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There are not many certainties in life, but if you own your own business, a moment will arise where you have no option but to…set your prices.
How you go about setting these prices is called your pricing strategy. And I know many business owners who wish this could be done for them! They try to wriggle around it, cringe a little as they type it on their website or say it to a client. In business it can take time to become comfortable asking for money.
As much as I’d love to provide an easy 5-step process, there are many considerations to take into account, like:
– What is involved in producing or delivering your product or service?
– Is price positioning an important part of your business model?
– What do you require as wages or owner drawings?
– What quality and values matter to you in your business?
– What does it take to run a sustainable business for you?
On top of this, we all have different patterns, behaviours and beliefs around money, asking for money, our financial capacity, our own price sensitivity and perceived value. These are all subjective and impact our ability and effectiveness to price our products and services.
So today I’ll explain a couple of specific ‘pricing strategies’ that I think will help kind and considerate business owners.
I’ve noticed that some kick-ass, intuitive, good do-ing, do good-ing business owners tend to not feel confident in their setting up their pricing strategies. They are keen not to over charge, want to ensure every person can afford something that they offer and at times would rather go without themselves than increase their prices.
The only problem with unintentionally mismanaging our pricing strategy is that our profit is dependent on our pricing. Our profit is important for providing for our business, our lives and for us to thrive. When we don’t use pricing strategies or options that ensure we are running a sustainable and profitable business, we start to self-sacrifice; we end up mis-using important resources such as our time and energy, instead of potentially just using money, to have tasks or actions completed for us or on behalf of us in business.
It’s a pretty critical skill in our business, and I personally believe that incorrect pricing or ‘hopeful’ pricing strategies (the ones where you pick a figure and hope it covers everything) can lead to burnout due to this mismanagement of resources – that’s our time, energy, money.
So how do we as empathetic, compassionate business owners ensure we master this skill? Here are some thoughts, because let me tell you there are no pricing strategy rules. (Take what suits you and leave the rest.)
– Offer products at prices for all budgets. Don’t price your time to suit all budgets. –
There is a distinction here. One is intentionally offering a product to suit each budget along the customer journey from low to high priced products. The other means ensuring you price your most valuable commodity – your time – at a premium rate. Your time is the only non-renewable resource in your business. It is precious, so treat it that way. If you only offer in-person options, then do some brainstorming: how can you help someone get one (or three) steps closer to their desired outcome without having to actually be there holding their hand?
– Being overly generous in business with discounts is not a pricing strategy that serves anyone. –
Heavy discounts are best left for very intentional purposes and not as a regular pricing strategy to increase sales. They not only train your customer to wait for sales to purchase, if overused they devalue your product or service. Even if it is not your intention to do so. Find other ways to feel generous in your business; this could include allowing space in your schedule to volunteer your skills for a not-for-profit or a scholarship for an economically challenged person. It may involve including digital support products for free or charging a premium price so that you can include the best customer service and delivery possible. It doesn’t need to involve a price reduction that potentially leaves you feeling resentful.
– Price your products and services like your life and the environment depend on it. –
Because they do.
What happens when you start to compromise what is important to you in business and life?
- You potentially get run down (or burnout)
- You start to skip lunch or seeing the kids after school because you are working
- You stop seeing friends, face a biz-life crisis
- You give up any creative outlets or exercise, because…werkin’ all.the.time
- You start to compromise your quality of product or service (or life and values)
- You stop thinking about the environmental impact because you can not pay yourself or business bills and use the recycled/eco/natural/carbon neutral inputs in your product
I would love to hear if you have any other thoughts about this. What pricing strategies do you find support you in running a sustainable and profitable business?
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As business owners we don’t have a lot of time for scrolling social media.
Therefore, I share how you can master your financial decision making to stay in line with your values and goals, nail your business design to be profitable and make money enjoyable and manageable via emails direct to your inbox.
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