apples-to apples comparisons
If what you sell appears to be a commodity – something where people can buy the exact same thing somewhere else for less – then you are instantly trapped in a ‘race to the bottom’!
Apples to-to-pears comparisons fare far better. By adding value and creating unique product and service bundles, comparisons become much harder and it allows the customer to value the totality of what you offer and not just the basics.
Managing quote creep and time stealing customers
Pricing can often seem to be crystal clear at the start of a project but the next thing you know you are throwing in extra for this, and for that – and your hourly rate is slashed in half. Or worse!
Nailing down quotes and being REALLY clear what you do – and don’t – include will always be wise. If extra hours might be involved over and above the spec, make it clear what rate these will be charged at. Say if telephone calls are chargeable; these can be a massive drain on your time and if you allow customers to use you for free in this way – I promise you they will!
Which means, of course, that you need processes and systems to monitor what you’ve quoted for and what time you’ve spent on the project. Believe me when I say systems are worth all the time and effort you put into developing them – and will quickly repay you 10-fold in reduced time spent and less time lost.
Use scarcity and authority advantageously
That you only work with 10 clients, or that you are perceived as a leader in your field are both good ways to push your charges up.
Always properly understand your customer
If you make the effort to properly get under the skin of all your customer types, you’ll get to really understand what it is that they value most. For one segment, it may be something very different to another buying the exact same product.
Subtle nuances in the way the package is presented can make a MASSIVE difference to specific niches. It could be as simple as focusing on reliability, relationship or reputation.
Finally – always remember:
- Consider the value you deliver rather than the cost that you charge
- Customers won’t ever properly value what you do – that’s your job
- That, 80% of your income will come from your 20% best customers …
- … and 80% of your stress will come from your 20% most painful customers – and they are usually the ones who aren’t paying you enough!
- Always be prepared to walk away from customers who don’t want to pay what you want to – or need to – charge.
Don’t forget to let me know your pricing experiences, as well as your success – and horror! – stories.