Figuring out how much to charge is one of the biggest challenges small businesses and self-employed professionals must face. Everyone wants to be paid well for their work, but there’s always that nagging fear of losing opportunities and loyal clients if you raise your prices too high. And if your prices are too low, it becomes hard to sustain your business (not to mention pay your own bills).
Choosing a pricing structure is like walking a tightrope, and it can be fear-inducing. I’ve found that many of my clients respond to this fear by playing it too safe with their prices. Rather than charging what they think they deserve, they give in to fear and charge rates they know their clients won’t object to. But there are better, more balanced ways to set prices.
Charging For Value
Start by realizing that it’s not the end of the world if a few people think your prices are too high. If people don’t want to pay the proper amount for the value you offer, let them go to someone cheaper. A good number of these people will soon be back after discovering that the cheaper option is not as good. And those who don’t come back obviously aren’t in your target market. That’s okay-some people are more concerned with price than value.
Next, think about how you’re marketing your business. If you deliver top-quality products or services and want to charge accordingly, does your marketing make this clear? If you are not interested in catering to clients looking for the lowest rates, think about how you can include this in your marketing strategy. It’s all about how you present your work. If you provide value that is worth paying for, make this clear from the very first connection you make with prospective clients.
Pricing Strategies
Deciding how much to charge comes down to a formula. For self-employed professionals, think about how much you need to earn, what it costs you to run your business (including marketing and administration). Don’t forget to account for how much time it takes, on average, for your daily task (you need to be paid for ALL the hours you work). For small businesses, a good approach is to calculate your monthly operating costs and balance this against your average sales. This should give you a clear picture of your ideal per-service or per-unit rate.
These strategies are actually pretty simple, and as long as you know the right questions to ask it doesn’t take much time to figure out how much you should be charging.
Don’t be afraid to charge what your worth. And most of all, remember that making a profit is no crime. You work hard, so charge based on the value you deliver.
