Do you like coffee? Maybe, like me, you ADORE coffee. But not all coffee. I'm a self-confessed coffee snob; if a coffee is made badly it's gross, if the coffee is burnt it tastes overly bitter and if you don't get the measurements just right it's not great either.
And you know, pricing your products and services can be like that cup of coffee. It can be the most soothing and delicious feeling or it can be bitter and disappointing when it's done badly.
Pricing is the backbone of your business. It will help you hit your sales targets and make your business profitable. But it's more than that. It values you as the seller AND the product or service you are selling. And yet, it can be really hard to get right for so many business owners. Why?
2020 proved an incredible year for start-ups, despite a global pandemic & an economic recession. Between February 2020 & February 2021, 835,000 businesses were registered in the UK. And consumers were buying. Love and support for small businesses and local businesses grew and sellers wanted to meet demand.
However, a common attitude we encountered all of last year continuing into this year with some of these new business owners was similar to "I can't charge more because people won't buy from me; they already complain I charge too much." Business owners are worried if they charge more they'll lose sales. In some cases, this has meant that some business owners are barely charging above cost price, not taking into consideration their time, energy and experience and working all the hours known to man. Does this sound familiar to you?
Well, I'm sorry but that just isn't good enough. Consider 3 reasons why:
You didn't start your business so it could make you miserable. You started it to accomplish something specific to you: more time, more freedom, more money. Something. But you definitely didn't start it to work for less than the apprenticeship wage. (That's £4.15 per hour in case you're wondering.)
You're not charging your worth. Remember your pricing values YOU and your product or service. If you have 10 years of industry experience or a university degree or an accredited qualification or you hand craft each individual item, remember, that is what people are paying for: your skill, your brain, your knowledge, your experience. As well as the fabulous product or service you are offering. That's WHY it's fabulous.
If you are charging pennies for something worth pounds, you aren't going to attract those who are willing to spend pounds, instead you're only going to attract those willing to spend pennies. Stop.
So, what next? Where do you start?
It's true: every business is unique & every business' pricing structure is unique to them depending on what they're selling. BUT there are 3 pricing principles that apply to every business. Here they are:
Figure out how much work is really involved in providing your product or service. I'm talking about the cost of prepping for that call, the time you spend answering emails to that client, the costs you don't think about like heat and light & that all important one, the cost of your experience.
Ask yourself if you're charging the right amount...How much are your competitors charging? How much is your product/service costing you? How much do you need to charge to cover business expenses? How much do you need to charge to cover your personal expenses? What value are you giving to those who buy from you? How much money are you saving them?
How much do you want to work? Remember why you started your business. Is your pricing helping you achieve that goal. If not, rethink your pricing.
Don't get me wrong, there is more to it than just this. BUT this will enable you to look at whether you're getting your pricing right & stop it leaving that bitter taste in your mouth, like a badly made cup of coffee.
Have you struggled with or are struggling with your pricing? Let us know! We'd love to hear from you.