Episode 23 – How To Set Your Pricing
This is a super juicy topic and one that gets people really riled up and is something that can feel very personal.
The reason it feels personal is because it’s putting a value on your time and current skill level.
So it IS a personal decision, but before we get to how to set your pricing I want to explain that it’s not a representation of your intrinsic worth.
What do I mean by that?
I mean your pricing is a representation of your current skill level as an entrepreneur right now.
It has nothing to do with how good a person you are or your worth as a human being. So just because you might charge more or less than someone else that just reflects your current stage and type of business, not YOU as a multifaceted human being and your personal worth.
So when you hear the “charge what you are worth!” rhetoric remember to separate the two.
Okay, so how should you set your pricing?
Pricing is affected by four things:
- Your Level of Expertise
- Your Social Proof
- Your Sales Skills
- Your Confidence
Let me explain why each of these four. The reason is each of these factors boosts the price point you’ll be able to make sales at.
Let’s say you are excellent at what you do and you’ve got great social proof (you might have been published and have some strong testimonials) you will still have difficulty charging top rates if your confidence is low and you don’t know how to handle the sales interaction.
How about if you have excellent sales skills, your confidence is okay and you have relatively little experience in your field and social proof?
You are going to be able to sell at a higher price point than someone in the same situation who doesn’t have your sales skills because those skills enable you to get the value of what you do have across to people.
Each of the factors – expertise, social proof, sales skills and confidence – increases the price point that you will be able to get a yeses at
The better score you have essentially for each one the more you can charge. Not because someone else is giving you permission but as you improve in each area your work is more desirable and you are capable of getting yeses at a higher price point.
This means if you are new, have minimal testimonials and are clunky when you speak to potential clients they will feel that you don’t have much experience with this and won’t be willing to pay top dollar for your work.
Which is why the strategy many coaches teach of starting with premium pricing in almost all cases doesn’t work.
If you’ve been doing this for a few years, wow people in the call and they can see lots of testimonials and your confidence to get them results comes across that will be worth more to people.
You have to have the sales skills, confidence, social proof and expertise to get the yes.
I’ve seen many people burned by this ‘charge top rates from the get go’ strategy and I was one of them.
I actually almost completely killed my revenue in the first few months of my business by adopting that strategy and I speak to a lot of people who got the same advice, tried it and became increasingly desperate until they solved the problem.
I believe in charging market appropriate pricing and increasing your prices as your expertise increases, your social proof grows, your sales skills improve and your confidence grows.
If you set your prices beyond your capabilities of actually getting the sale you won’t get sales
Your confidence will decrease, you’ll get desperate which people can smell, your social proof stays pretty stagnant and you don’t get any practice to build your expertise in your field.
The core message here is – price appropriately to your level so you can get the sale.
Then as your skills, confidence and social proof grows raise your prices.
Got it? Cool!
This can be reverse engineered to set your prices in the first place
Step 1: Figure out the range of pricing in your niche. If you don’t know for sure ball park figures will do. You want the minimum price and the maximum price for a comparable offer to yours.
Step 2: Rate yourself between 0 to 5 in the areas of expertise, social proof, sales skills and confidence. 0 being the lowest 5 being the highest. If you are new this might not feel awesome but remember you are just getting a starting point. Then add up your score. You will get a number between 0 and 20.
Step 3: Enter this all in to the Pricing Calculator at catleblanc.com/pricing and get your approximate price point.
What the sheet does is if you give yourself a 0/20 which means you rate yourself 0 in every category it sets the price to the lowest. So let’s be clear it’s extremely unlikely you’d give yourself a flat zero but that’s how it’s set otherwise the maths becomes extremely complicated.
If you rate yourself 20, which is a 5 in every category it sets the price to the maximum price and in the likely situation that you are in between it sets it at the appropriate place in between.
The calculation is linear for the sake of simplicity whereas in reality pricing curves are usually curved. Your pricing increases more at the higher end of the scale than it does at the lower end.
This means this number is a ball park figure for you to use. If you don’t like the number – it’s okay. It’s your prerogative to change it.
What you do with the number is up to you
Sometimes people want to hear a number and the number is helpful.
Sometimes people want to hear a number and their reaction is ‘but I think it should be this number’. If that’s your reaction that’s totally fine. Go with your number.
You want to price appropriately for your ability to get the sale.
Because as a new business owner you want sales.
After getting your number you may want to play around with the minimums and maximums you set.
This is meant to be your price for the next 3 sales. After that you get to reconsider.
And remember your price is a factor of your expertise, your social proof, your sales skills and your confidence.
Want more juicy details on getting your business started? Check out the Zero to Paying Clients Masterclass at catleblanc.com/masterclass
Now I’d love to hear from you
What’s your experience with pricing?
Have you had to change your pricing?
How do you decide when it’s time for a price increase?