How to Price YOUR Services for Profit
Michelle Mitchell, Mitchell Consulting
- How did YOU come up with your current pricing strategy?
- Did you Google your competitors?
- Have you been charging the same as when you operated as a side hustle?
- Or have you gone with what your first client was willing to pay?
There are a lot of different ways to approach pricing services in your small business. Some methods work better than others and I’m going to show you which is which.
DON’T base your pricing on other businesses.
I understand why I see so many small business owners price according to their competition. When you don’t know where to start, you start with Google. You also want to be competitive and charge a more appealing amount to your clients in comparison. The problem is, your business is completely different from anyone else’s. Each of your levels of expertise and education, years of experience, proficiency in different life skills, and expenses can vary widely. Those factors are all essential to consider when pricing.
DO take into account your unique business and financial situation.
Let’s say you are a communications consultant, for medical students, who has been in practice for two and a half years. You have a Master’s in Health Administration and a Ph.D. in Communication, employ an administrative assistant, and have debt to pay someone who loaned you start-up money. Now, if you Google a similar business owner, they might have three years of experience, a Bachelor’s in Communication, work alone, and have few expenses. Your prices can’t be the same if you have such different factors to account for.
DON’T base your pricing on your hourly rate working for someone else.
Now that you have more control over your income, you aren’t beholden to what you were making elsewhere. You also run your business differently than the company you worked for before.
DO increase your capacity for abundance.
You might be limiting your profits because you’re limiting your capacity. If you’re operating with a scarcity mindset, you believe that there’s only a limited amount of money to go around. When someone else is charging more, you have to charge less to make up for it. That won’t lead to as much profit as it could—and should—be making. With an abundance mindset, you know that there are enough resources for everyone to achieve what they want to achieve, and to earn what they want to earn. When you have this mindset as a CEO, you can confidently charge enough to bring home the amount of money you desire. You can also increase that amount comfortably, knowing that you have the capacity to earn an abundance of money.
DON’T equate your worth to your pricing.
You can’t put a price tag on a person’s worth. Money is ultimately just a concept made up by people that has value only because we’ve assigned it value. You, on the other hand, are valuable no matter what. Trying to price your services according to your value is impossible because they can’t be measured on the same scale. If you did that, you’d be seriously underestimating your worth.
DO recognize your personal worth.
No one can put a number on the unlimited gifts, happiness, wisdom, and love you provide. Once you recognize that, you can begin to lean into your vision. You are more than worthy of making your vision a reality, but it can only be achieved if you believe you deserve it. Not only are you endlessly valuable as a person, but you also bring your expertise, experience, passion, and knowledge to the table for every service you provide. When you demonstrate that in your delivery, those things are incredibly valuable to the client.
DON’T keep your pricing the same.
As your circumstances change, so should your pricing. Your pricing shouldn’t be the same at an annual revenue of $50,000 as it is at $200,000. Once you hit that six-figure mark, you need to be charging more to make up for your more limited time and resources. Your expenses have probably increased quite a bit so that needs to be reflected in your pricing as well.
DO update your pricing as you grow.
I know that it can be scary to raise your prices, especially for long-time clients who are used to paying a certain rate and may not be expecting a change. Even though it might seem risky, your long-time clients should recognize the value of your services and be willing to pay more to stay on as a client. New clients won’t know about any other rate and will be happy to pay what you charge if they’ve been convinced that they can benefit from your services.
The bottom line is this: you are worthy of creating and sustaining the business of your dreams and you are valuable no matter what. You need to price your services to reflect the realities of your business. Not someone else’s and not the cheapest offer on the market, your passion should bring you the maximum profit.
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