Welcome to Spark Bits Weekly where I ask a panel of homeprenuers a blazing question about running and growing their businesses from home.
Today’s Q is:
What is your strategy for pricing your offers so that you are getting paid what you’re worth in your business?
Christa Jensen from ChristaJensen.com says:
This is a very important topic and not one easily tackled when you go to set your prices whether it be a service or a product. Having a good strategy to get paid your worth is fundamental to the success of your business.
Everyone should, in my opinion, always follow these 3 strategic yet simple rules:
- Know the value of what you are offering. (What would you pay, not what you want people to pay. Choose at least 3 prices).
- Research. (Know what your competitors are charging and charge competitively without undercutting your value).
- Don’t be afraid to test prices (Start with your highest ideal price and offer discounts using other projected prices).
If you value yourself too low potential clients will not take you seriously. If you do not do your research you will not be effectively competitive. If you test your prices you could increase your sales dramatically (don’t price lower than your lowest valued price).
I have used these rules for years. The training on the value of a successful business I had to learn in the last time I worked in the corporate world stuck with me and now I apply them to what I offer!
Stephanie Watson from Monthly Content Helpers says:
Since 90 percent of the work I do is content writing, it’s not really very difficult for me to price my offerings. I price by the package or by the article and give discounts for bulk orders. The one thing I had to realize is that I am not competing to be the low cost leader. I want to work with serious online and offline business owners who want quality content that provides value to their audience. I don’t want to work for people who only care about getting the lowest price without being concerned about quality.
Once I realized all that, it was simple to set my prices. While I have package rates, it all started with knowing how many hours I can work a week and how much I need to earn. That helped me create my goal hourly rate. Then I figured out how long it took me to research and write an average article. That helped me create my package rates. I also learned that if I have 5 or 10 articles to write on the same subject I can do all the research at once, and pass on the discount to my clients.
I receive inquires from all types of business owners seeking content, some do want to pay me less than I am worth. I have figured out my worth and I don’t accept positions that don’t pay me what I have figured out I need and deserve. That’s not to say I didn’t at first.
Sometimes you do have to stick your toes in, do a lot of low paying work in order to build up your resume and confidence. But, after getting experience and building a reputation, people start wanting to hire you for your expertise as much as the tasks that you do. Once that happens, you can command the fees that you deserve.
Brenda Trott from Done4UMedia Marketing says:
I let people know what my highest prices are and then ask for their budget. Then I build a plan for them that might offer less services but still be as valuable for them and their business. The idea is that once I get them more customers, they will be able to afford to scale it up.
The topic of money is a sensitive subject for many people and can be a huge stressor for an entrepreneur who may have a predetermined expectation of having the hard work pay off big time. It is particularly pressure provoking when factoring in supporting a family or when frequently entertaining the thought of making enough to pay the bills. Money in general evokes feelings of many colors. So having all things to consider, is there a way to price your products and services so that you’re making what you are actually worth?
A huge point shared by some of the Sparkplugging advisors was the caution of undervaluing yourself. As I agree with this view I also believe pricing may be influenced a bit by your viewpoints and personal relationship with money. The task of pricing can become quite challenging and it is a task that is of superb importance for the success of your business.
Think about when you had to slap a figure on one of your products or services. Were you ever worried about things like, “My customer won’t be able to afford the price?” Or, “My customer won’t want to work with me if my price is too high.” Or, what about, “My competition will steal my customer?” These and similar thoughts will most likely be reflected in your pricing decisions.
So what is your worth? In addition to factoring in your internal money dialogue, here is a summary of some of the ideas presented by our Sparkplugging panel. Plus, a few other tidbits I’ve learned along the way:
- Have a clear picture of your priorities, personal goals and vision for your business. However, take an honest look at where you’re at right now. If you need money immediately you might have to start on a less than ideal end, work your customer through your sales funnel and scale up as you progress.
- Be honest with your value and provide real justification by demonstrating how your product or service will be beneficial to your customer. Don’t assume your customer is clear about the benefits of your product or service.
- Figure out who your customer is and what particular market you are serving. I figured this out when I was running my cleaning business several years ago and realized that our service didn’t just provide cleaning. We provided aesthetics too as it included detailing, organizing and de-cluttering living spaces in the homes of people in affluent communities. It was a service that our customers proudly paid a hefty amount for because many of them had a certain image to maintain and they had the financial means to pay for the service.
- If your customers are always haggling for discounts, are you working with the right people? For example, my husband, a graphic tee designer and seller, is frequently approached by high school and college kids requesting discounts or freebies. Offering discounts is tempting because it’ll bring in some money and exposure but clearly, not all markets are a good fit for what you have to offer. Choose your customers wisely and consider your positioning and messaging.
- Factor in your costs and what you want to earn. You’ll want to cover your expenses plus take in a profit at the end.
Although you may have to consider many other factors in your pricing depending on the type of business you’re in, when it comes to getting paid what you’re worth also take into account your wisdom, skills, and creativity. There is no one in this world that has a replica of all your personal assets and your expression of them. Therefore, put them to use, accept your worth and gain the ability to proceed with confidence to strut your stuff. After all, don’t you deserve it?