How do you feel about pricing?
Do you feel comfortable and confident when it comes to what you charge or is it something that causes you stress and worry?
In this episode Sally Farrant – aka The Pricing Queen – talks about what gets in the way of us putting up our prices.
She explains what the biggest pricing challenges are for business owners and how to overcome them.
And she shares how to price your product or service in a way that you attract the right kind of customer who isn’t going to quibble about what you charge.
We also talk about the emotional side of pricing and how being questioned about what we charge can affect our feelings of self worth.
You can listen to Sally’s insights on the player link below or carry on reading as a blog post.
Sally is a management accountant and has worked with large corporate organisations but now helps small businesses get clear on pricing.
She finds the biggest challenge is knowing your worth and what to charge to make money.
What you should charge as a business owner versus what you earned as an employee
One mistake we make when working for ourselves is to not factor in the costs of running a business.
Sally says: “Work out what your price per hour and price per day is. You should say, ‘How many actual client hours do I want to be delivering?’
“Because when you’ve got your own business, you’re not delivering to the client all the time, you might be working five days a week.
“But on Friday, you might do all your admin and marketing. So you’re only working four days in front of the client and the price needs to reflect this.”
Your hourly rate will need to include what you need to make in your business, plus your costs
Sally explains: “This means your hourly rate goes up, and you want to earn more than you did before.
“You have to take into account how many holidays you’re going to have, cover for if you fall ill. So it needs to be at least 20 per cent more than what you may have earned as an employee.”
Most business owners get a shock when they sit down and look at the numbers
Sally says it’s common for people to hide away from the numbers.
She said: “Most people say they know that they’re under charging. But they’re frightened of putting them up and losing existing clients.
“That’s usually the biggest problem – they need to be upping prices a lot and that can be hard with existing clients.
“The first thing to do is put prices up with new clients. They’re at the new rate, they didn’t know that there was another rate – so that’s the easy bit.”
To take the pain out of price increases, Sally’s advice is to do them regularly
“This means big increases don’t happen,” she says. “Go to your nicest clients, the ones that love you.
“They do not want to go somewhere else – the effort of finding someone else to do the work that you’re doing is way more than you anticipate.
“Almost nobody says that they don’t want the price increase as long as you’re reasonable about it. Most clients will accept this.”
With pets, like with children, it’s often more about the relationship than the price
Our pets are precious, they’re our family, and people want to know they are safe, happy and well cared for says Sally.
“This is more important than cost. We want to know will the person caring for them be reliable? Will they turn up? Will your dog be exhausted when they get back and happy?
“Are they going to take them out for country walks? Or is just walk on a lead around the block.
“All of those things really make a big difference to how you feel about somebody.
“In business you build a relationship, you spend time training them getting them to understand how you work so they want you, not someone else.”
While it can be tempting to discount, try to hold out when stating your price
Even during times like Black Friday, when it feels like everyone is offering deals, Sally says tread carefully.
“I thought about doing an offer for Black Friday, and I was going to do Power Hours, but then I stopped myself as I haven’t got time to deliver them.
“It would be doing me a disservice and the clients to offer those at a discount, because I’ll get a flood of them.
“If you’re a product business, you might have things that you are trying to get rid of, or are very popular, and you can offer really good bargains on.
“With services, you might discount a pre recorded master class. So you might have sold that already and can be put it in your shop so people can still buy it.”
When people say they can’t afford you, try to offer a solution
Rather than feel like a door has closed, try to offer something for a lower price point.
Sally explains: “Can you go down a level? What could you offer them? If you got a group programme or package?
“Or rather than the whole package, what is the most critical thing that needs doing now? So if it’s a project, is there something you could start with?
“If it’s dog walking, could it be once a day, not twice a day? Or a group walk, or a shorter adventure?
“Try for two or three key packages so if someone says ‘no’ at one level, there’s somewhere else for them to go so you don’t lose them.”
For product businesses factor in all your costs like PayPal fees in the price
Sally says PayPal is vital so customers don’t have to ‘get up off the sofa’ as this can stand in the way of them buying from you.
She said: “The rates are higher but the amount of people that checkout via PayPal is amazing, because they can click a link, and buy it through PayPal.
“A lot of people don’t like to save their credit card details everywhere. It can be a bit of a no brainer to have PayPal. So make sure that you’re calculating the fees at the higher rate.”
Social proof also comes in handy when we feel we need to justify our worth
If you’re working with huge pet brands and you’re getting amazing transformations, make sure people know about it!
Sally explains: “Let’s say you’re an expensive dog walker – you do the extra training or solo walks.
“If you’ve got your social proof, so testimonials and other content on your website along with your rates, you will deter people who are price sensitive.
“You might say, ‘Well, that puts people off,’ but then you’re not putting off the people you want, you’re putting off the ones who aren’t right, who don’t value you and see why you’re special.”
The key is to attract people who see what you offer as a priority
Just as one person might happily spend £200 on a haircut, another would rather spend £30 and with products and services for our animals, it’s the same.
“Pets are part of the family, so they will be a priority,” says Sally. “Be careful of what you see as a priority or not compared to your customer.
“So while you might think it’s a lot of money to spend £50 on a bandana and lead set, they might not see that at all.”
Links mentioned in this episode:
Sally’s website: www.businessgrowthbynumbers.com
Check out her blog: www.businessgrowthbynumbers.com/blog
Work with Sally: www.businessgrowthbynumbers.com/work-with-me
Follow her on Instagram: The Pricing Queen
Join her Facebook group: Strength in numbers