Setting the correct pricing that truly reflects the value you provide to your customers is one of the hardest decisions we make in our businesses.
Why is this?
It comes down to a few basic things:
- People are not always rational. They place entirely different values on things – some people may spend a fortune on luxury brands or quality products, but be very stingy in other areas. Or they may spend big on their families, but hardly ever invest in themselves. There is no single, simple formula that covers everyone.
- Setting prices means we have to place a value on things that are actually “priceless” – our skills, knowledge, experience, education and uniqueness. This is REALLY personal stuff, especially for soloists providing services or if you earn money from your ideas as a thought leader.
- We have to face up to our relationship with money, which may or may not be a positive one. You may feel unworthy or uncomfortable about making money doing something you love, or you may have other beliefs about money that get in the way.
While reviewing your pricing is an ongoing process, here are a few ideas to help you better honour your value and create a more profitable business.
Give yourself a pay rise
You don’t have an employer to negotiate with, so you need to do this yourself! If you are starting to feel burnt-out or unappreciated by your customers, getting more work than you are comfortable with, or your costs have risen dramatically during the year, it’s a sure sign you are overdue for a price rise.
Go with your gut. If you feel your pricing is already fairly close to the mark, a small increment may be all you need to take the pressure off. Let your existing customers know your new pricing and the date it kicks in, and just do it. You might like to offer a “beat the price rise offer” to nudge along those potential customers who may have been sitting on the fence, but it’s not essential.
However, if you feel your current pricing is well below the “true value” you provide, you may need to completely reposition your pricing. Consider gradually phasing in your new prices with existing customers, while attracting new customers who are more able to pay you what you are worth. Standardising your pricing using the “value-based” model rather than an hourly rate, and packaging (or repackaging) your offers can be helpful in this process.
Standardised pricing can be used for certain tasks that you complete on a regular basis. Consider the value that these services provide to your customers, rather than simply taking the amount of work involved into account. Just because you can do something quickly and easily shouldn’t mean that you don’t get paid appropriately! Having a set price list on hand will make quoting easier too.
Pricing packages help simplify the buying process and allow you to maximise your profits. Ensure your packages include products or services that are of low-cost to you, that you can complete really efficiently, that you love doing AND are highly valued by your customers. You might like to consider offering 3 options – an entry level for customers wanting to try you out before they make a bigger commitment, an “ideal” package that covers most customers’ needs, and a premium, somewhat over-the-top option (you might be pleasantly surprised!) – to enable the “Goldilocks Effect” to kick in. It’s a bit of a weird pricing psychology thing, but it’s been proven to lead buyers to choose the “just right” middle option.
Alternatively, you might like to create an evergreen “product” such as a webinar, course or eBook that you can sell to customers who need your help, but who cannot yet afford more personalised services.
Outsource outside your Zone-of-Genius
Are you spending hours fiddling in Canva, trying to balance your books, or tearing your hair out revamping your website, when none of these form the core of your business activities? Surely your time would be better spent doing paid work or building connections with potential or existing customers.
If you’re feeling overwhelmed by your workload, or if you are constantly doing tasks that you don’t enjoy and someone else could do more cheaply, you should consider outsourcing.
The advantage of being a soloist in today’s world is that you don’t have to hire someone permanently to grow your business. A good virtual assistant, bookkeeper, or other specialist is worth their weight in gold. They’ll free you up to do the things in your business that ONLY YOU can do!
You might also like to consider outsourcing home stuff. Getting a cleaner or personal concierge, or using a fresh food delivery service, might free up hours of time that you can spend actually earning money! And Mums, don’t feel bad about getting some childcare if you need it. It doesn’t have to be full-time, long daycare (because avoiding that is probably why you’re running your own business in the first place), but giving yourself permission to enjoy a few hours a week to give your business your full focus will reap huge benefits!
Tighten up your systems
Preparing proposals, closing sales and asking to be paid can make even the most outgoing soloists squirm. So if something makes you feel uncomfortable, systemise it! This helps take the emotion out of it, and ensures you treat all of your customers fairly.
Review your Standard Terms of Trading document (you do have one, right?) to ensure that it includes clear boundaries around your agreement to work together, payment terms, deposits, refunds, project delays, final sign-offs etc – anywhere that a lack of clear boundaries might cause you financial or emotional strain. Make sure that this document is sent to every customer as part of your initial proposal, and if appropriate, is clearly displayed on your website.
Create a follow-up procedure for quotes, and communicate this with potential customers from the outset. Allow them reasonable time to review the proposal properly and ask questions if they have any. Let them know when you will contact them for an answer, diarise it and make the call!
Send invoices promptly, and make sure you follow up overdue invoices efficiently and reliably. I usually send a short “friendly reminder” email a few days after an invoice falls overdue. It’s non-threatening and ensures my clients don’t feel terrible if they’ve accidentally missed the original invoice, forgot to schedule the payment, or pushed it into their next payment run. Best of all – it works!
Feeling properly valued is vital for ensuring you feel successful and enthusiastic about your business. It even affects your overall health and wellbeing. Taking time to implement these few suggestions will not only help you make more money, you’ll also enjoy your business a lot more!
This article was originally published on Flying Solo – Australia’s Micro Business Community
Hi, I'm Cath Connell
Wholehearted Business and Marketing Consultant, and Creator of Wholehearted Marketing
I'm passionate about helping micro and small business owners take a more 'wholehearted' approach, and build a successful business WITHIN a life. Through Wholehearted Marketing, I provide 1:1 consulting and mentoring, training workshops, practical resources and hands-on support. I hope you enjoy reading my posts and find them relevant, helpful and interesting. Feel free to connect with me on Facebook, Instagram or LinkedIn, and make sure you register for your free BIG Marketing Questions Cheat Sheet - it's the perfect tool to get you started!