There is no doubt that pricing your services can take an emotional toll on you and one of the most challenging tasks you will have as a small business owner. But if you think about pricing in a different way- as a business transaction, you can start to peel away all the frustration and emotion that comes with pricing your services.
Raise your hand (promise I won’t look) if you dread reviewing and making changes to your pricing and packages. There is no doubt that pricing your services can take an emotional toll on you and one of the most challenging tasks you will have as a small business owner. But if you think about pricing in a different way- as a business transaction, you can start to peel away all the frustration and emotion that comes with pricing your services. Here are the 9 biggest mistakes we see creatives make when pricing their services.
- They compare themselves to others: I know, it’s so hard NOT to compare yourself to everyone else in your market. I see you right now, scrolling through your Instagram feed, feeling overwhelmed and comparing yourself to your peers. Well guess what? I am giving you permission to STOP IT. Put the phone down and realize that you are an individual running a business that needs to achieve certain metrics and goals that you set out to accomplish. You made the decision to build a business for your OWN reasons and those are going to be completely different from anyone else, so stop thinking you need to be doing what everyone else is doing and start considering what YOU need to make your business a success.
- They lack confidence in building their pricing: Okay, how many of you have said “I can’t pay that much for my service, so no one else will”? I see you nodding your head in agreement. Here’s the deal. Have you ever thought that YOU may not be your ideal client? Pricing is not about what YOU would pay for your service, it’s about what your target client is willing to pay for it. Be confident in your abilities as a creative entrepreneur and present that confidence to your clients when they inquire about your services.
- They don’t know how much they need to make each month: Now’s the time for you to have a big “aha” moment. Are you ready? Okay, here it is. Your pricing should be directly related to your financial goals. Let me say that another way. If you are pricing yourself without knowing HOW much you need to make each month to pay your bills and save for retirement, you are running your business blindfolded. Okay, I get it. Financials are NOT the sexy part of what you do, but it is the most ESSENTIAL DATA that is necessary to run a successful business. Knowing the financials of your household and your business takes the guesswork out of pricing and gives you the knowledge you need to make informed decisions.
- They don’t know the cost of running their business: This goes hand-in-hand with #3, but it’s a common mistake for small business owners to lack the understanding of the full cost of running their business. You should be tracking all the expenses you are incurring including hard cost such as equipment, supplies, and materials along with hidden costs such as marketing, networking and taxes. Understanding your total business costs will make sure you make a profit (kind of important, am I right?) so do the math and make sure you’re covering all your costs in your final pricing.
- They don’t know how to say “no”: It’s common when you first start running a business that you may do some work for free or at a discounted rate to gain experience. But as you start growing your business, the work and clients that are not putting food on your table need to stop and you should be charging consistently for your services. Letting clients walk all over you or see your pricing as negotiable (or free) should do one thing: go work with someone else. Saying “no” is a powerful tool in your business and clients that are not ideal or inspiring you to do your best work should take a hike.
- They offer too many discounts or promotions: Offering special promotions at certain key times in your business can help drive traffic, but constantly discounting your services and slashing your prices will only train and attract clients that want your services only when offered at a discounted rate. There are 3 different types of clients and each one has a motivation to buy from you (we will talk more about this in a minute). Budget clients are motivated to purchase from you because of price and obviously the lower the price, the more they are motivated. This client type is going to pay you the least for your service regardless of your experience, quality, or time. Limit promotions to special occasions or as a special perk only to your existing clients.
- They don’t understand what motivates clients to purchase from them: Depending on your price point, you will be attracting a certain client type and understanding what motivates your clients to purchase from you is key in building your packages and offerings. Let’s expand on what I talked about in #6. There are 3 client types: budget, value and luxury clients. Each of these clients are motivated by different things. Budget clients are motivated by price, value clients like your price but want to see the VALUE and quality you bring, while luxury clients are all about the quality and customized experiences. Understanding which price range and client type you are attracting need to be the foundation of the packages you offer.
- They don’t think of the long-term potential a client has when building their offerings: When pricing your services, don’t have the mindset that your client is going to purchase from you just once. The goal you should have when building your offerings is to give your clients a reason to come back and use your services to buy from you over and over again. Perhaps in your highest package you provide an incentive or discount on their next purchase from you or have packages that celebrate different milestones in their lives. Your packages should give them reasons to create loyalty and come back and use your services again and again. This creates an incredible marketing cycle that will feed your business over and over instead of constantly finding new clients.
- They make impulsive changes: Okay, so you put your pricing out there and you’re ready to book clients and then….. crickets. Your calendar is empty and you start to panic. What do you do? You assume your pricing is too high and you slash it in order to get bookings. There are so many reasons why people may not be booking from you that isn’t directly related to your pricing. People are not always ready to book the minute they get to know the services you provide. Building relationships and establishing trust is a big part of driving bookings to your business. You may also want to evaluate what is included in your pricing. The higher your pricing the more your clients are going to want a custom experience and if your packages are bare bones with a premium pricing, you may not be motivating the right client to use your services. Don’t always assume your pricing is too high and impulsively change it. Erratic changes in pricing are confusing to your customers and doesn’t build trust for the long term.
Although pricing can be challenging, it is the foundation of your business being profitable and successful. If you need help with a pricing strategy or structure, contact us today to learn how we can best support you.
No doubt that the world is crazy right now and we are all feeling like we have little to no control over our small businesses and goals we set out at the beginning of the year. But even with the “stay at home” orders in place, there ARE things you can do to set yourself up for success when businesses can reopen. Here are things you CAN do right now for your business during the pandemic.
Hey Y’all! My name is Tammy Dahlquist and I am super excited to meet you! I have had the idea to start Red Door Mentoring for sometime now, but you know how it is, life gets busy and before you know it another year has past and you’re thinking “where did the time go?” But it’s finally time and I am so excited to start this new journey with you.