For most small business owners, pricing is a complicated issue! There are so many factors that contribute to a good pricing strategy that often the business owner ends up just guessing. And that can be dangerous for both the client and the customer!
I remember doing exactly that when I started my coaching business. Because I wasn’t confident in my abilities, and because I didn’t understand the VALUE of my services, I charged my first private client $300 a month for private coaching! WOW – that resulted in him getting a heck of a deal but eventually, I started to resent this client. WHY? Because I didn’t understand pricing and the common mistakes. That’s not what I want for you – your business should be filled with joy, profit and freedom.
So here are 5 common mistakes you’ll want to avoid when it comes to pricing so you can maximize your profits AND have easier sales conversations!
Pricing Mistake #1: Pricing based solely on being cheaper than your competition.
This type of pricing strategy can put you out of business because it often leads to a game of continuous discounts.
Have you thoroughly researched your competition’s pricing? Or are you just looking at their price? A deep dive into their services might reveal that your services are different from what they offer. In your sales conversations, focus on what makes you different and a better choice.
Pricing Mistake #2: Not updating your pricing.
I’m guessing you’ve noticed that the price of your groceries continues to increase… Well so should the prices of your services. The market and costs of goods continue to increase. Have you raised your prices in the last year? 6 months?
Here are 10 signs that it might be time to raise your prices/rates! (here).
Pricing Mistake #3: Offering too many pricing choices or not enough choices.
This pricing strategy is related to how you package or offer your services. Since a confused mind never buys – when faced with too many options, customers become confused – be sure to simplify your pricing.
A clear pricing strategy can be as simple as offering three pricing choices and then indicating your most popular program! You’ve probably seen this with pricing options for technology or software services!
Pricing Mistake #4: Focusing on selling low-ticket.
Selling low-ticket services/programs is no guarantee of a quick sale plus you need more sales to make the same amount of money! A lesson that I had to learn is that it’s easier to sell a $10,000 program than 10 X $1,000 program – it only takes one client and perhaps only 3-4 sales conversations to sell a $10K program while it would take 30-40 sales conversations to sell $10k worth of $1,000 programs. That is working harder!
Mistake #5: Pricing by hour, session or month.
There are several problems with this approach. While it’s been a tradition in many industries to sell their services this way (bookkeeping, accounting, legal services), it is becoming more and more acceptable to price by value.
That’s why in this week’s episode of Work Less PROFIT More (here), I interview the author of Ditch the Billable Hour, Shaun Jardine and we discuss why there is a better way to price your professional services.
QUESTIONS to ask yourself:
- Have I thoroughly researched my competition’s pricing and packaging?
- When was the last time I updated my pricing?
- Am I offering too many pricing options (or too few)?
- Am I focusing on selling low-ticket or should I rethink my pricing strategy?
- Am I pricing by the hour, session or month?
If you’d like help with any of these, please reach out and book a call.
Be sure to listen, share and subscribe to this week’s podcast episode here!
YOU CAN DO THIS!
Diana
PS. Pricing strategy is critical for a sustainably profitable business. Here are other related blogs and podcast episodes:
- 5 Big Pricing Mistakes Guaranteed to Hurt Your Business (here)
- The Importance of Pricing in Your Profitability Strategy (here)
- Difficult Conversations: Money Talk – Profit & Pricing (here)
- Ep. 74 – 3 Simple Ways to Increase Profits Without Taking on More Clients (here)
- Ep. 107 – How to Raise Your Prices Without Feeling Slimy (here)
In case you missed it – 10 Signs You Might Need to Raise Your Prices (listen here)
