How to Rock Your Start-Up: Nail Your Business Pricing and Keep the Increases Coming!
Pricing your products or services within a business can be a paralyzing thing. Scared of pricing so high you’ll never pick up a client? Worried about pricing so low you’ll attract the WRONG type of client or feel like you’re working for free? These are just 2 among many thoughts that are stressing you out! Here are a few things to keep in mind while working on your business pricing.
Where NOT to start
Having a set hourly rate as a service based business might sound like a great thing, but I can tell you it is NOT. It may sound easy to track when it comes to invoicing your clients, but there is more than just charging your clients for the time they spend with you to think about. You spent time, money and put loads of effort into learning the skills you have! Your clients should be paying you not only for the time they spend with you, but also for all of the hard work and hard earned money you put into getting here!
If you have a product based business, you need to have a clear understanding of how much your product costs and how much time it takes to produce them. As an example, bakers need to break down cost by each ingredient they use! Keeping track of all the ingredients sitting in the kitchen won’t be as fun as the baking, but it is NEED to KNOW information to make sure you’re not losing money on your products!
BOTH service and product based businesses need to know their business numbers. You need to know how much it costs you to run your business monthly or yearly. Don’t forget about things like your website cost, social media schedulers, canva, etc. You need full understanding of your financial picture to make an accurate decision about pricing.
Pricing Options
When I first started out, I made the mistake of trying to have an option for everyone. All this did was have me droning on when I spoke to potential clients about pricing and it confused the shit out of them! Too many options will actually deter potential clients from making a decision about booking with you!
What I recommend for NEW service based businesses is having no more than 2 options for potential clients. As your business grows and you find you need to add more options, narrow them down by discussing with your client things like, what they’re looking for and what they hope to achieve by working with you. You can then offer the 2-3 options you have that are the best fit.
FREE Services to Gain Experience?
This is another mistake I made when I started my business. I was looking to gain experience and confidence in my coaching! Experience I got, but confidence was drained from me in no time! Here is how it went:
I posted online that I was looking for clients to help for FREE!
About 15 people were interested! This was so exciting!
I gave those 15 people the ‘homework’, sent them details on how to book a time slot with me and waited…
Crickets are what I got from the majority of them…
I started to work with 5 of them, but lost a few along the way. What was I doing wrong?!
Very few showed up and did the work, which made me feel like SHIT!
This experience had me feeling like this was all my fault and that I must have been doing something wrong to have so many clients ditch all at once! What it taught me was that my clients were not invested in my process because I was giving my services away for free. They felt they had nothing to lose by NOT showing up! So, I urge you to refrain from giving away your services no matter how new you are.
Here are a few options to start with:
Charge a lower fee for your first clients. If taking this route, I recommend showing them what the FULL fee would be on their invoice. (I encourage this option)
Charge a deposit and once they show up and do the work, you refund the amount, or part of it.
I also recommend requesting your first clients leave a review of your business on Google or Facebook in exchange for the great deal they’re getting while working with you.
Price Increases
For an established business, I recommend you increase prices annually. For newer businesses, increasing prices twice a year can help you gain confidence in your pricing. Another key tip: Plan out your price increases at least 1 year in advance! This will help push you forward in your business! It will be scary but worth it!
Remember that even if you’re new and starting out, you are worth it! Your services or products are worth it!
