Getting squeamish when the time comes to talk about money with clients?
“But it only takes me an hour to do that!” is NOT a valid argument for you to base your pricing. You don’t want to charge only what you need to keep the business up and running. You want to charge what you’re WORTH.
To help you find out how much your expertise is worth precisely, today we’re going to talk about the thing every aspiring entrepreneur has to know: the crucial difference between cost and value.
What’s the big deal with cost & value?
Cost and value are often confused because of the belief that the value is always just a bit more than the actual cost of the product/service you have.
Let’s take the most random example: you’re producing and selling organic, sugar-free apricot jam.
Here’s how the thinking process goes for most people:
The wrong thinking behind your pricing strategy: Well, I only put apricots and stevia and a bit of water in it, and right now, I make it myself… so I surely can’t charge a fortune, can I?
The right thinking should be something like this: What do the people who buy my apricot jam get?
If you’re stuck on the latter, here’s some help: they get plenty of things!
Sure, you may only put apricots in it, but your customers get a healthy, homemade alternative to store-bought jam; you save them time so they don’t have to make sugar-free jam at home; in the long run, you help improve their health, which may save them additional hundreds of $$$ in the future!
Costs don’t determine the value of your products and services!
It may only take an hour of your day to get it done – but what’s the real value of your offering? If you manage to transform someone’s life or help them live the dream or teach them how to earn thousands of dollars, then the value you offer is surely much bigger than the costs involved with running your business.
And after all, you don’t run a business to cover costs only, do you?
Don’t charge a flat hourly rate for something that took you a lifetime to learn. You’re not only charging for that one hour now.
You’re charging for all the days and weeks and months and YEARS it took you to learn how to do ALL of that in just one hour!
Tips on how to determine your value:
I’m aware that it’s really difficult to be aware of your value right from the start, so here are some tips to help you out.
- Drop any limiting beliefs you have around money. There’s always enough money in the world and yes, you deserve a portion of it! If you don’t think you’re worth it, no one else will.
- The not too high, not too low advice isn’t helping? Just listen to your gut – and do whatever feels right for YOU and YOUR business. If internal beliefs like but I don’t deserve this much or who am I to charge this amount get in the way, deal with them first before coming down with your prices! Click here to learn how to let go of your money beliefs!
- Don’t base your prices on other people’s prices! Just because Sarah So-and-So thinks charging $998 is going to work for her, doesn’t mean it’ll work for you. Your prices are your own and the value you provide is unique. Your prices should reflect that as well.
- Struggling to come up with an actual number? List all of the expenses you’ve had in becoming the expert you’re now – education, coaching, certificates. Look at those numbers… and then add the emotional struggle, and all the disappointment, and frustration and the sacrifices you’ve had to make along the way. Doesn’t seem too much now, does it?