Pricing seems to be the hot issue this month. Many of my clients are asking for help with how to decide how much to charge for their services. Many years ago I would have avoided this topic like the plague because of my own unresolved money issues.
My negative beliefs said that if I wasn't earning a six figure income in my business, I wasn't smart, wasn't successful and was a fraud! Now I know better, but this way of thinking is actually common with solo business owners who begin their business from the expertise of their service but lack sound business skills, Self doubt is the catalyst for making some very poor decisions.
Here are a few issues that can affect your ability to set clear, correct prices.
• You look at what other business owners are charging for a similar service, and then end up comparing yourself to them and feel bad and confused. You try to copy what they are doing but it doesn't work because you don't know what their business plan is and how they arrived at their figures.
• You are desperate to bring in cash right away in any amount, and are relieved when people pay you anything. Money stress will cause you to feel poor and constricted, which turns into a downward spiral. You become lost in your own feelings of failure which make it hard to make good money or business decisions.
• You choose a 'stab in the dark' price based on what you feel ok with and what you think people will pay. Since your self-doubt is high, you end up picking a low price thinking you are not good enough to charge more. The truth is, if you truly feel you are not good enough at what you do, why would anyone pay you anything?
Here are five solutions to these problems.
1. Focus on your niche market clients and listen to what they need and want. Begin to develop services and products that are exactly meeting their needs. Doing this helps you to keep your focus on how you are offering value to them. As this focus grows, there is no room for your own self-doubt and you will begin to value your expertise.
2. Be a business owner, not a practitioner. Many years ago when I was a counselor, I had a client tell me I must be rich because I was earning $60 an hour. He wasn't a business owner so he didn't get it that only a small percentage of that went into my personal pocket.
In order to offer your excellent service to your niche clients, you are also providing:
• On-going support services and follow-up.
• Good organizational systems that help your business function.
• A team you manage, to help keep this all going.
• New products as business develops.
• Marketing, technical development. research and office organizing.
This growth offers even more value to your clients.
Your prices need to reflect all of the above. You are not charging for one hour of your time. You are running a business.
3. Develop excellent money management. Many solo business owners who are struggling financially, become money avoiders because looking at unpaid bills creates anxiety. It is human nature to want to move away from anything that causes stress. However, this is an incorrect instinct. The stress will actually be much less once you take control of your money systems and know exactly what is going in, going out and owing. I think it was T. Harv Eker that said, “If you can't manage a small amount of money, the universe won't give you a large amount.”
4. Develop a business plan that reflects financial goals that show where the revenue will come from. Many solo business owners begin with no plan, no vision and no idea where they are going. I use simple pie charts ( Money Map) to help people to understand what their business needs to generate. Your prices begin to make more sense based on that picture.
The marketing/sales funnel will also help you to generate a plan based on providing valuable products and services for each level of the funnel. This gives people price and product choices and also allows you to build from a solid business model.
5. Be clear and confident. Discounts and sliding scales are confusing and inconsistent. Most people won't make a decision based on that 20 percent money difference. People want help and expertise. Discounts work at Wal-Mart but not for service based businesses. They make you look desperate. For the same reason it's not good to immediately offer to lower the price if someone seems hesitant, or offer a sliding scale that puts the pressure on your customer to decide where they fit. You want to give people a feeling of confidence and clarity.
It's better to offer bonuses that give more value to the sale and offer payment plans to make it work for people who want your programs but have cash flow challenges. In this way you offer support and options that help people get the help they need and at the same time allows you to run your business responsibly.
One you feel clear about your prices based on the above points, make sure you “check-in” that your prices feel correct. Most people have their techniques. For me, I can feel it in my solar plexus when something is not quite aligned. It's also good to share with your mentor or mastermind group. If you have any self-doubt, figure out where it is coming from and face it head on as your clients will sense it and it will affect your business. Remember, prices change as your business grows, but if you follow these five points you will always stay on track.
Contact Kaya Singer for a free session to look at your business and these five points, your pricing and your niche. She is the author of "Clear Your Focus Grow Your Business," http://www.awakeningbusiness.com.