Have you implemented value-based pricing for your business, or do you sit around wondering what you should price your products and services?
If you are struggling, you wouldn’t be the first if you did – nor are you likely to be the last.
How much is enough? How much is too much? How much will they pay? How much do we need?
One of the top struggles many companies and entrepreneurs face is pricing. Even if they come up with pricing, they often get tangled in the doubts of “what if we are pricing too high” or “what if we aren’t pricing high enough.”
The Struggle with Pricing
It feels good to have sales close. It’s money in the bank and happy customers out in the world. Everything seems great until the bottom line shows up. If you find out then that your prices weren’t high enough to make your budget balance, then an increase in cost can send those once happy customers out into the world complaining.
On the flip side of the coin, if there aren’t enough sales to make the bottom line happy then you might be forced to lower prices to increase sales. Again, those once happy customers might not be so happy when they see the lower prices.
The struggle for the right price and the right balance is real.
Want to earn more money? Don’t know what you can charge? In this free webinar, our friend Chris Lema offers strategies for successful value-based pricing.
7 Things Chris Lema Has Said Repeatedly About Value-Based Pricing
How do you figure out how to price your services? Often we end up deciding prices based on time or comparison. Chris Lema argues that basing your price on value can work much better.
But it’s not as easy as charging what you’re worth. How do you know what you’re worth? Chris Lema offers some helpful insights for freelancers on how to set their prices.
Value-Based Pricing Quotes You Need to Know
1. “You will become more valuable over time.”
Your pricing should increase over time. You will learn more. You will develop more. You will secure a solid foundation (in fans and products).
2. “Your experience is saving clients money.”
Your pricing should reflect the reality of savings. Not everyone can do what you do (or wants to do it). Even some of the ones who can do what you do can’t do it as fast or as precisely as you can.
There was a man who needed help with his air conditioner. If you’ve ever been in the South in August, you know that an air conditioner going out is a huge issue. For this man, it was compounded by the fact that his wife was nine months pregnant.
He called the serviceman who agreed to a rush order. When he arrived, he looked over the unit, took out a small tool, and made an adjustment. The air blew cool again.
The man was shocked when he received a bill for $500. “All you did was spend a few minutes and made one adjustment.”
“Yes, but the bill is for knowing what adjustment to make and being able to make it so fast.”
What you do saves clients money.
3. “People want results and they want them now!”
Your pricing should frame you as an accelerator. You help move things along. Like in the above example, the client could do the research, invest time and energy trying to make it work, buy added tools to fix the problem, or wait a little longer for someone to help OR the client could reach out to you and get it done now.
4. “Only put a price in front of a client when you fully understand what is motivating them.”
It’s not always what they say that is the problem. Most of the time the true problem is a little deeper. Take the time to listen and understand what your client actually needs and then show them how you can answer that need.
Several years ago, I was selling knives through a direct marketing company. I did a presentation for a lady and she eagerly put in an order for the full set of knives. Her husband canceled the order when he found out so I offered to come to demonstrate the knives for him. When he saw how his wife could handle the knives and how easy they made things for her (she had suffered a stroke the previous year), he gladly reinstated the order.
Listen to your clients and be open to showing them how your product really will help fix the need.
5. “Never put only a single option/price in front of your prospect.”
Giving options can help clients figure out what they need. Think “This – or This” when it comes to offers.
If you are a fan of The Big Bang Theory, you may recall the episode where Penny uses the baby book on Sheldon. The book explains how you shouldn’t say no to your child but instead offer the child two options that are acceptable to you. That way the child feels like he or she has some control. It worked for Penny.
In a similar manner, the options will work for you in most situations. You can do this for this price or pay all at once and get this price.
Provide a couple of options for your client.
6. “Keep a history of your proven track record.”
Show how you have helped. Examples of success, testimonials, and other proof of success will do more to justify your pricing than anything you can tell your potential clients.
7. “Qualify your clients.”
Not everyone needs what you sell and you don’t want to work with everyone anyway. Make a list of the traits for your ideal client. Be specific. When you are looking at potential clients, rank them on a scale that comes from your ideal client definition. Be as selective about your clients as most clients are about finding the right product or service. A good fit delivers great results.
“A problem well defined is a problem half solved.” -John Dewey
Pricing is important. It not only sets the foundation for your business success, but it also sets the stage for your future growth.
- You will continue to grow in value.
- You save others money by doing what they can’t or won’t (or shouldn’t).
- You help people now.
- You have a way to meet a need.
- You have multiple options to meet that need.
- You will build a track record of helpfulness.
- You have to choose to find the right clients (and say no to those that aren’t a fit).
The more you invest in determining the right value-based pricing the more success you will find for your business.
Put Your Value-Based Pricing to Work
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Learn More About Chris Lema
Chris Lema is the Vice President of Products at Liquid Web. A well-known blogger and public speaker, Chris has led their product teams to develop and launch the Managed WordPress and Managed WooCommerce product lines.
Kathryn Lang believes it is simple, and as an award-winning author and natural-born hopesmith, she shares tips on how to find your why, pursue your purpose, and live a bold, intentional life – always with a dash of twisted encouragement.