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Is Your Approach To Pricing The Right One?

Posted By: Comment: 7 Comments

I wanted to talk to you today about pricing – it can be a tricky issue to get right and so often when we start out we make the mistake of undercharging for our services.

And from that position of undercharging, it can then be very difficult to increase your prices in line with your true market value and it’s easy to be intimidated by the prospect of having to ask valued clients for more money.

What can make matters worse is that your initial low prices may have allowed other people to build up their own businesses and they could be unhappy about any pricing change you introduce if it directly affects their profit margins.

The reality is that increasing your prices may lead to your business losing some clients altogether. But that doesn’t mean that you should stick to pricing policies that don’t reflect your true value or that don’t allow your business to develop.

Making changes for the better

The fact is that experienced clients will know when they are getting a bargain from a service provider that they couldn’t get anywhere else.

Inevitably, some clients will protest if and when you increase your fees. But you will also have clients that are not delusional and who will accept the changes, at least once they’ve realised that you mean it.

In the end, if you are really good at what you do, then your clients will be secretly anxious not to lose your services and they won’t want to express too much discontent as long as your fee increase is reasonable.

It starts in your head

For the most part, objections to price increases start in your own head. If you are not used to raising your prices then you might feel defensive, apologetic and/or stressed about announcing a price increase—no matter how well-deserved or overdue it may be.

Tracking your time

This is a tactic I am always encouraging my clients to carry out. Not only does it give you a realistic appraisal of how much per hour you are actually working for, it also helps you:

  1. Understand that your price rises are both justifiable and well-deserved
  2. Assess your true value as a service provider
  3. See exactly how much of your working time was billable – and how much wasn’t
  4. Know exactly how much you need to raise your rates
  5. Gain the confidence you need to announce a price rise and see it through

As well as all of this – because you’ll know the increase in fee is well-deserved, you are less likely to give off signals of nervousness or uncertainty to your clients, which can be very important.

Considerations when pricing

Consider the questions below when deciding on a new pricing structure:

  1. How much is fair—to you and your client?
  2. How much do your competitors charge for the same services?
  3. What benefits do you add that your competitors don’t?
  4. How much does a project/coaching or consulting programme of that particular type typically cost in your industry?
  5. What is the value of what you deliver to your clients?
  6. How quickly do you turn projects around?
  7. How much additional time do you spend on a typical client interaction?

Remember that your client is paying for the finished results—and the skill and expertise you bring to the table.

But there are exceptions to this which you should consider. For example, if you’re going through a learning curve or you’ve procrastinated for five hours (eg you played Candy Crush… my guilty pleasure) then you have to consider this honestly and remember that it is all about value.

If your client is receiving exceptional value from your services, they may not like price increases, but unless you raise your rates too high or right out of their budget, then they will accept them, sometimes even happily!

I would love to hear about your insights into pricing, please leave your comments below.

And if you found this post useful, please share the inspiration with your business contacts on  FacebookLinkedIn and Twitter.

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  • Michala

    It’s definitely an issue I’ve been working through as I want to support people who are on lower incomes but I know I can produce good quality, low priced items as well as higher ticket prices for products so the customer can chose their budget to work with me.

    • Carole Bozkurt

      Thank you for sharing Michala – I agree if you want to serve people on lower incomes then producing a high quality, low priced option is a great answer.

  • Helen Reynolds

    I remember being terrified when I first hiked up my prices to be in line with my value. It was worth it though! I now see fewer clients, earn more and am currently fully booked for 6 months. That’s when you realise you did the right thing – and probably ought to raise prices again soon (but don’t feel ready!). I hadn’t taken into account my non-billable hours when I started out and hadn’t realised how many there would be! If I hadn’t raised my prices I wouldn’t have a business now.

    • Carole Bozkurt

      Fantastic news Helen about being fully booked for 6 months – well done. It’s really easy when you start out to lower your prices, Everyone I know, including myself, has done this but that fact is that people will pay the higher price tag for great value.

  • Valerie

    For a long time I wanted to increase the price of my intuitive readings (but felt I couldn’t because so many people were doing them for far, far cheaper than i was), which ties in with what you say about ‘it starts in the head’. At the beginning of the year I took the plunge and raised the price. I’m sure it has deterred people, but I do get clients, so I’m pleased with my decision. Next year, I intend to increase again.

  • Annette

    It took me a while to get round my head stuff and increase my prices, firstly just increasing my session by session price, then the big hike going into only selling packages of 6 sessions. I told myself people wouldn’t buy my programme but they did! Some people get the value, others don’t, but the latter are not my ideal clients so I can let them go 🙂

  • The biggest change you can make is to move from hourly to value-based pricing. Clients who nickel and dime you will be very emotionally attached, sucking time and energy because they’re usually laying out from their personal finances. Clients who are prepared to pay more typically use a marketing budget and see the benefits of an investment in skills and experience, for which they are prepared to pay a premium. Value-based pricing is a big mental leap, but very worthwhile if you are able to divorce yourself from the hourly method.