I’m going to make a big assumption that you have a business that adds value. Entrepreneur has some great readers, so I’m trusting that you want to help people, and create products and services that change the world. One struggle for entrepreneurs is figuring out what to charge for these world-changing offerings.
If you price too high, the customers you’re targeting may not be able to afford it. If you price too low, you’re robbing yourself and your business. Also, customers and leads will base their decision to buy based off of what your pricing says about what you believe you’re worth. Higher tier customers hesitate to buy something at a lower price because of the perceived value.
I’ve been in business since I was 19-years-old. My first business was a service business in the bread industry. I hesitated to charge a higher price even though several customers suggested I raise my prices. My second (and current) business involves writing, speaking and coaching.
My “Lifestyle” business involves many pricing decisions:
- What I should price my books?
- How I should price my coaching services?
- What I should charge conferences that want me to come and speak? In the last week, I’ve booked four international speaking events that were tough to price.
- How to charge companies that want to hire me as a consultant.
That list could go on. The pricing strategy that has made a difference in my business is evaluating what I’m offering and charge based on the value the customer will receive. A wise entrepreneur told me that my prices should be high enough to make me feel a little uncomfortable, but still feel like a deal for the customer. Since taking his advice, my revenue has increased with fewer customers.
Pricing is a work in progress.
I have priced my offerings too low and higher tier customers told me that’s why they didn’t hire me. I have read books, watched videos and hired coaches to teach me about pricing. After all these years in business, I’ve realized pricing comes down to testing. Just because a pricing strategy worked for another entrepreneur, doesn’t mean it will work for your business.
Testing will give you feedback from the best source: the people who will buy what you’re selling. You will test prices and more than likely, raise your prices as your business grows. The one suggestion I would make is price based off of value instead of an hourly model. This is not a job. It’s your business and your time is your most valuable resource.
What you charge is a reflection of what you believe about the value you provide to your customers. If you struggle with raising your prices, it may be because you’re battling self-limiting beliefs. I delivered bread in my first business, now I write and speak all over the world. It’s still hard for me to remember I’m not a “bread guy” anymore. Get honest about how you feel about your worth. Beat any self-limiting beliefs.
Attract fire starters.
Have you ever had to work with a low energy customer? Or worse, someone who always complains? The money may be good, but the effect that customer is having on your state of mind can undermine your ambition and business. Avoid those people and work to attract customers who understand the value of spending a little money to hire someone who’s done it.
Your goal is to attract fire starters and customers who will become your walking billboard because they understand and appreciate what you do. You want customers and clients who excite and inspire you to maintain the fire needed to push through the hard times in your business.
At the end of the day, being an entrepreneur isn’t about the money. You started a business to make an impact and create a life of freedom. If you’re spending day in and day out working with people you can’t stand or doing things just to make money, your business won’t last very long.
Price according to what your testing tells you. Price based on the value you provide. Don’t be afraid to charge higher prices if you're delivering higher value. Create a business that is scalable and that fits into your life. It should not be the other way around.