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There are two sides to pricing. The first is deciding HOW MUCH you should charge, the second is deciding what pricing strategies you will use to help your products and services sell. Today I am writing about HOW MUCH to charge.
Basically, price comes down to value. If you take nothing else away from this post, remember that price is about value.
For example, if someone offered to sell you a hamburger for $100, you would never buy it. To you the hamburger is not worth $100 of value. However, if you were offered you that same hamburger for $100 while you or your families were starving to death, you would quickly reach for your wallet. Pricing is all about value to the buyer.
Value is what makes your clients decide to buy.
How much to charge is one of the biggest challenges most self employed professionals face. Your fees can determine whether your business is a success or failure. It’s stressful teetering on the pricing tight rope. If you charge too much you must increase the value you provide and if you charge to little you barely make enough to sustain your expenses!
Starting my first business wasn’t easy. I set my prices based on what I thought I should charge. I didn’t really know how to figure out what I needed to charge to be successful. I ended up pricing myself WAY to low.
I had these two clients. Nightmare clients. One called me all hours of the day and night. He once called me at 2 am on a Saturday. The other called me and talked to me about his dog, his wife, his life. I gave both clients a ton of (free) suggestions, and neither valued my suggestions.. but they kept calling. The problem was they did not VALUE me.
Why didnâ€™t they value me? Because I devalued my offerings with my pricing and my willingness to GIVE away so much of my time, for free. I didnâ€™t bill for the time that the talker was talking about his wife, dog and life. I answered the phone at 2 am. I let them ask me a quick 5 minute question for free over and over again.
My Solution? I told both clients that I loved talking to them and working with them, but that my time was getting very tight and this was the last time I could give them a free 5 minutes. Then I charged them a retainer fee upfront, so when they called to chat or ask a quick 5 minute question, I could just take time off their retainer.
The results were amazing. Both clients agreed to the retainer. Both clients took me more seriously. Both clients started to value what was formally my free advice and they started to implement it.
It took a few years for me to figure out how to set my prices and my boundaries, but once I did, it was a real game changer. With my new pricing in place, I went from struggling to financially secure very quickly!
When you under price your offerings, your products, or your services, your clients think there is something wrong with what you are offering. Your services and products become devalued. Your clients need to pay you, in order to take you seriously and to value your products and services.
There is always going to be someone who is willing to charge less than you. Do not take the route of trying to be the cheapest low cost provider unless you are ready to create a business based on VOLUME. You are better off being the premium provider and having better quality clients, doing less volume and making more income. Most of the time clients associate high prices with high value and quality and low price with lesser quality.
When you price yourself to low, your clients do not value your offerings, they respect you less and tend to be less likely to implement work and suggestions. Clients are not price-conscious; they are VALUE conscious. Your goal in pricing your services and products is to get your clients to see the full VALUE of what you offering, not the price.
On some level, pricing your services and products comes down to Mindset. I find in life and in business that things always come down to mindset. You have to believe in yourself. If you do not value yourself, if you donâ€™t believe in yourself, why should your clients?
If you believe in what you are offering you want to motivate your clients to use your services and products. Charging for your services and products and charging well, will help you create loyal clients. The goal is to create a loyal client base that keeps buying from you, using your products, and using your services. A client base that will refer you and help you grow your business. A client base that will rave about you and provide you with fantastic testimonials.
Now here is the part that business owners sometimes forget. To get your clients to follow your suggestions, implement your ideas, use your services and products, so they have great success, your value and pricing need to be in line with one another.
You canâ€™t be afraid to charge. You cannot be afraid to tell clients your prices. You need to state your prices and fees with confidence.