28 Jul Not Sure What to Charge? How to Set Prices with Confidence
Do you ever feel like a contestant on The Price is Right as you’re trying to guess the value of your products and services?
You feel the butterflies in your stomach as you go back and forth because you’re just not sure what to charge. Should this course be $97 or $497? Should you charge by the hour or by the project?
The audience (aka all the other successful entrepreneurs you’re looking at and trying to mimic) shout “Higher!…No, no! Lower!”
You’re so confused! You don’t want to sell yourself short…but you don’t want your prices to be so high that no one can afford you either.
You second guess yourself and wish you knew how to set prices with confidence.
You want to earn your worth and grow more profits in your biz…but you don’t want to be so expensive that potential clients don’t even consider working with you because of the price.
And what will your current clients think if you raise your rates? Will the crowd bombard you with “boos” and buzzers?
Your head is spinning…and as you’re trying to figure it all out, Bob Barker (aka your dream client) is waiting for your answer. Time is running out and if you can’t name your price with confidence…it’s game over…a lost sale.
How great it would be to feel completely confident in your prices so the next time a potential client asks you how much you charge…you can rattle it off in one second flat…without looking to anyone else first…and without feeling scared the client will laugh in your face.
Imagine being able to show your clients and customers that your offerings are so valuable that they’re surprised the “actual retail price” isn’t more…
…and they’re eager and willing to hand over their cash…feeling like they’ve just won the grand prize of a trip to Jamaica, complete golf club set, and a BRAND NEW CAR!!
How to Set Prices With Confidence
There are some important things to consider as you work on setting prices.
Here are some of the questions I ask myself to help me set prices in my business that feel great to me and my clients:
- How does this offering fit into my overall business? Is it an introductory offer to get clients into my sales funnel? Or is this a signature offer that will serve as the bread and butter of my biz? Is this a high-end, exclusive offer with tons of personalized attention?
- How do I want my pricing to position me within my industry? Do I want to be the “discount store” that offers lower prices than competitors? Do I want to be neck-in-neck with other industry leaders? What would separate me from the competition then? How can I add more value and exceptional service so I can set prices above the competition?
- How much money do I want to make from this product or service? How does this fit in with my bigger profit goals?
- How many products, enrollments, copies, etc. can I sell? How long will it take me to sell that many?
- How long will it take me to create and deliver this product/service? When I divide the price by the amount of time to devote to this offering, how much does that make my hourly rate? Is that hourly rate a good reflection of my skill, expertise, and experience?
- What are my up front costs for this offering? What are ongoing costs I’ll incur for continuing to offer this product/service?
Once you’ve had a chance to explore the answers to those questions, do some research and run the numbers to figure out what to charge. Like this:
:: Calculate all the costs you’ll incur for that offering. List these as “expenses”.
:: Research what others are charging for a similar offering for the sake of comparison. Decide where you want to rank in relation to those prices.
:: Brainstorm ideas of how you can make this the BEST offer possible- one that will have clients swooning to work with you
:: Decide how much you want to make from this offering THIS YEAR. Calculate how many you’ll have to sell and see if that feels achievable to you (without losing your mind in the process).
:: Set a price that will make customers feel like they got more value than they paid for. This reduces buyer’s remorse and refund requests…and leads to raving reviews!
Then run this calculation:
Price of offering x Number of Sales – Expenses = Profit
How does that profit total feel to you? Does it have you feeling like you’ve just won the grand prize? Or do you feel like you’re walking off the showroom floor empty handed?
It’s so helpful to see how real numbers will play out in reality…but there’s one more thing to consider when you set prices…and it’s a BIGGIE!
The #1 Most Important thing to consider when you set prices is this:
Set prices based on the specific RESULTS your clients will experience, not based on the OFFERING itself.
You’re not selling 10 yoga classes. You’re selling a enhanced immune system, flexibility, increased sex drive, improved focus and concentration, and finally being able to drop those last 10 lbs.
You’re not selling 4 business coaching sessions. You’re selling a clear vision for her business, a marketing plan of action to make more sales and more profits, and a feeling of confidence and authority in her work with clients.
Think about the value you offer…the results you deliver…the way your product or service CHANGES LIVES.
How much is that change worth? Try to put a price tag on the transformation you offer instead of the product or service itself.
Consider how much it will cost your client if she doesn’t invest in the solution to her problem. How much money does your product or service save her over her lifetime?
Make More Profits
There’s not a precise recipe for setting prices. It’s more of a pinch of this, a dash of that, and then you try it to see what it tastes like and adjust as needed.
But exploring these questions and running the numbers will help you set prices with confidence…prices that result in your business making more profits…and your clients feeling like they got a ton of value at a killer price.
Remember, your business needs to make a profit or it’s not a business, it’s a hobby. No one expects you to give away your knowledge, skill, or products for free…so don’t let the fear of client’s “not being able to afford you” keep you from charging what you know you deserve.
It’s not your job to decide what your clients can and cannot afford, so mind your own business. Let your clients decide for themselves how much they value the transformation you’re offering to them. Keep your eyes on offering exceptional value and top notch experiences to your clients and set prices based on that.