Exactly how much are you worth? This is a question every entrepreneur must ask themselves. It’s a pretty loaded question when you think about it. Do you look at the local market? Start off lower when you are just getting started? Wouldn’t it be nice to know all these factors you are going nuts over in your head?
Relax and read today’s post. It’s exactly what you’ve been looking for and what you should have been told from the beginning.
Do you look for the industry standard going rate?
Sure, it’s a good place to get ideas. But don’t let those prices rule over you. Above all forget local prices. Especially if your business or service can include you traveling to the client, the client traveling to you, solely handled remotely, etc.
If you have structured you business in any of those ways, rule one is FORGET WHAT EVERYONE ELSE IS CHARGING. Yup! If your business model is open like this you can literally charge whatever you want. You’ll need to work a little harder targeting your perfect client who is both easy to work with and able to afford you. But you can by all means charge what you want.
When your business serves locally only
If your business is only set up to serve clients close by I invite you to stand out! Don’t be like your competition. Check them out, see how they are doing things…then completely blow them out of the water. They go left…YOU go right! As long as you are different you’ll attract attention. Mention how you are different and never stop making a point about it. Remember when every car rental company was the same old same old? Then BAM one company says THEY WILL PICK YOU UP! Suddenly they are doing something very needed that NO ONE ELSE was doing. They got attention and they got more clients. Every facialist in your area doesn’t include a full face, neck, shoulders, arms, and legs massage? Add them to yours and market the heck out of that benefit! The key is to find a need or benefit and make sure everyone knows you do it when your competition won’t. Now you can not only charge more, but you can be a leader in your industry.
What should you price yourself at when starting out?
Quick answer…exactly what you want to be charging when you have more experience. Yup! It’s very hard to raise prices, you’ll lose nearly all your clients. Knowing this, just start out where you want to be. It will be a slower start, but you’ll make it. You cannot expect a client to pay more for a service they are used to paying a certain price on. Remember the huge mistake Netflix made way back when they suddenly raised prices? They were a very cheap service. The people purchasing became furious when they raised pricing. Eventually they were able to raise prices, but they did it by offering up exclusive shows and content. There was some added benefit.
Avoid this slippery slope and start off where you’ll be happy. This doesn’t mean you won’t be able to eventually go even higher. For that you’ll need to be in such demand that you become an exclusive product or service. That’s another post altogether.
What happens when you are priced where you want to be, but no one is buying?
Here is when you’ll want to check out the competition a little closer. If you are offering an inferior product or service…that’s your answer. If you have bad or no reviews while your competition has many and raving ones…that’s your answer. If you are offering a product or service so unique…maybe you need to promote it enough that others even know it exists or perhaps it is a product or service that just isn’t needed.
When you know you’re worth more
If you are sure you are better than the rest and/or offering something that no one else in the industry can match…hold strong. Don’t submit to negotiators. Don’t fall victim to discount hunters. Don’t kill your business that way. If you want to be a high end and exclusive product or service…charge like you are and make no apologies. You can not serve everyone, just your target market. Don’t think lowering your prices will bring them in. It doesn’t matter who so and so knows. If anyone ever tells you to work for free or at a lower rate because they know tons of people and will promote you I URGE you to show them the door fast. Good negotiators do this, not good clients. It may be months before you see your first client in your target market. Hold out! Wait for them. You wouldn’t marry the first person that asks you on a date right? That’s crazy! You have to wait for the right one. It is better to be alone than in bad company just as it is better to struggle a little bit in the beginning until your ideal clients come along.
Yes, this may mean you’ll need to do other things to make money until this happens. Don’t be discouraged.
How come some people are not as good as me but charge way more and are paid?!
This is an important lesson. I’ll bring up the art world for this one as it can be especially prevalent in creative fields. They are not simply purchasing something you have created, they are purchasing the experience you provide with purchase. No, this doesn’t always mean treating them well. This can mean the stories you tell about your work. The feeling they have when they see your passion. Your personality. Your belief in your work. Your excitement!
“When all is said and done people will pay what you feel you are worth.” – Kat
When you see a really high end artist negotiating with a client over a piece of art, they know it’s not what the piece costs to make + labor. It’s emotional. They are drawn to the feelings they are getting from the environment, the fact they are in position to spend lots of money on enjoyment, and what they feel about the artist. If they know the artist doesn’t back down on their price, they know their art in general will be a good long term investment. If the artist lowers their price, they will see the long term value unstable. When the artist is coming from a place of fear. Fear of not making the sale. This means that fear may allow them to accept lower and lower rates. Someone who is strong and believes in themselves will not back down from their prices. No matter how outrageous they may be. “Now that’s a good investment”, the ones with deep pockets will say. “This artist is going places and I want her/his work!”
I hope you’ve gotten what you need to understand a bit of the psychology behind pricing. For more detailed advice on your individual business please see my services HERE.
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