If I were to survey 100 entrepreneurs about their biggest challenges, more than half of them would say, knowing what to charge. You see, it’s different when YOU are calling the shots. You could work for someone who has the courage to charge $500/hour and while you may think it’s too much, when asked about the company’s rates, you’ll confidently reply “we charge $500/hour.” But, when asked that same question in your own business, doubts and fears that you may be not worth it start to creep up to the surface.
Trust me, I get it. I experienced the same thing when I first started my business. I bought into the popular misconception that you have to “pay your dues” by charging lower rates or working for free. I say this is a myth, especially in my case because I hold the advanced degree, have the certifications, etc. I had already paid my dues when I invested in my education to serve my clients in excellence, but the truth of the matter was that I wasn’t confident that people would actually pay me what I wanted to be paid.
And that leads me to you. Perhaps you feel the same way. Perhaps you have the degree or certification or experience getting big results for the people you serve BUT you’re afraid that people won’t pay you what you want or worse, you’re unclear about what you must be paid to earn a profit. Either way, setting the right rates for your products and services comes down to these five considerations. Take heed before you tell another person what your rates are.
- What will your market bear? Based on the ideal client that you’ve chosen to serve, what will they pay for your service? While I am of the mindset that you can charge more when you have social proof or results substantiating the value you add, you don’t want to price yourself too low or too high based on your market. You must, dare I say it, do some research. You need to ask yourself, “what are people who buy products and services similar to mine paying for those products and services?” My recommendation is that you start by asking those who would buy your products and services instead of just looking at a colleagues website and determining that is the right price. Just because their price is listed doesn’t mean people are buying it. If you can prove your results that can lead to you charging a little more in your market. While research is important, do not look at another’s prices, set yours and move on. You don’t know how they priced themselves, and again you have no clue if anyone is even buying.
- What is your overhead in producing the product or service? Do you have to bring in a subcontractor to help you complete the work? If so, how much will that cost you? Have you added that into your price? Do you have to set aside a massive amount of hours when you can’t be earning other money to complete the work? Being clear on your numbers is essential to setting your fees. Many people pull a number out of their behinds but can’t back it up and as a result they end up undervaluing their products and services. So be clear on what it will take for you to produce the product or service, as well as how many you’d need to sell to break even and ultimately to create profit in your business.
- How much time will it take to deliver the product or service? In general, you should charge more when you must be active to provide the service. If you have created a passive or leveraged way to get what you need to your clients, you can charge a little less. But you need to be clear on what your time is worth and how much you must make in order for it to be profitable for you.
- What is your overall revenue goal? Again, knowing your numbers is essential. Let’s say your goal is $100,000 but you charge $250 a month for your services with a 12 month commitment. That’s $3,000 per client. To achieve your goal with no other revenue streams, you’d need 33.3 clients for the year to hit your income goal. Now, if that’s doable for you, great. But that means you have to work with 33 clients each and every month to make $250 per client each and every month. I don’t know about you, but that seems like a lot of work to me.
- Will charging that rate make you feel good? It’s no secret that when we feel good, we do better work. So, if looking at the number makes your stomach hurt, it is probably too low. You want to feel good about the contribution you’re making and ultimately getting paid for. So while some would tell you how you “feel” has nothing to do with your prices, I believe it has everything to do with your prices. If you are excited, grateful, appreciative and passionate about your work and prices, you’ll be in a positive energy space. When you send positive energy into your work, you attract more people who want what you have to offer. It’s all about attracting more of what you’re passionate about.
So, before you settle on a price for any product or service, get clear on these 5 considerations. Have a comment? Share it below. I’d love to hear your opinion on this pressing matter.
©2012 by Darnyelle A. Jervey. All Rights Reserved. Darnyelle A. Jervey, The Incredible Factor Business Mentor and Coach, is the founder of Incredible One Enterprises.com and the Leverage Your Incredible Factor System® a proven step by step program for turning your passion into profit. For more information and a FREE audio download “How to Use Your Incredible Factor to Attract MORE Ideal Clients” visit https://www.incredibleoneenterprises.com