5 mistakes to avoid with your pricing

Transcript

A big thing that I work on with my clients is pricing. And in today’s episode, I share how to find the right price for your services and the five pricing mistakes to avoid.

Hello and welcome to The Clare Wood Podcast, where myself and incredible guests share about money mindset, financial successes, and how to manage your money in a fun and practical way to create wealth and abundance in both your business and your life. I’m your host, Clare Wood. I’m a business coach and a money mentor. I strongly believe that money has the power to positively change the world. I can’t wait to help you transform your mindset around money, create a love of numbers, and build the business of your dreams so you can live a life of financial freedom, giving, and global impact.

Today I’m going to talk about pricing your services. As always when talking about money, there might be a few triggers in this episode for you. But bear with me, as I’ve spoken about before on the podcast, changing your thinking requires getting uncomfortable and pushing through the discomfort of the triggers. We’re going to talk about pricing and specifically how you can feel confident in pricing your services, products, courses, and anything else that you offer.

One of the biggest questions that people ask me is how much should I price this ad? Well, let me share with you the five mistakes that you should avoid when setting your prices.

Why you shouldn’t price the same as your competitors

Mistake number one, pricing by looking at the market. Maybe go and look at the market and see what other people are selling your thing at. But what other people are doing, shouldn’t dictate what you are doing. And bear in mind that you only see what you see when you look at the market.

Let me explain. You might offer a different service to the rest of the market. Even if things seem the same on the surface, you will have a different way of delivering things, a different energy, and perhaps achieve different results for your clients. And the other challenge with looking at the inverted commerce market is that sometimes we focus on… I don’t know. The three other known graphic designers who live in the same town as you, who do the same thing as you. We forget that most services can be offered remotely. And actually your competitive market is global. Even those of you that do have an in-person service like hairdressing or massage, you don’t have to be dictated by the market if you offer a premium service offering. This is why I believe that positioning yourself above the market is a really effective pricing strategy and why creating VIP offers is such a great thing to do. It’s one of my favourite things to do with my clients. So in summary, don’t let your perceived market dictate your pricing.

Don’t ask your family or clients what you should charge

Mistake number two that we make when it comes to pricing, you let other people’s opinions affect your pricing. No one knows your business or your target market better than you, unless you’re my client and you’re listening and I tell you to increase your prices. And then you’ve got to listen to me. But seriously, I know the B2B space very well in services. So I do have a bit of an inside glimpse into what other service providers are offering. But for the most part, you know your business and your target audience the best. So if your mom says something to you like, “Don’t be ridiculous. No one would ever pay that price to a hairdresser, a copywriter, a sign writer or whatever it is that you do,” please don’t listen to her. Repeat, do not listen. Your mom is not your ideal client, or maybe she is.

And on that note, don’t let your ideal clients dictate their pricing to you. Don’t go and ask one of your ideal clients how much you should charge. If my hairdresser came to me and said, “How much should I charge you for doing your hair?” I’d probably say 50 bucks, not less $300 I know she’s worth. Well, that’s a lie. I wouldn’t do that to her, but you get my drift. Even your ideal client doesn’t actually know what they are happy to pay. Circle there.

What do I charge them? Let’s go back to the very foundations on pricing. So what actually is money? Back in time, and in fact, in many cultures around the world, even today, there isn’t currency for money. People barter. So someone might be a chicken farmer and someone else might collect fresh water from up the mountain. And they exchange products at an amount at which each party decides is fair. That might mean that one chicken will buy five barrels of water, or conversely, the two people could decide that 10 chickens are worth one bucket of water. As we know, in time, we upgraded the bartering process and replaced it with this thing called money.

Originally it was gold and coins, and now money rarely takes physical form. It’s usually electronic transfers and paying through your card, your phone, or even your watch. But even though the bartering system was replaced, the exchange principle remained the same. Someone might say, “My horse is worth 500 gold coins.” And someone else might say, “No, it’s not.” So the seller can either choose to lower the price of their horse, or they can hold the price, not sell the horse. Alternatively, they can seek out and sell it to another party who does think that the horse is worth 500 coins. You’re probably wondering, “What is this all thing Clare? How is this helpful to me?”

The point I’m trying to make is that price is only an energetic exchange. It is an amount that each party determines is a fair amount for the exchange. If you don’t think something is a fair exchange, you don’t pay. Simples.

So what does exchange mean? And why can some people charge more and others not?

Usually people are paying a service-based business money because they have a problem and they want the problem solved. So essentially they’re paying for transformation or a promise or hope of a transformation. And the value that they are happy to pay for it depends on firstly, the value they place on the transformation. And secondly, the belief that they have that the service provider has the capacity to deliver the transformation possible.

As an example, let me share why people are happy to pay good business coaches good money. If more than anything in the world, you want your business to become a million dollar business and you know that there’s someone who can do that, you are likely happy to invest the money to make it happen. And if someone has a trusted reputation for delivering results, well, you probably want to go with him.

Let’s share a non-business example. We all know that Oprah, Oprah Winfrey obviously, has shared openly that she has battled with her weight over the years. Let’s just say that there was a celebrity personal trainer/nutritionist that was able to help 98% of their customers to sustainably lose weight. I imagine that Oprah would pay huge amounts of money to work with this person, right? And even if you said to her, “Hey, there’s a guy down the road that’s charging 60 bucks an hour that can do the same thing,” she would absolutely prefer to pay a premium price to work with someone that has the reputation, the profile, and the proven track record.

Anyone can make good money through their pricing in any industry, depending on our ability to:

1. Deliver a transformation that clients perceive to be valuable.
2. Demonstrate to their audience that they have the capacity to deliver that transformation.
3. Number three, build an audience of their ideal clients to market this offering to.

All that pricing is, is finding an energetic exchange that feels good for both parties.

Putting prices on your website – to do or not to do?

Pricing mistake number three, you don’t disclose your prices on your website. Okay, this is going to be controversial, but I’m going at full steam ahead on it anyway. Put your prices on your website people or at least a guide. I do recognize that it’s really hard for some businesses to effectively quote without seeing a job or having an understanding of what the job entails, but at least give your potential customers a guide.

I asked a new client of mine yesterday, why she doesn’t have her prices on her website. And she said, it’s because she doesn’t want to scare people off. We dug a little deeper and she identified that she’s worried that people wouldn’t book a call if they knew her prices, but she knows that once she gives someone of call, she’d be able to demonstrate the value that she could add and convert them into a paying client. Now, this way of thinking is totally understandable. In fact, I always used to do this in my early days of coaching, but nowadays rather than push marketing, I use pull marketing. My potential clients have already seen my prices, seen the services I offer, and the transformations I deliver. And the discovery calls are literally just a, “What do you need help with?” And then seeing whether I’m the best fit for them and vice versa. This is such an easier way of doing business rather than trying to convince someone of why they should work with you.

Putting your prices on your website also stops wasting people’s time, both yours and your potential clients. Let’s use the creation of a logo as an example. There are going to be some people who expect a logo design to be $99 like that business non-human designs, or maybe they think that going through a designer will be a premium price of double that at $200 and they literally only have $200 to their name. So if they get on a call with you, no matter how much they want to work at you, they literally cannot afford it. What a waste of time?

And on the other end of the spectrum, there might be some business owners that if you were charging $200 for a logo, would instantly be turned off by that price and assume you aren’t for a good.

There’s a gray area of people in the middle who may be could be swung either way, but why would you waste your time hoping someone sits in the gray area where you can convince them to pay your prices. You probably turn off far more people by not being upfront about your pricing. I’ll tell you for one, if someone doesn’t at least have a price guide on their website, I will instantly click away and go and work with someone else. There is no way I’m wasting my precious time getting on a call with someone, having no idea or ballpark to where they’re offering seats. And from a range of people that I’ve asked about this, I would say that most people agree with me.

I liken not putting prices on your website to putting up a misleading photo view on a dating app. Let’s just say I suddenly ended up single again and went back on a dating app and I used a picture of me from eight years ago when I was last single. I know I don’t really look like that anymore, but I figure if I can get a guy on a date with me and he can see how funny and intelligent I am, he wouldn’t worry that I’ve put on 10 kilos or aged 15 years. Kids do that too. Sure, some guys who might not have gone on a date with me with a real photo of me might end up liking me, but do I really want to take that chance? Why would I waste my time and his time? So in summary, I’m a huge fan of putting prices on your website. I think you’re walking away from business, from your dream, and easy to work with clients by not having your prices on there.

Experimenting with your prices

Pricing mistake number four, you don’t experiment with your pricing. Gosh, we can get ourselves into a pickle about this realm. People ask me all the time, “What if I screw my pricing up?” Well, you haven’t tattooed it on yourself. You can always change it back. I love to play around with pricing and it’s so interesting learning what your audience responds to. For example, my membership, which is my entry-level offering, I did a huge offer on it. 50% off the first month, and all these massive bonuses valued at hundreds of dollars with zero-locking contract. And do you know what? It didn’t resonate with my audience at all. For the most part, I attract high-ticket clients. So, a discount on an already bargain of a price in the membership did not excite them, but I didn’t know that until I gave it a try.

As a service-based business, you can try price increases, price decreases, or discounting or value add. Personally, I am not a fan of discounting. I much prefer to encourage my clients to create a value add offer, but your audience might respond really well to it depending where you sit in the market. In terms of price increases, I have definitely done this with my private coaching offering. I keep increasing my prices and I continue to have a really strong flow of leads for private coaching. So your audience will indicate to you if they still perceive the value in your services. Play around with your pricing, have fun with it. And remember that nothing is permanent. It’s your business. You are the CEO.

When and how to increase your prices

The fifth and final pricing mistake I see businesses make, you never increase your prices. Now I am not suggesting that everyone needs to have an aggressive price increase strategy. In fact, for many businesses and their dream target market, this is just not appropriate. But for most business owners, as your experience and your audience grows, it makes sense that you can charge more. If you don’t want to increase your prices into a new price point, that’s totally fine, but you do need to increase your prices each year by at least inflation rates, or you’re essentially giving yourself a pay decrease because all your other costs across the board will be going up in line with inflation. If you don’t implement at least small price increases, you could find yourself five years down the track charging really outdated rates. If anyone owns an investment property, you know what I mean. You decide to hold the rent for tenants this year, and the next, and you slip past and suddenly you are charging $50 a week less than market rates.

So when is the right time to increase your prices? The answer, whenever it feels good for you, but the start of a new year could be a really great time to do it. If we know that we can make more money by putting our process up, why don’t people increase their prices? The answer, fear. Everyone has fear. Even I get nervous increasing my process. Why? Because we’re afraid. Afraid our clients who walk away from us. Afraid people won’t like us or think we’re greedy if we put our prices up. Afraid we won’t attract any more new business at a higher price.

Here’s the thing. There are no guarantees if you do increase your prices that the above won’t happen. You might lose clients. You might lose all of your clients. You might get judged. But as I’ve spoken about many times in the podcast before, if you want a different outcome, you need to do things differently. And your change is scary and change is uncomfortable. Our brains are programmed biologically to keep us safe from danger or perceived danger. Our caveman brains want us back in our safe, safe cave, but a big pricing mistake would be to never increase your prices, or you’ll find that in 20 years time, when you’re still charging the same, you’re living of baked beans.

If you love my podcast and have been wanting to work with me for a while, you are going to love my Black Friday specials. This episode is recorded in November, 2020. If you’re listening in the future, you’ve missed out. Sorry.

Let me share a little bit more about these Black Friday specials. I have never discounted my services before, and I’m actually not discounting them here just to be clear. But what I am doing is bundling up some of my products so that you get a minimum 60% off the value of the bundle. There are three huge coaching offers with between 60 and 83% off the bundles, and they will be live only three short days. If you don’t want to miss out, jump on my email list by grabbing a freebie at clarewood.com. And just remember that Clare is spelled C-L-A-R-E. There’s no I in it. And the offers will land in your inbox. I have never done anything like this before. So I’ll keep you guys posted on the podcast as to how these Black Friday offers played out.

To sum up today’s episode of the podcast. Five ways to make sure you are nailing your pricing. Number one, don’t price by looking at the market. Number two, make your own pricing decisions and don’t let other people’s opinions affect your pricing. Number three, share your prices openly on your website and with your audience. Number four, experiment with pricing. And number five, increase your prices. If not by a lot, at least by a little regularly.

I’ve loved recording this episode for you. I hope you’ve enjoyed it too, and I look forward to chatting to you all again next week.

Thanks so much for listening. If you love this episode, please share it with your audience and don’t forget to tag me on Instagram at @Clare_Wood_coach. And also make sure you hit subscribe so you never miss an episode. Have an abundant week, and I look forward to talking to you again next week.