Know your value and pick your price
So, you’re starting a business - you’re ready to go, you’re excited to start chasing clients, you get some enquiries, you convert those enquiries into leads and now it is time to turn those leads into clients - and ultimately, cash. But there’s a problem… what do you charge?
Now, if you’re in a sector that has a standard pricing structure in the market place then the decision can be a fairly easy one to make.
Lets take the example of a window cleaner (and I am using that example as I am wistfully starring out of my freshly cleaned home office window as I am writing this article), in the window cleaning world there is a standard(ish) pricing structure for the services offered. And this pricing structure is based on the value - or the perceived value - of the service provided. Of course, there may be a variant of say 10% - 20% in the price that a window cleaner could charge, this might be based on their marketing, branding, word of mouth recommendations etc. but - in general - the price will be fairly standard across the board.
But let’s say you are a consultant, or a coach, or a funnel builder, or a marketer, or a PR specialist, or an expert - basically someone who gets paid for their knowledge - then how do you define your pricing strategy?
Obviously there are some standard ways to look at cost strategies: for example, look at the baseline cost price of delivering that service / offering and work out what your ideal profit margin is going to be (again, in a lot of sectors there will be standard profit margins), you could look at the lifetime value of a client or - the tactic that a lot of companies go for - look at your direct competitors and try to under cut them just a little bit to steal their clients!
All the above are perfectly viable but that still might not help the ‘expert’ decide and define their price.
So, here is my take on it… ready, it is quite simple to be fair… know your value and pick a price. That’s it.
While this is not a complex pricing model, it does pose a deep question; how do you value you ?! I don’t want to go down too much of a personal development rabbit hole here, but value is a perception and, in the case of the expert service provider, the price that you charge will largely be predicated on the value that you truly believe you can bring to your clients.
I am going to be totally transparent here, as a podcast and media expert I currently charge clients £1500 per day to work with me. Some of you reading this might think ‘bloody hell, 1500 quid for a day, that seems steep’ and others will be of the opinion that £1500 is not worth getting out of bed for - again, your perception of that monetary figure is based on your ‘value’ of the £1500.
But to me, as the expert, that day rate is a fair reflection of the value that I can bring to a client. The price is based on my 14 years of media experience, the fact that I have helped to launch 100+ podcasts with 90% of my clients ending up as iTunes top rated podcasts because of the system and process that I train them in. There is no one in the UK who has - directly - worked on the launch of more podcasts. My clients succeed because I am an practical tactician of my craft.
Increasing your own value of yourself, is probably a subject for another article, (or maybe left to self-improvement guru Tony Robbins rather than me) but, from a business standpoint, in terms of working out your value as an expert I would put pen to paper on this and list your relevant experiences and expertise.
What makes you valuable is:
- What you know
- How you can help / assist / accelerate / grow your clients with that knowledge.
Write it down, I am serious. List your expertise, your experiences, your skills, your talents, your successes etc.
Then, based on the above, pick a price.
If people bite your hand off at the price you decide you might have gone in too cheap - conversely, if no one buys, you might be valuing your expertise a bit to high. Keep adjusting as you go until you get to that sweet spot of the number of clients you want and the level of clients you want.
FYI - There’s a market for everything and everyone. Lots and lots of people will buy a £20 Casio watch (mass market), much fewer people will buy a £20K Rolex (niche market) but there is a place for both.
Do you want to be Casio or Rolex? There is no right or wrong - decide what is right for you; know your value and pick your price.
I dived deeper into this on a recent episode of my ‘Building The Brand’ podcast so, if you’re a fan of audio, go and check that out here.