43: 6 Questions to ask when deciding your pricing

This is genuinely one of my favorite topics because it’s business strategy, it’s marketing, it’s psychology, it’s confidence, it’s mindset, it’s perception. The question “How much should I be charging and what should my prices be?“ is always such a difficult question to answer, because the honest answer is: it depends.

Today I’m going to walk you through a couple of concepts I always apply and a couple of questions I always ask my clients when we have this conversation.

1. Your worth is so much more than what you charge

I do have to start by saying that your worth is so much more than what you charge. Your worth is not related to your pricing. However, you can charge for the transformational value that you provide. A lot of the results and transformations are revenue-based and quite clear and others are a little bit more intangible- more clarity, more confidence, taking more action, etc.(e.g. parenting coach), but you should still charge for the results and transformation you provide.

2. Revenue Goals

I don’t think your revenue goals are that important in deciding your pricing, but it does play a factor. What I like to do when I think about revenue goals, if you’re a service provider, is looking at how many clients can you take a month. I am definitely more on the introverted side of the spectrum. I love doing intensives, or masterminds, or if it’s one on one than ongoing coaching where we work together for at least three months on strategy and coaching, which means that I can take only a small number of clients at any given time. So, my prices have to be more on the premium side of things. That means that my marketing, my authority-building, how I build relationships, the results I deliver- they all need to be in that spectrum, as well.

3. Competitors

This can be a really good benchmark. One way of looking at this is, if your clients don’t hire you, or they don’t buy things you’re selling, from who else would they buy from. This can be really helpful in giving you an idea of the market that you’re in.

It can be a good benchmark for market research and just getting an idea of what else is out there. But keep in mind that you are seeing only the surface level. You only see the prices on the websites. You don’t see how long it takes them, how many they do, what their profit margins are, if they enjoy that work, if it’s actually profitable, what results they’re getting with that. You don’t see any of that. Again, like with revenue goals, it’s a good indicator, but it doesn’t give you the full story. So, you are using all these different touchpoints to build a bigger picture.

4. The Staircase Method

This is one of my favorite methods of pricing! You have a starting price and you have a goal price, and you make a price increase to go from A to B, like a staircase, you jump it every single time.

Now how often and how much to jump? That’s up to you. 

How often to increase? You can do that by the length of time, a certain number of weeks or months in between, or, you can do it by the number of sales you make in between. 

By how much to increase? I think 10% – 20% is a good rule of thumb. Any more than that would be dangerous because your messaging, your marketing, and your audience also need to catch up with the increase in your pricing.

5. Shoe Analogy

This isone of my favorite examples to use. Imagine you are going out and you want to buy a pair of black boots. You go out and you see two pairs of black boots and they look exactly the same. They look completely identical, except for the price tag. One pair costs $10 and the other costs $100. Which pair would you buy? 

Every time I ask this question everyone says, “I would buy the pair that costs $100.” When I ask why they all say, “Well, the cheaper ones will probably fall apart immediately and the hundred dollar ones will last me longer.”

But how do you know that when they look the same? This is price-value perception. When the price is the only differentiator you have, you assume higher price = higher quality, and that exact same principle applies to your pricing too.

And I say this more for people who are undercharging, you know who you are.

6. Your Ideal Clients

What else are they spending money on? That price and the decision-making process will be different for each person.

Think about the last time you spent money on something and what went through your head. This is something to keep in mind when you are planning your marketing, when you’re planning for a sales strategy or a sales plan.

• What do your people need to know?
• How do they process buying decisions?
• What does that thought process look like for them?
• What can you have in place to make that easier for them?

I would love to hear from you. How do you decide on your pricing? Do you think you’re currently underpricing? Are your prices a bit too high? Or are you in the perfect place for your pricing?

If you’d like to have a chat about your pricing offers, business strategy, and profit model: let’s have a call!

Love + magic,

Maggie