HOW TO PRICE YOUR PRODUCTS + SERVICES
+ Feel like you’re not charging enough?
+ Worried your mindset and confidence are holding you back?
+ No clue how to price or product or service?
Many women in business feel like they’re not charging enough for their products or services. We see blog post after blog post of mindset experts blaming a lack of confidence and self-value for under pricing. How to price your products + services.
How can you possibly charge enough if you don’t respect yourself and your confidence is lacking?
But that is NOT where the problem starts…
Yes, you can blame a lack of confidence and self-value. Maybe you don’t feel like an expert, maybe you’re still in the hobbyist mindset, maybe you’re worried about disappointing people. These are all valid reasons for undercharging and mindset work can help.
Before you start beating yourself up for your lack of confidence have you ever calculated exactly what your pricing needs to be to meet your business and personal goals?
If you have no idea then guess where you need to start? Yes, with the actual numbers! Not with feelings, not with guesses, not with intuition. Numbers ladies.
“Women are beating themselves up for
not charging “enough” without knowing what “enough” is!”
PRICE IS NOT A RANDOM NUMBER
To choose a price you don’t pick a number you feel comfortable with and start charging that. That is not an effective pricing strategy at all. You may be charging too little, you may be charging way too much (although I doubt it!).
When creating a pricing structure or strategy for your business you need to focus on numbers, not feelings. Those numbers should include consideration for:
+ COST OF GOODS
This one is kind of obvious. You need to factor in the cost of all the bits to make your product or offer your service. Most people get this right!
+ THE COSTS OF CREATING THE PRODUCT OR SERVICE
Many women forget to include their own time when pricing their products or services. This mistake is rife within within handmade industries. If you’re ever hoping to grow your business you need to factor this cost in. You need to know what you would have to pay someone to create the product or service for you.
+ THE COSTS OF DELIVERING YOUR FINISHED PRODUCTS OR GOODS
You need to include everything required to deliver the product or service. If you place a $0.02 label on your finished product that cost needs to be factored in as a cost of goods (COGS is accounting speak). If you wrap a piece of ribbon around the box, you need to figure that cost in. If you send a welcome gift to new clients, you need to add it in!
I see many women calculate the cost of the goods to make their item, but forget to add the extras that go into the final product you had to the customer.
+ YOUR PERSONAL FINANCIAL NEEDS AND GOALS
If selling your product or service isn’t going to help you financially then why bother? You might as well call yourself a hobbyist and be done with the stress of running a business. You need to set an expectation of your income needs and work towards making that happen.
+ THE MARKET POSITIONING OF YOUR PRODUCT
(budget friendly/mid range/luxury)
Positioning is really important. Where do you want to be seen in the market? You can be budget/low-frills or high end with lots of extras. Both approaches can be profitable! The trap to avoid is budget prices with luxury offerings; a common mistake many women make.
+ THE MARKETING INVESTMENT NEEDED TO MAKE A SALE
It isn’t the easiest thing to figure out when you’re starting out, but stick with me. There is a cost associated with attracting a new customer to your business as a lead (for me it is approximately $1.85) and a cost to convert a lead to a paying customer (mine is around $50 to $175 depending on the product). These numbers matter. They might blow your mind right now, but you can figure this stuff out! Tracking your numbers (things like marketing spend, hits to website, opt ins, inquires, conversion etc) will give you everything you need to work this stuff out. These numbers are business changing! How to price your products + services.
+ THE COST OF RUNNING YOUR BUSINESS
I have worked with multimillion dollar businesses that pay themselves really well, so you would assume pricing was sorted right? Nope. They did not correctly factor in accurate costs of running their business. They make money, the business racks up massive debts. Doh..
You need to have a pricing approach that covers both your earnings and the cost of running the business.
Your mindset might not be the problem!
Before you decide that you’re underpricing due to lack of confidence and self-worth please look at the figures first. If you find you’re underpricing you can work on improving whatever might be holding you back.
Working on your mindset with no knowledge of the numbers won’t help improve your business. Your confidence might increase but if you’re pricing is still wrong you won’t magically start making money.
Fix your pricing first, work on building your confidence and money mindset second and you will be well on your way to success. How to price your products + services.