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:
- Understand that your price rises are both justifiable and well-deserved
- Assess your true value as a service provider
- See exactly how much of your working time was billable – and how much wasn’t
- Know exactly how much you need to raise your rates
- 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:
- How much is fair—to you and your client?
- How much do your competitors charge for the same services?
- What benefits do you add that your competitors don’t?
- How much does a project/coaching or consulting programme of that particular type typically cost in your industry?
- What is the value of what you deliver to your clients?
- How quickly do you turn projects around?
- 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.