Are YOU pricing your offers in a vacuum? Let’s find out!
One of the most challenging things about being a creative entrepreneur is figuring out how to price your offers, services, and products.
It can honestly feel like a guessing game!
And we’ve ALL been there!
When faced with these ever-accumulating questions, entrepreneurs will essentially close their eyes, pick whatever number pops into their mind, cross their fingers, and hope for the best.
It’s quite a gamble!
The trouble is, there’s no “perfect” right or wrong answer when it comes to pricing.
And while we all have to start somewhere, this “throwing spaghetti at the wall” approach to pricing your offers isn’t sustainable!
So many businesses price “in a vacuum.”
What do you MEAN, Erin?
Many businesses decide how much to charge for their offers without any outside information, data, or validation. This can actually be more harmful to business (and potential clients) than it is helpful.
If you’re timidly raising your hand thinking, “yup, this sounds a lot like me…”, not to worry! I’ve got the tools and strategies to help you get back on track!
In this blog, we’ll explore why pricing your offers in a vacuum is dangerous. I’ll offer some actionable solutions to help you feel informed and confident as an entrepreneur who prices strategically for yourself and your clients. Ultimately, this approach will ensure that you can best serve your ideal client while setting up your business for sustainable financial success.
I don’t throw the word “danger” around lightly.
This isn’t some scare tactic to make you panic. Instead, I want to make you aware of some of the pricing traps entrepreneurs fall into that ultimately sabotage their money goals, their business, and the success of their clients! Here are three of the biggest problems I see in the online business world when it comes to pricing.
Has this ever happened to you?
You’re prepping an AWESOME new offer that you’re really excited to share. You KNOW it will fill a need in your industry and have the data to support that your ICA is going to SWOON over it!
You launch it with all the enthusiasm, confidence, and optimism in the world,
How could this BE?!
Your knee-jerk reaction might be to tweak the offer. You start adding new features, throwing in bonuses, and piling on the bells and whistles as a last-ditch effort to make your shiny new offer look even more enticing.
But, what if I told you your offer wasn’t necessarily the problem?
The problem is that while you put a ton of research and planning into the offer itself, you didn’t research your offer pricing. You priced your offer in a vacuum and unintentionally boxed out potential clients who either couldn’t justify the cost of your offer (if you priced it too high) OR dismissed your offer altogether (if priced too low) because it seemed too good to be true.
Your pricing speaks VOLUMES. And pricing too high or too low may negatively affect your ability to make sales, no matter how incredible your offer might be.
While there isn’t a perfect number, there is a sweet spot that market research can help you uncover to ensure your prices are within reach for your ideal audience (keep reading, I’ll show you how)!
I am not advocating you blindly follow people in your industry like a sheep.
You’re a LEADER in your industry, and I wholeheartedly believe in following your gut, disrupting the norm, and stepping BOLDLY into what makes your business unique.
However, you DO need to be tuned in to what others in your industry are charging.
Especially early on.
Your prices need to make sense in your niche and your industry just like they have to make sense for your ICA. Otherwise, your ideal clients will probably hesitate to work with you wondering,
“Why are their prices so much higher than others?”
If you charge at a higher rate than the rest of your market, ensure you have the experience, expertise, results, and VALUE to back the prices you’re asking for.
“Why are their prices so much LOWER than others?”
While giving people a good deal MAY land you some new clients, they may not be the quality of clients you’re looking for. Pricing your offers at a significantly lower price may attract “bargain hunters” who are more concerned about looking for a deal than finding a good working partnership or valuing the services or products you have to offer.
Yep, believe it or not, your prices speak volumes! Make sure you like what they have to say.
COO Tip: Get curious about competitors who do and do not share their pricing. While product prices are typically shared, you may not always be able to find pricing for services. Consider what feels right for you and your creative business. Price transparency is one way to build trust with your audience while pre-qualifying leads, saving you time and energy.
Finally, let’s dig into a topic that honestly gets me REAL fired up:
Increasing rates as a blanket business strategy.
I see this ALL the time.
Business gurus who push entrepreneurs to “just charge more” as the cure-all for any business challenge on the planet.
This kind of one-size-fits-all advice is, TBH, totally irresponsible!
Yes, increasing your rates CAN be an option. But it isn’t usually my first go-to when I work with my 1:1 coaching clients, and it’s definitely not the only way to increase your revenue, spike your offer conversions, or serve more clients.
In fact, if done prematurely (aka too early or without any data to back the decision), it can totally backfire.
And instead of earning more, increasing your prices can mean:
I always recommend entrepreneurs explore other options BEFORE defaulting to increasing prices so that if and when you do decide to raise your rates, you can do so with confidence.
Now that you know what NOT to do, it’s time to fill up your entrepreneurial toolkit with the tools and prompts you need to define your pricing now and in the future!
This is the exact process I use with my 1:1 business coaching clients and even my outsourced COO clients to help them build a pricing framework that works for them and their ideal client!
Have a business pricing strategy. As creative entrepreneurs, we are in a unique position. We get to do the work we LOVE. And sometimes, that means feeling grateful for any opportunity to use our passions and talents to serve others. But, this can be to our detriment. Often, we devalue ourselves or price on the fly without thinking through the long-term effects of our pricing.
That’s why it’s so crucial that you develop a customized strategy for YOUR business. YOUR product or service. YOUR ideal clients.
This strategy should take several things into consideration:
Market Research is just a fancy expression for exploring what else is out there! Get familiar with your niche, competitors, and ICA (ideal client avatar) with some real, hard FACTS!
The best place to start?
Pop on to our trusty friend, Google.
Look into your specific industry.
Identify your competitors. See how they package their products and services.
Notice pricing structures.
All of this information and data can give you a baseline in pricing.
With this data documented, you can easily understand what makes your offering unique. Take the guesswork out of pricing for your small business and ultimately be able to make intentional, strategic choices that make sense in your industry and for your business goals!
Another impactful way to gather the information that will inform your pricing decisions is to ask your people!
Find out what motivates your ideal audience.
Actually talk to them. You can do this in a few different ways:
Post questions on your stories. This is especially helpful if you have an engaged audience full of ideal clients!
Send surveys (I like using Google Forms or Jotform) to past clients, prospective clients, and even your email list! You may choose to incentivize responses with a coupon, freebie, or a “thank you” gift for their participation.
Take a former client out to lunch or hop on a Zoom call! Often face-to-face conversations will be more valuable since people can speak freely and verbally (instead of typing answers into a form). You’ll probably get more candid, accurate information and be able to ask questions as they arise instead of just relying on pre-planned questions.
No matter how you choose to talk to your people, use open-ended questions instead of yes or no prompts. Take their responses and read between the lines! Sometimes it takes a little digging to get to the root of their challenges, values, and goals. Don’t skim the surface!
Now it’s time to take a look at your overhead costs!
While getting external data from your market, competitors, and clients is helpful as you establish your pricing, you also need to look at the internal operations of your business to ensure your prices make sense.
Every business is different and will have unique expenses. You need to consider what it actually costs to deliver your product or service so you can be sure the time, energy, and resources you put in are worth it!
Product-based businesses need to think about things like (but not limited to):
Both service-based businesses and product-based businesses need to think about cost-related things like:
And so much more!
These expenses must be calculated and accounted for when assessing your pricing so you can avoid undercharging or offering your products and services at a LOSS instead of a GAIN.
When setting your pricing, take into account the time of your team, contractors, vendors, and anyone else you pay to help you create and deliver your product or service to your clients.
Finally, you need to understand how much of your OWN time is going into each product, service, or offer! Your time is a precious and limited resource!
Not sure where to start when it comes to estimating the time you spend on your offers? A time audit is a great place to start! Not only will it help you see where your time is going overall, but you can observe trends for specific projects to help you take control of your time. You can snag my Time Audit FREEBIE here!
Once you clearly understand the resources that go into your offer, you’ll feel more confident naming a price that makes sense. You’ll be able to charge a reasonable rate so that you get paid adequately for your time, costs, and expertise. At the end of the day, Every sale should be profitable even after expenses like paying yourself and your team, covering materials costs, and managing your business-related expenses!
COO Tip: Exchanging time for money through hourly rates can be a slippery slope. As you become more skilled, projects may take you less time even though they still meet your high standards for quality. You shouldn’t be penalized by earning less for getting things done quicker! This is why I tend to lean toward value-based pricing.
Now that you know how to BUST out of your vacuum, conduct STRATEGIC market research, and price your offer in a way that makes sense for you, your business, your industry, and most importantly, your clients, you’re READY to take action.
I hope you feel like you can now begin to map out your one-of-a-kind pricing strategy.
As with ANY new skill, applying this knowledge will take time and some trial and error. Be willing to get curious, lean on reliable information, and reach out for support when needed!
My door is always open if you have a quick question or need some guidance.
Did you know I offer 90-minute Clarity calls?
They’re perfect for creative entrepreneurs who aren’t looking for full-time support but could REALLY use some help breaking through their biggest struggle– like figuring out your pricing structure!
You can ask your biggest questions and receive strategic guidance from *yours truly* (someone who GETS the unique challenges you face as a creative entrepreneur).
Sound like EXACTLY what you need?