So, you’re working on pricing your services and products. You’ve been bouncing around pricing ideas in your head for ages and you just can’t settle on the “right” price.
Why is it so hard to decide on the best price for your services?
It’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?
Here are the guidelines I use when pricing my services (private consulting, live 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 in your decision-making process. 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 true value your offer provides to your client, the easier it will be 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.
If you want a high-end brand image, you can’t charge $50 a month for group coaching. If you want to be seen as an “everyday person” brand, then you can’t offer a $35,000 mastermind group, because that price-point isn’t reasonable to the “everyday person” you’re trying to attract.
Decide now what your brand represents and if your pricing is in alignment with your brand and its message.
In every audience, there are those who cautiously spend money and those who spend money more readily.
Why do people spend money the way they do? What makes them choose one purchase over another?
Get inside the minds of your clients: ask them what they’ve purchased in the past two years to help them work towards their goals, and what they paid for each of the items they purchased. Ask them how they think about buying decisions, what criteria they use (linear mind), and how these purchases make them feel (emotional benefit).
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I see business owners falling into this trap all the time. They use their own beliefs about money and project that belief onto their entire audience.
Get clear on your own money personality, and DO NOT assume everyone thinks about money the same way you do. People have all types of “money personalities” when it comes to investing to solve a problem or to move forward faster. But if you’re a cautious buyer, you might think everyone in your audience is also a cautious buyer. If you jump in quickly to invest in a product or service you want, it doesn’t mean all your prospects act the same way.
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 client might spend $750/session working with you privately, but only $400/month to join your mastermind group.
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 be profitable at the prices you’re charging, you’ll have to increase your prices. But if you find that you can’t increase your prices with the existing audience you have, it’s time to rethink your business model and strategy. Maybe you’re going after the wrong segment of your target audience. Or maybe there’s a leveraged service or product you could offer that would be within your audience’s price range and still be more profitable to you.
Imagine you set a price for your consulting program. It’s profitable at that price point – but can you grow it?
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. Increasing my prices led to buyer resistance.
If you can’t increase the number of client hours, can you either increase the number of sales you make or increase your price? Or can you offer a more scalable option like group coaching or mastermind groups, instead of working one-on-one? This way, you’ll 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 the results the client will get.
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.