Pricing is one of those things that every single entrepreneur struggles with. How much can I charge? How much SHOULD I charge? Am I charging too much? Not enough? How will I know when I’ve got it right?
Well my friend, I’ve got you covered! I’ve identified three simple steps to help you overcome pricing stumbling blocks so you can get clarity on the issue of pricing. I want you to feel totally confident and comfortable with the number you decide on AND become more profitable!
Just so ya know, I go into more detail in my video training Perfect Your Price, which you can watch for free right here.
Here are the three steps to figuring out your perfect price:
Understand that pricing is an economic decision, not a moral one.
Have you ever felt devalued by someone’s comment about your pricing? Either “wow that’s way too expensive” or “I can’t afford that much! Do you offer any discounts?”
Ouch. Let’s be real, that hurts to hear! (Yes, even if you’re already super successful and have hundreds of happy clients.) But the vast majority of the time, it’s not actually true. Those comments actually mean, “That’s not a high enough priority for me right now” or “I don’t value your offer enough to trade money for it.”
And that is totally okay. It doesn’t mean what you’re selling isn’t valuable. It means they aren’t ready to be your customer.
I used to be so bad at this. I used to lower my price point to a RIDICULOUS amount (like minimum wage pay) just because I wasn’t confident and allowed others to dictate the value of my services. I felt like it was my responsibility to lower my rate to what others felt were acceptable to them.
But you know what I was actually doing? I was lowering my value. And people don’t commit to what they don’t value. I wondered why clients would not do their action items, why they would not show up for coaching sessions, and why they felt little need to pay their deeply discounted coaching fee on time.
Well, it was because I was serving clients who didn’t value my services! They weren’t ready for the commitment, so why would they place a high financial value on it?
I knew I offered a valuable service that paid for itself many times over. I knew that my fee wasn’t an expense but was a true investment that would produce a lifetime of financial and personal dividends. And so I needed to adjust my pricing and my beliefs about the price to reflect that truth.
Pricing is simply a matter of finding that sweet spot where supply and demand intersect. You have a limited supply of your product or service. And there will be a varying level of demand based on your price. Other things can affect the demand like how good your marketing is, but that’s for another conversation.
Don’t let yourself dwell on thoughts of needing to make it more affordable for people, or bring down your price because you aren’t sure if what you have to offer is that great. If you can find ways to add value to your product or service and improve on your offering, then do so, but never judge someone’s ability to pay or the value of your offer by a few thoughtless comments.
At the end of the day, people pay for what they value. $5,000 is a lot of money for a dress or a suit, but it’s awfully inexpensive for a car. It’s not the price itself that drives decisions but the perceived value.
So as we move into steps two and three, be aware of your mindset and beliefs about pricing. Look at this as an objective decision, not an emotional or moral one.
2. What’s Your Focus?
3. Crunch the Numbers