Your pricing sends a message - get it right
2015-08-01 12:32:05 -
Business
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2060

Shalini Sinha: The Accidental Businesswoman

 

What’s the difference between a business that succeeds, a business that fails, and a business that barely gets by year after year? The answer is probably pricing.

 

Determining your pricing is the most important, and potentially most difficult, thing you will do in business. Pricing sets the measure from which everything else fails or succeeds, and is something that needs continuous review and evaluation. 

 

While pricing is always a work in progress – changing slightly up or down in response to circumstances – it is also always about more than just numbers. Your price sends a message, and the first time you set it, it’s important to get the message right.

 

My focus here will be pricing services for entrepreneurs without a business background and who might struggle with knowing their worth and being heard in our society. This is definitely more complicated than pricing a product.

 

Think about pricing from three perspectives. First, the actual costs that go into supporting and bringing your service to the market. Second, the market culture of paying for your service. Third, the value of the outcome your customer receives from your service.

 

First, it’s crucial in business that you are willing to look at the numbers. You need to consider all the factors involved in running your business. Service-based businesses, especially at sole-trader or start-up level, are in a particularly advantageous position of being able to keep overhead costs low. For example, you can work from home and don’t need to rent office space.

 

However, don’t take your costs for granted. Factor in a portion of heating, light, insurance, etc at home. You likely have professional insurance and professional association fees. You had to buy a computer and need phone and internet connections. Make a list of everything involved. Estimate how many hours per week you aim to serve clients, how many weeks per year you aim to work, and come up with an hourly overhead cost.

 

Second, be aware of the normal charge for your service in your market. There will always be a range: low, middle and high-end. Decide where you fit. Your decision will be based on your experience in the field, the type of client you feel most comfortable working with, and the outcome you offer your clients. 

 

Don’t just price yourself low as a way of competing. You will attract clients who are always looking for the cheapest service and not measuring for the quality and outcome. These clients don’t tend to be loyal and will leave you the moment the find someone else who enters the market cheaper. You don’t want ‘the cheapest’ to be the message you develop as your unique selling point.

 

Finally, take some time to get into the head of your client. This is where an entrepreneur really succeeds. It’s not about how great you are at what you do, why you love what you do, what you want to achieve, or what you feel you give your clients. Simply put, it’s not about you. Think about what your clients need, the problem they need solved, what their main considerations are and the difference it makes to their experience when that problem is solved. Consider the value of this to them. Consider this in your pricing and, most importantly, your marketing message.

 

Pricing is not easy. Again, you will need to keep doing the personal work about your value capacity to listening to others. Remember, pricing is more than numbers – it is about the psychology of the buyer and seller. Your inner game is of vital importance here.

 

 

Shalini Sinha is a writer, speaker and business coach with a strong interest in equality and natural health. Connect on Facebook/Twitter at ShaliniBizCoach or email shalini.sinha@referralinstitute.ie.

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