Let’s talk pricing. Did you just cringe a little? In my experience, nothing gives business owners a case of imposter syndrome faster than having to figure out how to put a value on what they do.
A woman I know recently released her first-ever product: an ebook for $47. She strongly believes that the information is worth the price (and I have no reason to doubt that), but several friends and colleagues told her, “I’d never pay that much for a book.”
Are they right? Should she adjust her prices? Or is it more a question of adjusting what she calls her product (maybe a home study course instead of a book)?
Capitalism says: Set your prices wherever you want!
Honestly, what I have found is that basically you can set whatever price you want. This is beauty of capitalism.
But that’s not particularly helpful, I know. So I usually counsel people to set a price that makes their life work. I’ve put together a workbook you can download to help you work this out for yourself:
- Start with the amount you want to earn in a month. Be sure to take into account things like taxes, savings and expenses!
- Then ask yourself how many products or services you can comfortably deliver in a month. This will depend on what you sell. Maybe you can only happily coach one person per week. Maybe you can only produce 15 widgets in a week.
- Whatever your number, divide your monthly earnings by the number of products and services and voila! There’s your price.
Seems too easy? Well, it is easy. But there is the question of positioning and what the market will bear. My friend with the $47 ebook, for example, may need to work on her positioning to sell her book for the price she wants to get — but that doesn’t mean it’s not doable.
“No one’s buying! Should I lower my prices?”
I don’t think that there are many occasions where people need to adjust their price down because I think people mostly undervalue themselves anyway.
Instead, look for opportunities to keep your prices where they are, and analyze why that offer isn’t working for you. Maybe your close ratios aren’t great; maybe you need to bring in more traffic in order to make the number of sales you want. Maybe you need to follow up more. (This ebook can help you analyze your process.)
I never look at people’s offers or packages and say, “Oh. The reason why you’re not getting to where you want to go is because your package is priced too much.” I never, ever, ever find that that’s the case.
What I do find is that people haven’t put enough attention to marketing or created enough offers to have enough people opt in to their email lists. Or they haven’t created enough traffic in one way or another for enough people to see the offers that they’re creating.
So before you start jumping to this idea that you need to lower your prices to get more clients, think about what you can do to increase the traffic so that there are more people overall seeing that offer in the first place. So there.
“When should I… *gulp* raise my prices?”
When I start to get overwhelmed, I know it’s time to raise my prices. I know some people probably want to slap me for saying, “Oh, I get overwhelmed with too much business.” Yeah, shut up Mindy. But it happens to many, many business owners, and that’s the point at which you raise your prices.
When you’re like, “Oh my gosh, I just can’t imagine taking on another session this week,” it’s time to increase your prices.
How good would it feel if you had to increase your prices every six months? I’ve done that in my business, and before you ask, no, clients don’t start to run away screaming.
Some of the best advice around this I ever heard was to set benchmarks for yourself, to take some of the panic out of raising prices. Make a rule for yourself like: Every time I get 3 new clients, I raise my rates by $25.
When you decide on that rule ahead of time, raising your rates is less scary, and more just a fact of life. You have three new clients, therefore your prices are going up. QED.
Just focus on getting traffic and focus on putting yourself out there and getting known, it will happen. And when that happens, you have eliminated this whole issue of needing to lower prices because that’s not really the argument in the first place.
If this sort of information is helpful to you, you might want to be one of the first to know when my brand new Sales Boss program comes out in a month or so. Click here to download the ebook and you’ll automatically be on the list and get the announcement when Sales Boss is ready for prime time.