Things to consider when setting your pricing
Pricing is huge. Even though it sounds like just one thing, it has to do with so many aspects of our business. I love talking about pricing because there’s always more to interpret and discover on this important topic.
If your pricing isn’t correct, it’s going to impact how successful you are, and many other things in your business.
If your business was a house, pricing would be akin to the framing. If you don’t get the framing right, the walls aren’t going to line up, the floors won’t lay right, and nothing else will work out how it should. Pricing is crucial to a well-built home and business.
Pricing affects whether or not you can hire help, what kind of help you can afford, it impacts how much or how little you work in your business. Pricing can be the difference between working 20 hours a week or 50 hours a week, working with a team or working solo, and doing it all yourself or getting support.
Pricing impacts how stressed you are. Raise your hand if you’ve undercharged and had to work more to earn what you need, all the while still only barely getting where you want to go.
Pricing impacts your relationships with your clients. If you’re constantly trying to cram more into your work day, maxing out your client load, or always need more clients to earn what you need, your clients might pick up on the stress you’re feeling and might even wonder if they’re getting the best of your attention or your most quality work.
Pricing also affects who you work with. If your pricing isn’t where it could be, or should be, you might feel desperate to take on clients who aren’t a good fit. Whether they’re misaligned in mission, and values, or not an ideal fit with what you offer, you might feel you need their business because you simply need more.
This blog isn’t about strict price-setting guidelines.
Pricing isn’t so much about finding the right price, which I talk about in many of my blogs and on my podcast, it’s about understanding that prices are ever-evolving and ever-changing. Our prices are not static things that once set, must stay there forever. We need to continuously look at, reevaluate and make sure they’re serving our business at this moment, and at this time.
Pricing isn’t Finite
A common issue I help my clients strategize is around helping them to figure out what they should be proposing when it comes to their pricing.
Sometimes they’re preparing a big pitch, or have an opportunity for a sizeable client, and they want to figure out what they should be setting their prices at.
They’re often nervous to pick a price because they worry that once they pick a price for this proposal, they can’t change it.
Just because you sent it out and offered a price to someone, doesn’t mean you can’t change it in the future, and even in the next proposal!
We put a lot of time, effort, and thoughtful strategy into our pricing, and sometimes it doesn’t work and give us the results we were hoping for. Part of being in business is not having all the answers and knowing that we are constantly tweaking, learning, and trying new things to see what works and what doesn’t.
We learn from the experience, continually make things better, and enjoy and embrace the process.
Your Business isn’t Finite Either
Like with our pricing, your business evolves and changes too. And as it does, our pricing needs to be looked at as well.
When business owners first launch, the biggest initial concern is usually a need for clients. Whether you quit your day job and decided to start a business, or you closed one business and are opening another, the first thing you need to focus on is how you’re going to make money with this new venture. At this beginning stage, pricing probably isn’t top of mind. You’re mainly focused on getting those first clients, and in many cases desperate to do so.
You might not be pricing-wise where you want to be and your rates might be lower than your competitors. Quite simply, you might not have a lot of experience yet and in the beginning, you’re really still learning about what you offer, who you want to work with, and building the skills to get great at what you do. You might be gaining testimonials and client experiences, and building up your marketing in that way.
As your experience level goes up and your skills increase, your pricing should be going up as well. You can no longer charge these entry-level rates. As your business grows, your main concern isn’t just getting people in the door, now you need to look at whether or not the money coming in the door is enough, and if you are at a point in which you need help.
Maybe you have too much on your plate and need a virtual assistant, an independent contractor, a bookkeeper, a marketing person, or an online business manager. You might hit a point where you can’t grow your business until you hire full-time employees. It could be a number of different things!
Whatever the reason for help, and what the help looks like, it’s time to start evaluating your prices because you’re no longer just selling your service as an extension of your passion, you now have a solid business and need to adjust your pricing to ensure it stays a functioning entity. Your pricing needs to reflect and accommodate for the changes. It needs to ensure those staff members and contractors can be paid, as well as yourself.
Your Prices Grow as You Do
As another example, your market might change as your business evolves. In the beginning, you might’ve said yes to everyone and anyone because you had to sell your services. But as you grow, gain experience, knowledge, and enhance your skill set, you get clearer on the types of clients you really want to work with. It might be a certain industry, a personality of client you enjoy, or a stage in life someone’s at that you’re most equipped to help.
Entering a new market might require you to change your pricing, as you cover your acquired skills and expertise, and perhaps take on new expenses.
Sometimes it requires taking on marketing expenses to learn better how to reach and engage in this new market.
And let me be the first to assure you that while it might be scary to enter a new market, or change yours, you don’t need to be scared. Realizing that you want to start moving in a different direction can feel like starting at the beginning again, but this is a totally normal part of your business journey.
You will always be growing your business, doing things differently, and changing things you offer and do, and as you do, your business will uplevel.
How’s Your Pricing?
Take a look at your business and ask yourself if you’re in a place like one of those I described above.
Do you need to look at changing things?
Maybe you have a full load of clients but aren’t making enough money and don’t have time to implement all the ideas and projects you want because you lack the time. Maybe you want to focus more on a specific market. And maybe you’re ready to bring in more help and start hiring employees.
If you’re in this boat, it’s time to start reevaluating your pricing.
And as I always say, the time to increase your prices is before you think you should.
Free Pricing Guide
If you’re a service-based entrepreneur, my FREE 5-Step Pricing Guide will help you to determine your pricing, as well as walk you through the first steps in implementing a price increase when it’s time. If you have specific questions about pricing for your business, and you feel like you’d like to get some guidance, schedule a complimentary discovery call with me here.
I’d be more than happy to get on a call with you for half an hour to talk about your business and discuss strategies you can implement today that will help you increase profit, grow your team, and build a successful business and lifestyle you love.