How to set the right price for your services
I haven’t talked about pricing for a while but I know that this is an issue for many of you. Whenever I’ve done a survey to ask what you want more help with pricing is right up there in the top 3. And it’s an area of confusion for many of my clients too.
I get asked a lot “What should I be charging?” or “What is the “right price” for my products and services?”.
Well here’s the gnarly thing about pricing – it isn’t an exact science. There actually is no such thing as a “right price”. Instead you have to find the price that is the sweet spot for both you and the clients you want to work with.
So here is my advice:
- Don’t price yourself as a Commodity
- Set a price that’s right for your Ideal Client
- Make sure that price is also right for YOU and the lifestyle you want
- Know how to clearly communicate your Value at that price
- Your Pricing isn’t fixed – you can change it at any time!
Here’s what I mean:
1. Don’t price yourself as Commodity
What I mean by this is you should avoid charging in such a way that people decide whether to work with you based on price alone. Petrol is a good example. Petrol is petrol. And I know where I can get it cheapest locally, and the equivalent close to my parents in North Wales. So I make sure I fill up in those 2 locations. That’s because petrol is a commodity to me and I’m shopping on price. I don’t really care about anything else (unless I’m tearing down the M40 and I realise the “nearly empty” light is flashing – then I suddenly don’t care about price, I just pull in at the closest services).
In the same way the last thing you want is people saying:
“Oh, the accountant down the road charges £100 per month less so I’ll go to them”
“£80 per hour for reiki? You must be kidding me, I know where I can get that for £25“.
You position yourself as a commodity when you:
a) Price your services by the hour, session or day
b) Focus on selling your “tool” rather than the actual “value” that you provide (your tool is the “thing” that you do – that might be coaching, accounting services, reiki healing, hypnotherapy).
This is why learning how to package your services into a programme or product designed to deliver results is so important.It's important to package and price your services into a programme designed to deliver results Click To Tweet
Because when you price yourself as a commodity you simply can’t win. You will have to get ever and ever cheaper to compete. It is so much better to become a “class of your own” so that people want to buy from you and shopping around doesn’t even come into it.
(And before you ask, yes, some people will always shop price alone, but it’s important you understand that these are not likely to be your ideal clients – the ones that you will grow a thriving business working with)
2. Your price must be right for your Ideal Client
The world is full of a huge range people all with unique life and financial circumstances. So whatever your pricing is, it must be at a level where the value exchange makes sense for your ideal client or target market.
Want to charge “high-ticket” fees of £10,000-£50,000 per client? Great! If your client is a business owner with a consistent turnover, or a stressed out achiever, flying high on the corporate ladder but miserable and unfulfilled, or anyone else for whom that level of investment makes sense in relation to their financial position and what they want to achieve.
But what if you feel deeply called to help single mothers get off benefits and change the lives of the next generation by turning their own lives around? Well you can hardly charge them £10,000 – they just couldn’t afford your fees, not matter how much you worked on your money vibration and your sales conversations.
I know I bang on about it all the time, but this is why knowing your ideal client is so important.
Because your pricing needs to be at the level that is affordable and makes sense for the client group that you serve (and ideally it will be a bit of a stretch for them).
As a personal example, a few years ago I started working with a mentor who helped me to really understand the value of my work and I designed (and started to sell) programmes priced at £5,000 £10,000 and £25,000.
But what I came to realise is that I have a deep emotional connection to a particular “ideal client”. And my ideal client is normally in the very early stages of her business and struggling to get it off the ground so £10,000 or £25,000 didn’t make sense for her. Yes, I knew that I was “worth” it, and that in the long term she would see the results, but it was a level of investment she found it so difficult to stretch to that by pricing myself at that level I was cutting myself off from a lot of the people with whom Ido my best work.
As a result of deepening my understanding of my ideal client prices have actually been reducing over recent years as I find ways to make my work more and more accessible to this ideal client group (keep watching this space, there’s more to come on this one!). This feels comfortable and congruent to me as I know I’m reaching the people where I know I can bring the most magic and make the biggest difference.
3. Your price must be right for YOU and your lifestyle
Want to work 3 days a week and have a 6 figure business? Your pricing may need to be very different than if you want to work 5 days a week to replace your old salary of £30,000.
But your business model also comes into it because if you are selling “one to many” you can still make a lot of money selling at relatively low prices.
So for example my online programme GMCSY at £995 (£495 during launches) is an absolute sweet spot for my ideal client. It’s affordable and makes sense as an investment – she only needs to get one new client as a result of buying the course and it’s paid for itself. But it also works for me and my lifestyle because I have 60-80 people joining it at one time, and it also acts as a stepping stone into my higher priced programmes – so it works for me too.
But if I wanted to bring in the same revenue but I only wanted to work 121 with clients then I would need to charge each of those clients a higher fee – for example I might choose to work with just 10 clients per year but charge them £15,000 each. Now I could totally do that, and I know I could bring the value. But I would be pricing myself outside the reach of many of the clients I love working with the most.
So to go back to the earlier example, if you feel a deep calling to help single mums on benefits get back into work, but you also have a lifestyle that requires your business to turn over upwards of £100,000 then it’s just not going to add up.
And of course sometimes we set our pricing strategically. So in my first year of business my pricing was much lower than it is now across all of my programmes. But I didn’t mind. I set my pricing then to “get going” rather than to make money – what mattered more to me was building my confidence, seeing my clients get results and gathering testimonials and case studies.
There are two pieces connected to value here:
1. Your Belief in your Value
You must believe that your work is worth the fees that you charge. Honestly, if you don’t – if you’ve set some inflated price just because your business coach has said you should, but you don’t truly “feel” your value at that level then when you sell you won’t feel congruent, and you won’t feel comfortable – because selling something you don’t actually believe in is simply not in integrity whichever way you cut it.
I very much like to tell my clients that I’m not the “price police”. And in fact for a business owner who is struggling to get any clients at all telling her to put her prices up (and scare her witless in the process) is most times not the answer. Because zero clients at £3,000 isn’t actually any more money in than zero clients at £600 – it’s still no clients!
So I normally encourage clients to just get out there and start selling their services. I’m often heard to say “I’m not attached to what you actually charge at this stage – what I care about is that you get out there and learn how to attract and enrol paying clients”.
Because what I know (even if they don’t yet) is that as soon as they start working with a handful of clients, and get good at enrolling them their confidence is going to skyrocket and it won’t even need to be me who says “you know, I’m worried you are not charging enough”. I won’t need to. The clients feel it themselves “Oh, I’m really good at this, look at the impact I’m having. Boy I’m not charging enough!”
Of course, getting really connected with your value definitely helps you set higher prices right out of the gate – so I also like to take my clients through processes designed to help with that to make sure they are not starting out so low it’s not serving them or their clients.
2. How you Communicate that Value
There is nothing more frustrating than knowing without a shadow of a doubt that you have amazing skills and talents, that the work you do is truly transformational and that you can changes people’s lives – whether that’s by helping them with their health, their business, their relationships, their finances or their emotions – yet find yourself repeatedly unable to communicate that to others so that they can see the value too.
This is why in all of my programmes I put such a huge value on getting to know your ideal client – inside out, back to front, so well you could almost be him or her – and then learning how to communicate your value in a way that resonates with them so deeply they are practically saying “where have you been all my life?” or “Where do I go to sign up?”
5. Your Price isn’t a fixed thing (but you must stick to it!)
So don’t get too hung up on finding that elusive “right price”. Know that whatever price you decide to set now, you can change it later. In fact you can change it any time you like (the price police don’t actually exist!). So as soon as you get that nibble in your gut that says “Wow, I can’t believe she got all that transformation and I only charged her xxxx” you can increase them.
But what’s important is that you are not changing that price moment by moment on a whim or according to your level of confidence – or, worst of all, according to what you think the client can afford to pay. (Please, never ever do this! I explain why in this article).
So get clear on your pricing, get it straight in your own mind and then stick solidly with that price. Until the time you know it’s time to increase, and then stick with that new price.
It’s never a straightforward thing
Finally, please don’t beat yourself up if you find the whole pricing issue a bit gnarly and confusing because you are definitely not alone – getting clear on your prices is just as hard for everyone, myself included. (I once got into such a confuddle about the price of one of my programmes I later sent out an apology email to the people who had bought it!). This is made more difficult by the fact that there IS no right price for the services we offer. For most of you reading this I bet if you had a good search around you could find someone offering what you do for around £50 per hour, and someone who has packaged up exactly what you do and identified a market willing and able to pay for it and is charging multiple 10’s of thousands. (Not convinced? Do some research – you’ll be surprised….).
Which is why setting your price based on a combination of your ideal client, your own income needs and a large dollop of intuition is the way to go.
What are your own pricing challenges?
Let me know in the comments below, and also let me know if there is something else you’d like me to address on the topic of pricing – I’d be happy to answer them in a later article.