Ahh, pricing. A topic that every business owner has something to share on.
Deciding how much to charge for what you do is tricky, especially if you've just started your business or are in the process or raising your prices. It's something I discussed in the latest episode of my podcast, but I wanted to write about it as well.
So here are some things to think about if pricing is something you're struggling with at the moment.
Ignore the voices telling you that you can't charge *that much*
Some thoughts that I (and many, many other business owners) have had when deciding how much to charge for my services:
- I don't have enough experience
- People don't want to pay that much for (whatever it is that you do)
- I don't have enough social media followers (!?)
- I don't want to outprice people I should be helping
- People will criticise me or think I'm greedy if I charge x amount
- I shouldn't charge much for things I find easy/enjoy/don't take much time
Yikes. I bet that when you read these you recognised some of your own thoughts in there.
The thing is, you wouldn't be running your own business if you didn't have the skill, talent and knowledge to do a great job. So yes, you can charge that much. Your customers want to hire you because they would rather pay someone to do a job that they don't want to do because they don't have time, or don't know how to.
It doesn't matter if you find it easy, fun or quick, you're still helping someone who needs it and is willing to pay you to do it. And that's okay.
I speak to so many women who emphasise that their primary aim in their business is to help others rather than make money. Same here. But you can't help others if you aren't making enough money.
Work out your expenses and go from there
How much money do you need to make each month to live on and how much does it cost you to run your business (web hosting, stock, software, internet connection...)? This is your absolute minimum income.
Now work out how much you would have to sell to reach that number. Is it realistic? If not, you need to increase your prices. If you're just about reaching your minimum income, you should still raise your prices - it's no fun working flat out just to make ends meet. You want to flourish and live a comfortable life.
Look at how much other businesses charge
Find three businesses in your industry and look at what they charge and how they structure their pricing (e.g. do they offer single services or packages? do they have payment plans?).
Don't start stressing if your prices are very different to theirs, no-one is wrong or right. Even if your businesses are similar, they'll still offer different things because you and your work are unique.
The point of this exercise is to get a feel for what's out there. If the prices you see are very different to yours, decide why and make it part of the appeal of working with you. You might want to emphasise that you offer a more premium service or you might make a point of being more accessible.
Know your ideal customer
If your target audience are students, there's no point having really high prices, as they won't be able to afford it.
On the flip side, if you're aiming to work with wealthy people, being super cheap will make them assume that your products aren't of the quality they want.
Make an ideal customer profile - how old are they, what do they enjoy, what do they value, what's their income? Really go into detail. This might sound childish, but if you don't know who your ideal customer is, you can't help them.
Think about how much they would want to pay for what you do and adjust your prices accordingly,
Know that the right price will feel good, if a little uncomfortable
Have you ever way undercharged and then felt annoyed with yourself and resented the job?
When I first started Easy As VAT, I was so keen to get my first clients that I charged way less than I should have. I was terrified of not having any clients or being told that I was too expensive.
I ended up working going above and beyond for small change, and guess what? Someone still came back to me saying I was too expensive.
The cold, hard fact is that your business isn't for everyone. The customers you want to work with will see the value in what you offer.
When you find your perfect prices, you'll be happy to charge them (although you might still feel nervous butterflies the first couple of times you send a quote). You'll know in your gut that it feels right to you.
I say put your prices right up there on your website - you may get fewer enquiries, but the ones you do get will be your dream customers.
At the end of the day, the prices you charge are completely up to you, and it's important that you feel good about them.
I'm a financial coach and mentor helping female business owners to gain the knowledge and confidence they need to manage their finances successfully and have a positive relationship with money. If you're ready to take control of your finances, click below to find out how I can help you.
I also have a range of amazing resources which you can use to help improve your business finances.