It doesn’t really matter what type of service you are providing. Whether it’s consulting, SEO, 1 on 1 coaching…pricing your service can be a real head-scratcher.
Chances are, you’re not exactly sure how to price your services/offers. How do you package your skill and expertise, and offer that to the marketplace?
So today, I’m gonna give you some tips on how to price your services. They might be very, very different from what you might be thinking.
How not to do it.
Here’s how most people think when they are trying to figure out what price tag to put on their service, especially if they’re just starting out.
They sort of scan over the competition in the marketplace, and start with the idea “OK, let’s see what they are charging…aaaha…aaaha…”
And then they get this range of prices and think to themselves “OK, I think I’ll charge something in the middle.”
That’s how people usually price their service. That’s not a very smart thing to do. By approaching it from that angle, you are competing based on price, instead of competing based on value.
Supply and Demand
What dictates your price is supply and demand. So the first thing you need to look at is, are you a drop in the big blue ocean? Meaning are you unique enough in the marketplace?
Are you uniquely qualified to solve this particular problem for your prospects? So, for example, if you are offering copywriting services to help businesses sell online, don’t try to be a copywriter for everybody.
Imagine this. You are working for a business owner as a copywriter and they are organizing this big event.
They basically need your copywriting skills to fill the room. Now if they are selling 2-3 thousand dollar tickets, and the room has 100 seats, that’s a pretty big demand.
So, if they pay you $5,000 to create a campaign for them, it’s not a big deal. 2-3 seats and they paid you off. It’s easy to justify. They have a big demand, which is why the value of what you supply is bigger as well.
So when you are pricing your services, you need to think about what you are really doing. What I mean by this is, what is the value that you’re providing compared to the demand, the need that is out there? This is your service.
How much does it cost not to buy your service?
If you just go in thinking “this is what I do”, you will not be able to charge a lot. A much better way to look at this is, how can I package what I do? So now, you’re selling a result. You’re selling an outcome, or better yet, you’re selling money at a discount.
Now, remember this, because this is very important. “What does it cost a prospect NOT to do business with me?”. This is the mindset that would be highly beneficial for you to adopt.
That’s what you use as a “platform” to price your services.
Present your value
You must have seen those movies where someone saves someone’s life and they say “OMG you saved my life, I owe you.” Think of it this way, there is no price for someone’s life. You cannot have enough money to pay for your own or anybody else’s life. This is an infinite number.
And since your life is infinitely valuable, and it is comprised of time, that means 1 hour of your time is infinitely valuable. Do you see how silly it is to charge by the hour and compare it to what others are charging?
If someone says “You charge $5,000 by the hour, it’s too much.” you have to explain to them that it is not the hour of time they are paying for, it is your expertise constructed out of your experience.
It is your job to present the value. That’s how you know what you’re worth. Did you just wake up and know the skill you’re offering? No, you explored, you learnt, you tested it…so don’t sell yourself cheap.
Present the value. What does it mean for them? How will it impact their business? How will it make it easier for them? How much could it increase their bottom line?
It can even save them from making a million-dollar mistake and prevent them from losing money.
Now we are transitioning from a “brainer” to a “no-brainer”. Know your worth. It’s not the time you are pricing, it is what’s inside the time, and what it costs a business owner NOT to work with you.
Know how to package your value. Pack it up with credentials, testimonials, credibility, unique expertise, software, even your team (if you have one). Now you can essentially deliver the same service, but the value is so much greater in the marketplace. And it’s not made up, you’ve just presented it in its true form.
This is how you should price your services. The last thing you want is pricing it by the hour. Price it by the value and by the results they will get.
If they can make $10,000, you charge them $1,000. If they can make $100,000, you charge them $10,000. This is selling money at a discount. Over deliver, and they will want to work with you over and over again.
Don’t ever get discouraged. If you can solve their pain points, you can charge what you are worth. Again, how much would it cost them NOT to work with you, to keep the problem that they have? Think from that angle.
Charge premium prices from day 1.
Here’s a couple of more points to consider when outlining your strategy.
1. It’s important to have a clear “big picture” vision when it comes to your services and offers. Never just put your services out there in the marketplace vacuum.
You might have various products which can be positioned in a long term funnel.
Which means you can have an entry-level product that you want to feed into higher-priced offerings, or it can be a premium flagship product that you really want to charge a high price for.
Don’t stop there though. Think about your broader positioning. Walmart has super high volume and lower prices. Bergdorf Goodman, on the other hand, have much much higher prices and fewer customers.
Your answers to these questions will help you strategically price your offering. My suggestion is that you structure your funnel in a way where your entry point offer, if you wish to even have one, is something you don’t need to spend very much time on at all.
Perhaps it can be a service you can automate with software, or even give out software itself with tutorials so business owners can use it themselves (in other words, it’s a hands-free service for you).
Then, if they really want quality “stuff” you can offer them an upsell on a monthly basis. This too can be very hands-off for you, but with higher perceived value, as it solves their key pain points.
2. Put matters into perspective. Some business owners’ reaction, when they hear that a service will cost them $1,000 or $5,000. might be “holy flying penguins, that’s a lot!” This is the time you need to emphasize what it costs them NOT to take it.
I’ll sell you a bed real quick. Let’s say we are friends and you are looking at a bed that costs $5,000 with some sort of alien tech astronaut mattress. You say that’s a lot for a bed. I say you spend over a third of your life in bed and the quality of your sleep affects your productivity, your health, your business, and your looks. So how much will it cost you not to get it? See how just changing the perspective works in your favor?
Business owners often don’t see it this way, so you have to show them.
Deliberately translate the value of your product and service into real-life currencies, like time, money, love or health. Ask yourself what result are you helping people achieve, and how can you translate that value into even more time, money, love or health.
3. This one is obvious. Make sure it makes sense for you. Make sure it’s profitable. If you know your costs are X for your product or service, you got to charge more than that. You don’t want to be losing money per sale.
Not just that, your time spent needs to be well worth it. You’re not in business just for charity. You need to make a profit and there’s nothing wrong with that.
I’m sure that, for some of you reading this article, it has changed your mindset on how to price your services. This should give you a more clear idea on how to not only price your offers, but also what mindset to have, and how to position yourself and your brand in the marketplace.
Now, get out there and make it happen!