“How much should I charge for my services?”
“Am I overcharging?”
“Will I ever find clients that’ll pay for my products?”
As a small business owner, I’m 100% certain that all these questions are swirling around your head ALL.THE.TIME.
It’s pretty common for anyone who has a business or wants to start one to be perplexed by how to price their products and services.
After all, the right pricing is what will make clients open up their wallets and scream “Take my money NOW!” to your face.
And that’s music to every business owner’s ears, don’t you agree?
Kathryn Moorhouse to the pricing rescue!
Kathryn inspired me to start my own online business. She’s an awesome digital business strategist who knows the ins and outs of successful pricing and revealed them to the students of my flagship course, Master Your Finances, in our private Facebook community.
Here are Kathryn’s 5 easy hacks to price your offers for success!
1. Always include your profit margin in the price
To determine the price of your physical product, as a business owner you use a traditional formula that can be easily found online and comprises the cost of goods to sell it, your marketing expenses, variable costs, and fixed costs.
But you usually neglect to put in enough profit margin because you think that your final price is too high for anyone to buy.
Well, stop doing that!
Unless your business makes profit, you do NOT have a business.
Make sure to ALWAYS include your profit margin as a percentage of your product pricing.
Your profit can be broken down into a business buffer fund, or business emergency fund, and your business profit account. Setting aside for the former is absolutely necessary with all the uncertainty that’s going around the world today.
This also applies to business owners who sell digital products or offer online services.
2. Know your numbers
Besides your profit margin, there are other important things you should take into account when determining your pricing. These are:
- taxes your business will have to pay
- personal expenses
- owners compensation (This is your salary or your take-home pay.)
- business expenses
Having calculated these amounts, you’ll come up with your baseline pricing that you can increase or decrease depending on your financial goals, priorities, and values.
Keep in mind that your baseline pricing is not set in stone and could be different from someone else’s.
3. Pay attention to your mindset
NEWS FLASH! The biggest factor that affects your pricing is your mindset.
People just starting out in business often fall into the trap of undercharging because they feel selfish or guilty about charging for something they enjoy doing, or because deep down they think that they have to pay their dues during their first years in business.
But this is simply NOT true.
The reason you started your business was to make a living off it, right?
If you keep getting stuck in the scarcity mindset, you’ll never have a profitable business.
When you know the value of your product or service and how it benefits your target audience, you feel more confident in your offer and you sell it more easily by sticking to your pricing.
Focus on your thoughts, because they dictate your decisions and your actions.
I’ll be honest with you: Working on your mindset takes lots of effort and time but it pays off in the end.
4. Tailor your pricing to who you sell to
Ask yourself who you serve and who you sell your product to, what their pain points are, and what unique solution you offer to them.
If you still prefer to start selling at a lower price, don’t go lower than the baseline figure that covers your costs and is the minimum amount for your survival.
Begin at a lower hourly rate with your first client to get a feel of how long it takes you to get your work done and then start increasing your prices with your next clients.
Include a clause in your contract that your price will be re-evaluated after 3 or 6 months, as it allows you to adjust your pricing model and see if changes need to be made, especially if you’re unsure about your pricing in the beginning.
This way you’re in a constant process of increasing your pricing to meet your business goals and get where you need to be.
As you gain experience and become faster at what you offer to your clients, ditch charging by the hour and design packages customized to your clients’ budgets. This will allow you to work fewer hours without getting paid less.
Include a couple of tripwires in your lower-end offered products or services that’ll prod people to say yes to them more easily and make the transition to your more expensive offers smoother.
5. Be aware of where you stand in the market
Research what your competitors charge to determine your position in the market and where you can be in the future.
Coming up with a premium signature offering, meaning an offering that delivers optimum results to high-end clients willing to pay top dollar for it, will place you on the highest spectrum of the market, as long as you communicate its value to your target clients clearly.
So it’s about identifying the problem you solve, the exact result you offer, and who it would be perfect for.
If you enjoyed learning about how to price your products and services successfully, then you don’t want to miss the other guest expert videos that come as a bonus when you sign up for my Master Your Finances course.
Come on, the clock is tickin’, my friend!
Enroll in the course right away and taste the freedom that comes from mastering your finances!