So… you have an offering, and you’re trying to figure out what to charge for it.
Perhaps it’s a brand new service or product – or maybe you’re rethinking your entire pricing strategy for existing offers.
You’ve been bouncing around pricing ideas in your head for ages and you just can’t settle on the “right” price.
That’s because you don’t have clear guidelines for making this kind of decision. How can you make a wise decision if you don’t know the criteria to consider?
Let me share the guidelines I use when pricing my services (consulting, classes and mastermind groups) and my products (self-study programs, books):
What results or outcomes will people get from the product or service you’re selling? This is, above all, the most important piece. If I’m going to help someone grow their business, it’s worth it to them to spend the money because they’ll get the result they want quicker. If I’m going to help someone finally write their first novel, or lose weight, or climb the career ladder, it’s worth it to them.
Delineate the specific results people will get from joining your group, attending your class, working privately with you. The clearer you are on the value your offer provides, the easier time you’ll have to charge a solid fee for what you’re offering.
Are you a high-end brand, and therefore need to charge high-end prices for all your offerings? Or a middle-of-the-road brand?
Your pricing needs to be aligned with the brand image you’re creating.
In every audience, there are those who cautiously spend money and those who spend money more fluidly. I had a client who took home $400,000/year from her business, and bought her “fun” clothes at TJ Maxx because she didn’t want to spend money on more expensive clothing. I’ve had clients who made $35,000/year and purchased a $15,000 mastermind group.
Get inside the minds of your clients: ask them what they’ve purchased in the past two years to work on their situation, and what they paid for each of the items they purchased.
If you are uncomfortable investing in a $400/month mastermind group, you’ll be uncomfortable asking others to join your group at that same price point. If you would never pay $1,500 for a workshop, you’ll resist charging $1,500 for your own workshop.
Get clear on your own money personality, and DO NOT assume everyone thinks about money like you do. People have all types of “money personalities” when it comes to investing to solve a problem or to move forward faster (even when they’re not spending their own money, like in a corporate situation where they’re an employee).
In the eyes of the customer, the fee for the mastermind group should be less than working with you one-on-one, but more than if they take a class with you (they don’t get as much attention from you in a class). So a customer might spend $750/hour working with me privately, but only $355/month to join Synergy.
Look at your pricing ladder and make sure your tiers make sense: are the prices for all your products and services in alignment?
If you sell your offering at the price you want, will you make enough profit to hit your financial goals? If you find that you can’t increase your prices with the existing audience you have, it’s time to start rethinking your business model and strategy. Maybe you’re going after the wrong segment of your target audience.
Imagine you set a price for your consulting program. It’s profitable at that price point – but can you grow? There was a time in my consulting business that I was working with 30 clients a month. The price point was perfect and clients streamed in. But I could not find the time to squeeze in that Client #31, and increasing my prices led to buyer resistance. Can you either increase the number of sales you make or increase your price, to reach your financial goals without burning out you, your team, and your process?
In the end analysis, smart pricing rests on what’s included in the offer and what results the client will get. A mastermind group that meets four a month is more valuable than a mastermind group that meets one hour a month. A mastermind group that includes training is more valuable than one that does not. A mastermind group with an expert is more valuable than one that is not run by an expert. A mastermind group with someone famous is more valuable (in the eye of the beholder) than a group run by someone with no name recognition.
So how do you know if your price is right? Put it out in front of your audience and see if they buy. Surveys won’t work – people are notoriously bad at estimating what they’d be willing to pay for something in the future. (We simply aren’t good at guessing what we’ll do in the future. It’s a common problem with surveys and market research work.) They’ll make a real buying decision about pricing only when the offer is in front of them. My best advice is to put an offer out there and see how your audience responds.
Related Post: Mastermind Group Fee Setting