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5 Mistakes to Avoid When Pricing Your Services
Whether you’re just starting up your business or you’re launching a program, one of the greatest challenges that you may be struggling with is deciding what to charge. If you are, don’t worry. Many service-based businesses struggle with this. I did when I first started out in business – some 15 years ago!
I admit that back in those early years I would see what my competitors were charging and use this figure as a benchmark. Or, I would ask some of my closest friends and colleagues for their advice on what they believed would be a suitable price range.
Maybe this is something you’re doing now. If you are, I can tell you it will only lead to feelings of confusion, frustration and burn out. Why? Because following these methods only leads to you significantly undervaluing and undercharging your worth. Trust me, I’ve been there.
To help you, here are the top five mistakes that you’ll want to avoid when pricing your services:
- Not recognizing your strengths and talents
Many service-based business owners devalue their strengths and talents because they don’t recognize the true value and benefits they offer their customers.My clients (who go through the Unearth Your Brilliance Branding program) are constantly surprised with the feedback they receive from their colleagues identifying their strengths and brand attributes. It’s not until they see similar responses from several of their contacts that they begin to recognize and understand what makes them unique.
- What are one or two things that you find easy to do (i.e. organize things; handle problems; overcome technical issues etc)?
- What are the common characteristics, skills and strengths you use to deliver successful outcomes?
- What do your colleagues seek your support and assistance with because you’re known as the ‘go-to’ person in this area?
Answering these questions will help you start building a skills and strength inventory.
- Pricing Your Services by the Hour
Jim Rohn said: ‘You don’t charge the client for the hour – you charge them for the value you bring to that hour.’Therefore, using a business model that’s based on you charging clients by the hour leads to burnout and frustration. This is because there are only so many hours in the day. As many business owners don’t recognize their strengths and value, they continue to underrate and undercharge their services.
Instead of charging by the hour:
- Create packages that include more than just a coaching session with you. Consider including an eBook, an audio, mastermind groups or a forum where your clients can network with like-minded business professionals.
- You could also send out a weekly online journal that prompts the client to action between coaching sessions to keep them working and moving toward their goals.
- Comparing Yourself to Your Competitors
There are many things you can’t take into consideration when comparing your services to that of your competitors.Even if you’re able to identify qualifications, background or years of experience, they don’t have your strengths, value and unique qualities so it’s difficult to compare apples with apples.
Also, the last thing you want to do is get into a pricing war with your competitors – particularly for a service-based business. Unlike a business that sells products, you can’t mass produce your time and therefore shouldn’t undercut your competitors by charging a lower fee.
Instead of measuring yourself against your competitors:
- Aim to identify what makes you unique and different in what you stand for and in the programs that you develop. This will allow you to create a strong brand (and reputation) that is unique and quite distinct from what your competitors are offering.
- Look at the knowledge, experience and support you offer your clients and put a value on the results you can help your clients achieve.
- Measure yourself on YOUR personal best and not what your competitors are doing.
- Offering Discounts as a Desperate Bid to Get a ‘Yes’
Extending a discount as the only way to get the client to say ‘yes’ to your offer only serves to devalue your expertise and credibility. It also does little to boost your self-confidence as you strive to build a successful profitable business.Instead of slashing your price:
- Offer a quick-action one-off special price to prompt the client to make their decision.
- Offer a reduction if the client pays you in full for the entire program.
- Offer a bonus (or bonuses/special gifts) to make your offer truly irresistible.
For more ideas read the article:
3 Reasons Why Discounting Could Be Damaging Your Reputation
- ‘Assuming’ What Your Clients (and the Market) Will Pay
How many times do you find yourself making excuses for your prospects and quoting a significantly reduced price because it’s what you “assume” that’s all they can pay?One of my colleagues was speaking to a potential client, however due to the clothes the prospect was wearing, “assumed” she would baulk at the fee. After the fee was mentioned, to my colleague’s surprise, the prospect responded with “How soon can you book me in. Is it o.k. if I pay in cash today?”
The lesson here is: Don’t make assumptions. Like my colleague, you may be (pleasantly) surprised at what your ideal client is willing to invest when he/she believes you have the solution to help them solve their problems – once and for all. Which of course you have!
Undervaluing and undercharging your services only ends in disappointment for both yourself and your clients. Just like the employee whose salary is well below their worth and ends up disgruntled and despondent – you too can end up feeling undervalued, underpaid and unhappy because of the low fee you’re charging. You don’t want to feel like that when you continue to work with that client do you?
Remember, get clear on the skills, strengths and benefits you bring to the client and be willing to ask for an investment level that recognizes the value and amazing results your clients will achieve through working with you. After all, you’re worth it – right?!