How to set your prices and feel
confident charging them…
It’s a horrible feeling… scrolling through your competitors’ website to see what they charge and what they offer so you can set your prices and know exactly what your competition offers.
It is never a good idea to do this as feelings can range from…. my website doesn’t do that, how on earth do they charge that much to is that all they charge…. they’ll never pay what I intend to charge.
Setting your prices can be an absolute minefield and can bring to the surface all sorts of problems that you never thought existed (or had ignored for so long that you didn’t realise that they were there). I mean did you ever stop and ask yourself how your competitors priced what they offered before jumping right in there and copying them? Perhaps they made the same mistake as you and are now regretting it?
Sure, there are lots of things to consider before setting your prices such as what your costs are, what other choices your customer has in the marketplace to how much time you invest in providing the product or service. However, the most important thing is that you feel confident in these prices and that your default setting is not to reduce your prices or feel fear when asking for the sale as you feel you are too expensive.
Before you even consider setting your prices, ask yourself the following questions:
What’s the value in what you offer to your customer?
In a world of excess, it has become clear that people pay for what they value and not what they need. The contents of my wardrobe, bookshelves and iTunes account would testify to this. How can apple charge so much for an iPhone? How can Mac charge so much for eyeshadow and Starbucks so much for a coffee? They know the value of what they offer and so should you.
If you’re not sure of the value you offer, consider:
- How do you make your customers’ lives better?
- How will using your products / service change their lives for the better?
Before you set your prices you have to be confident that what you offer is worth it ! It’s no fun in a sales situation trying to convince your customer (note you should never have to convince your customers) that what you offer is worth it. It’s a classic who are you trying to convince here … you or me.
Who can you help most?
Have you an unlimited marketing budget? Have you a massive team that will help you appeal to all customer types? NO ? Didn’t think so and that’s okay.
Now that you know the value of what you offer and how it genuinely changes people’s lives for the better it’s time to ask yourself …. Who wants this the most ? What type of customer really wants what I offer, can afford to pay for it, is easy for you to reach and you’ll enjoy working with them.
It’s easy to decide on a potential customer because they’re within your comfort zone and you feel safe taking care of them. But that doesn’t mean they are the best customer for what you offer. Of course, you have to enjoy working with them but just because you’re a mum with young kids doesn’t mean that your customer base has to be mums with young kids.
Take time and make a list of all of the people that will benefit from what you offer and go through the list and score them based on:
- How much they want what you offer (want and not need)?
- How easy they are to reach through your marketing channels?
- Can they afford what you offer?
- How much fun you will have working with them (we call this your ROE or return on energy)?
Once you have narrowed this down- these are your ideal customers and now you can go on to find out as much as possible about these people and start to build relationships with them.
I love talking about my local baker when on this subject. He’s in his 30’s heavily tattooed and has a biker image ! He runs a gluten free bakery with lots of vegan options ! I got a shock when I first saw him and asked what inspired him to sell me gluten free, vegan treats ! He responded that he always knew he wanted to open a bakery but didn’t know what kind. Then he met his now wife and she is gluten intolerant. Frustrated with the lack of choice he opened up a gluten free bakery and now he is selling me cakes as opposed to something more manly to someone else (I actually think gluten free and vegan is manly).
It’s essential you investigate who needs what you offer most and not just settle on who you think might ! Imagine how confidence destroying it will be to sell to someone who does not want what you offer after you’ve built them up to be your ideal client.
How can you raise your standards?
If you compromise on your prices and feel you are undercharging clients … you do one of two things a) you work really hard and exhaust yourself to prove you were worth more than what you charged (a little too late to do this and now you’re absolutely zonked and bewildered) or you lower your standards and offer a poor standard service cause deep down you know that they got a bargain price and now they will get a bargain service.
Ask yourself…. How will this improve your chances of charging higher rates in the future? How will your client feel about recommending you to others if they are not happy with the service?
Before setting your prices …. look at what you offer and consider if you were the best in the world at what you do, how would you be of service to every client? How would you build rapport? How would you conduct any sales conversation? How would you deliver your product or service? How would you follow up? How would you ensure your customers were happy after they have purchased from you.
Look at your complete customer journey and ensure that from start to finish you are at your best.
Knowing in advance that you provide the best service and that your customers will be excellently taken care of, if they choose you, will give you a lot more confidence when setting your prices.
The nitty gritty
Once you have looked at the value of what you offer, who this will benefit most and how to be the best at what you do it’s then time to consider the other elements involved in pricing what you offer. These are:
Your costs: all of the costs involved in providing what you offer from your direct costs such as stock, ingredients, staff, your time to your other costs such as marketing what you offer, rent, rates, phone and broadband. I’d always recommend chatting to your accountant but as a rough guide you can add up all of these costs for the year and divide them by 12 to get a monthly view. These costs are your overheads and you should consider them in deciding what to charge.
Cost creating what you offer: If you are a coach or consultant chances are you spend a lot of time behind the scenes creating packages and preparing for sessions. These costs should also be included in your pricing structure.
I always recommend looking at these costs last as once you list what is costs you to do what you do, the cost you should be charging can seem quite high. Too high in fact that you are tempted just to copy what your competitors are doing.
However, now that you know the amazing value you offer, who wants this the most and how to deliver it in the best way possible- these costs don’t seem so high and who knows… maybe you can increase them?
So are you accepting my challenge? Complete the tasks above and get confident charging what you are worth.
Your success matters and you deserve an authentically awesome business and life.