Gail has two businesses, greeting cards and catering. I asked her how much she charged.
She didn’t answer my question. Instead she said “Oh, they’re just cards. Besides I’m new at it and all of the supplies come from the dollar store.” I asked again. Finally she gave me a response, $1.50 a card. She looked ashamed.
I asked her about her catering business. She told me that she’s happy with what she makes there and went on to tell me about the success she had with a recent job. She served 150 people three meals over two days. She enlisted the help of a few friends and family members and got to work. She was thrilled with how everything went. I asked her how many hours she had put in. We calculated everything out and she realized that she had made about $20 an hour and that was without paying her assistants or including shopping time. Maybe she wasn’t earning so much in her catering business after all.
Pricing our products and services can be difficult. It means you have to look at what you are doing, assess it and put a value on it. Oftentimes when we look at our own products and services all we see are faults. We have a tendency to judge ourselves. We are super critical of everything we do. We find every little thing that isn’t perfect and magnify it.
When you price your products, services and programs you need to take yourself out of the equation. Consider the following to set a price that is both fair to your client and you.
- What is the benefit to my client? Think about what they gain by taking your program or investing in the service. What will they be able to do? What will they be able to stop doing? How will they feel? What is that worth to them?
- Listen to your clients. Gail told me that her clients routinely told her that she should charge more for her cards and her catering. They are right.
- Take yourself out of the equation. Forget that you’re “new at it”. Forget that “it was easy for you”. Ignore the fact that it may have three steps instead of five or is imperfect in some other way. Consider what you would pay for the service.
One last thing… it’s okay if you feel a bit uncomfortable with the price that you came up with. Say it aloud a few times. Get used to it. Believe in the value that you are placing on it. After you say it (and get it) a few times, you’ll get much more comfortable with it and wonder why you didn’t do it sooner!
Have you been under-valuing your self? Do you have other thoughts on pricing your services? Share with me on my blog.
So glad to see this discussion. I teach and do consulting on helping clients pricing their product or service correctly. Pricing is a touchy subject. People are afraid to quote too high of a price because they may loose the sale. If you quote too low of a price you may be working for pennies instead of the dollars you need to run your business. Each sale that you have must pick up the overhead or fixed costs of the business…which is all the costs of keeping the doors open, including rent, insurance, untilities, marketing, communications, website, etc and your salary. Whether you are a one person business or have 100 employess you need to be paid a reasonable salary as the owner of the business. The first thing I have my clients and students do is develop a personal budget so they know what they need to put in as their salary. Once they have their salary then we start building a pricing sturcture.
For more information on pricing check out my two blogs, http://www.empressofbiz.blogspot.com or price itperfect.blogspot.com