Pricing your services or products is among the toughest challenges you’ll face as you try to move your business to the next level and particularly in the case of services because non-material costs are notoriously difficult to evaluate. For example, I know two business coaches and one charges £125 per hour for their time while the other charges £800 per hour. Can you believe the disparity between the two fees? If we look at this a bit closer there are some points to take into consideration:
- The coach that charges £800 per hour has been an executive coach for 16 years.
- He coaches MDs, CEOs of major companies in the City.
- He has a wealth of experience and expertise in business and running companies.
- The coach that charges £125 per hour has been an executive coach for 4 years.
- She coaches more junior people in the business.
- She has a strong track record in the corporate world.
There are definitely factors that can make a real difference such as experience and expertise and in the example above who you are providing the service to is crucial but why is the gap be so big for a similar offering? At the end of the day it’s still 60 minutes of time.
I recently read an article that stated that most female self-employed entrepreneurs undercharge for their services and products; the main reason for this is they do not fully value themselves. This makes it difficult to price correctly when a core belief of self-worth comes into play. A very simple exercise you can carry out to ascertain how you view your pricing is to think about the cost of your offering then double it, then treble it. How does that feel? Can you imagine advising a prospective client tomorrow that the new price for your services/products are three times greater than what they are today? This is a very basic exercise and doesn’t take into account many of the practical factors of pricing but it’s a good measure to test how you feel about it. When I first did this exercise it made me very nervous.
How we view money plays an important role in attracting the right type of clients. How many of us base our fees upon time rather than the value we provide others? Being conscious of how you think, feel and speak about money will determine your level of success. We need to get more comfortable with talking about money and not let it become a taboo subject. Money is like a flow of energy, flowing in and/ out of our life. If we become too scared to spend it we block the flow of energy. If we don’t respect it and are not committed to making it grow it will not provide us with its continual flow.
Get your pricing strategy wrong and you will create a problem which could damage your business. Get it right and the potential for creating a thriving business becomes much greater.