How do you hold your “price”?
More often than not, my clients and I seem to get bogged down in emotional issues.
Let’s face it, making decisions involves getting clarity and more often than not getting clear means knowing what you want; which comes from knowing what you feel.
In business as in life, issues arise.
Issues can be as simple as a client not paying on time or more complicated like having to address more serious matters with an employee, a colleague or a friend.
This past week, while talking with a friend who is new in starting his business, he was expressing his frustration about a hard day of work and less money than he should have charged/quoted. His frustration was real. The job that needed to be done was physically demanding and took twice as much time as he thought it was going to take.
At the end, he was exhausted and his mind was unsettled about the money he was going to get.
During our debriefing, we covered a range of topics including self-worth, money exchange, dealing with people’s reactions while giving an estimate, and underestimating the time needed to do the job. You know, the good stuff that can only be learned while attending the “school of hard knocks”.
Events like these can only be dealt with through real business experience with real people. Despite his incredible frustration at himself and people in general, we were able to sort out the lessons learned.
It was all going well until he said “Well, it is not fair that you get paid only to “talk” to people while I work so hard and get paid less”.
Of course, when I stand up and teach a workshop or sit with a client in a one-on-one coaching session, it seems to be effortless on my part, no one realizes that I spent 6 years in 3 different Toastmasters clubs learning public speaking, twice as the president, that I worked as a training director for 6 years delivering countless hours of training in addition to getting certified in a variety of coaching modalities, mind/body psychotherapy healing programs and multiple training and development certifications.
It looks to him like I just “show up” and talk to people… that’s what my friend was saying.
I had to take a double deep breath on that one.
Of course how would he value what I do, especially when I offer my advice freely to my few friends who are in business for themselves?
What he was dealing with while agonizing, was three things; the prices he quoted and the potential client’s reaction to his price (he really wanted to get the client), him launching his new business (still green in quoting prices) and the uncertainty around price setting (not clear benchmarking his industry).
One thing he thought he knew for sure was the amount of work needed to do the job. (Although in the end, it took him twice as long as he estimated).
At first my reaction was to joke and say “talk to the boss.. oh wait.. you are the boss”.
His response was “you are not funny”.
After going through the components of his deal including the emotional/physical fatigue incurred, I wanted to use this experience as a learning opportunity.
The first person that has to be convinced of the validity of your price is.. YOU!
One of the most challenging things to do while being in business for yourself is to set prices and stand by them.
I personally have done it all, under-pricing when I started which meant I worked too much for too little, changed my prices depending on who was in front of me as I “knew” what was in their bank account, giving more hours for the same price etc. The only thing that I have yet to do is to stretch my self-belief and ask for more than what I feel comfortable with which leads me to my 5 step process in setting prices.
5 steps to setting your price
1) Convince yourself of what your value is
Add up the number of years that you have learned directly or indirectly your craft, add the number of dollars that you invested in training and development, compile the two with life experience and “voila”! You hopefully are starting to see that when you show up, you have a suitcase filled with years of experience and knowledge.
2) Get clear on your packages
Create packages for your services; you can use an hourly rate if you’d like. For example, if you design websites, create three packages from the lowest tier for a very basic design to the highest tier for something more complicated that may involve SEO (search engine optimization).
Define those packages in terms of time taken.
Add the number of years of experience that you have. Obviously more experience means faster and more elaborate work.
3) For each package, set your price “intuitively”
Take two pieces of paper and set two price points; one that takes your breath away (highest) and one that sinks your heart (lowest). Place these two pieces of paper on the floor and take a step just in the middle of what feels “right” to you. Set a price point and stick to it for each package.
4) Add services “a la carte”
Get clear on your hourly rate and the type of services that would be added potentially. For example for someone who designs website, a homepage video would be an “added” service.
5) Benchmark your services by researching the industry and compare prices
Determine your price based on value not on others. You may offer web services similar to other people yet you may have a BA in Fine Arts that gives you an artistic eye to capture the essence of who your client is.
Learn to live with your price points. Practice makes perfect, so practice saying your prices without flinching with friends and willing acquaintances.
Learn to overcome objections by benchmarking the services against the value that people will get.
For example someone getting a website designed by someone who has earned a BA in Fines Arts will get a personalized brand through colors and images that someone else might not get.
Identify what distinguishes you from the crowd and be able to speak to that.
Practice, practice and practice!
The more you practice, the less people’s reactions will deter you.
Know that their reaction is the reflection of how worthy they feel about their deserving the investment that they are about to make for their business.
Drop me a line and let me know what you think!