How To Know If Your Price Is Right
Thanks to the war and the post-pandemic inflation, price increases are affecting every facet of our lives and businesses. When you are selling a product, it’s easier to price it. After all, there’s your cost of product, then transportation, then packaging and your margin to base your price on. But when it comes to pricing your advice or time or services, here are 3 ways to know if you’ve got the right one and what to do to change it if need be.
Profitability
My client Pam had a leadership consulting firm. Her firm had been stuck with the same bottom line (profit) over the past 3 years. Pam could never grow her profitability because as soon as she got more clients, her costs of doing business would go up. We saw that her prices were the quickest way to increase her profitability. If like Pam, you are constantly chasing the same profit year after year, you may not have the right pricing.
Long Hours
If you’re consistently working long hours that hurt your health, relationships and allow you to have zero fun, that’s the first sign that you might not have the right pricing. I get that entrepreneurs are supposed to work a lot but I make 4x my peers and only work 1/2 days. So what would it be like for you to imagine that your price has everything to do with your lifestyle?
Competitors Who Charge More
If you have competitors that sell the same service as you do but charge way more, you might not have the right price. Sure, you’ll tell me that they’re bigger and more established but that won’t wash with me. 86% of buyers don’t see a difference between two suppliers who do the same thing. That’s why unless they have a very unique technology that reduces the client’s problem drastically, then there’s no reason why you can’t price parity with them.
How to Change:
Price Equals Positioning
In business, your price is dictated by your positioning in the market. Ie. who you sell to and what you sell and how you sell it. Therefore change one of those components and change your pricing. It’s often the first part of our work together with all clients who want to grow fast.
Poverty Mindset
Fear of losing clients because of high prices is a nightmare every business owner faces. You must own up to your demons and fears and get help around beating this beast inside your head. Shifting to an abundance mentality will allow you to price up easier.
Kick-butt Differentiator
Remember Swiffer? That disposable mop that was affordable? If that wasn’t a kick-butt differentiator in its category, I don’t know what was! So if you can’t invent your own Swiffer, then pick other ways to differentiate your business. Some ways I teach are: super-niching, developing a personal brand, becoming highly media-visible and so on. There are ways, my friends..
Become Excellent at Your Niche
It doesn’t matter how much your services cost and how inexperienced or small your company is, the truest differentiator is excellence. And excellence only begins with a focused dedication to picking a niche in the market. What industry will you serve and what pain point will you spend the Malcolm Gladwell’s ‘10000 hours’ to become excellent at?
Look Bigger Than You Are
Let your marketing and visibility make you look bigger than you are. Perception marketing is real. It works. I often hear from prospects that they thought I was much bigger. Let your visibility and message speak for you. Nobody balks at paying a premium for a giant brand, not in any industry.
Hopefully after reading this article, you’ve discovered some ways to address your price woes, the sooner the better.