How to Set Your Prices & Not Freak Out
Pricing is a really, really, really sticky subject for a lot of entrepreneurs.
Not only do you kind of have carte blanche to charge whatever the hell you want, but it also goes hand in hand with how we value our (and/or our work’s) worth.
It can be really challenging to balance that, and to simultaneously make sure that we are pricing accordingly, and making enough money to stay in business.
For me, this has been a big struggle, and I’ve learned a few things along the way that run counter to what other people will suggest. Let’s dig into those.
Confidence is the Name of the Pricing Game
Before I started my consulting company, I worked in retail and in direct sales, so I never really had to think about pricing; I was just coming up with promotions and stuff.
When I did have to start thinking about pricing, it was a huge challenge, and brought up lots of emotions.
Here’s what didn’t work for me: just setting my prices high and hoping someone spends it to work with me.
I know there are cases where this has worked, but here’s the problem:
If you do not already feel super freaking confident about the value that you will give, especially when you're right out of the game, you will sabotage yourself.
Why?
Because you don't feel comfortable telling somebody to pay you $5,000 for that service.
If you’re just getting started, and you don't have any testimonials, or regular or repeat clients, then unless you have really high self confidence already going into this, you're going to feel really awkward when you're having conversations with people who seem interested in working with you.
You're going to have a really hard time confidently saying, “Yes, so the rate is $5,000.”
The reality is, if you don't feel comfortable with it, you won't want to talk about it. And if you're not talking about it, then you're not going to be getting enough clients.
On the flip side of the coin, you don’t want to work for free, for exposure, or for a testimonial.
Here’s what I recommend instead:
Instead of going super high (and self-sabotaging) or free (and burning out), I recommend you start in at a lower price point (but not so low that you can’t pay yourself) to get those initial people.
This helps you in two ways.
It means you can actually feel good about what you're doing, and build the confidence to charge more over time.
You might decide that something that you think you want to do as part of the service you provide is actually not something you want to do after all.
Give Yourself the Chance to Experiment & Figure Out What Works For You
My very first consulting client ever was my tattoo artist.
He actually reached out to me when I launched my business, and we worked together for a month.
My plan was, “I’m going to create this whole report of my suggestions, and I'm gonna get it bound, and it's gonna be beautiful, and I'm gonna drop it off, and then we'll have a follow up call.”
But… I did not love that.
I loved thinking about it! I loved coming up with the ideas, and sharing those ideas.
But typing up a 45-page document felt like I was in school all over again.
I didn't like it.
And that was really valuable because I figured out that I needed to change how I worked with my clients. I decided I would rather have it just be a coaching call, and email over some notes and a recording afterwards.
That feels fun, and it doesn't feel like homework for me, and it's even better for my clients because, really, who has the time to sit down and flip through a 45-page document and then implement all that stuff?
Trying out your offer so that you can figure out what’s sustainable for you has inherent value, even if you don’t charge a high price for it.
Here’s another example:
Later on, when I started my first group coaching mastermind program, I really thought I was going to take my time, plan it all out, and have a whole marketing plan.
And then I was doing a bunch of discovery calls, and I realized I had a ton of really cool women who wanted to work with me who couldn't afford my private one-on-one rate, and I ended up starting my group program a lot earlier, just by reaching out to the people who had felt like a good fit.
It wasn’t important to me at the time that it be a huge revenue source.
Rather, it was something I was curious about trying, so that I could figure out what I liked and what I didn't like, and then be able to tweak it and improve it going forward.
And I was able to charge less for that first cohort, knowing it was a learning experience and that the price was temporary.
How This Can Work for One-on-One Services
This works for one-on-one services as well, especially if you want to get some experience and testimonials.
It's not terrible to start out at a lower price for a certain number of clients, knowing that you will raise your price later.
If you do an offer at a lower rate for five people, you get the experience of working with five people, testimonials from five people, and feedback from five people, so you can make it even better going forward.
And then when you open the door for new clients, maybe you double the rate, maybe you triple the rate, maybe you do something else entirely. Maybe you realize you hate working with people one-on-one, and you want to do something different.
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This is also really great if one of your long term plans is to make a course to really leverage some passive income.
One of the best ways to go about designing a course is working with people one-on-one first, because you can see what they are really struggling with: their pain points, what worked and what didn't work, to help them.
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Another type of offer that can be great to do at a lower cost is a workshop, where you can teach to several people at once, and meet people who may become your perfect one-on-one clients or who will buy your course.
I use speaking engagements and workshops as a sort of top of my sales funnel, because they're a way to get me in front of people for a lower commitment, so they can see if they like what I'm about and if they would like to work with me.
Then, they can convert into a higher paying client later.
Don’t Burn Yourself Out, But Give Yourself a Chance to Improve & Gain Confidence
I'm not suggesting that you go out and you work yourself to death doing a bunch of free or low-cost trainings.
But do it if it feels good for you to be able to offer something that's a little bit lower price point, especially as you're just getting started, because then here's what happens as you keep going: it gets better and better.
You get stronger at your craft, and you can confidently raise your price and feel good about the value you’re providing.
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Let's say you’ve been working at Target as a sales associate for five years, and you’re an amazing sales associate, but you've never been in a leadership role.
And then you go over to Macy's and you say, “I would like to apply for the role of District Manager.”
How do you think you are going to feel trying to explain to them why you are going to jump from sales associate to district manager?
It’s a big leap, so it’s a good idea to give yourself some stepping stones to build your skills and confidence.
Maybe you could be a keyholder – you're probably super qualified for that.
You could be in management, you could get a pay increase, you could get some more responsibility. That makes sense.
But you're probably not going to feel great trying to convince them that you should now be the manager of all the stores in the district. It’s going to be a pretty hard sell.
There has to be some point in between, where you get some more experience under your belt, and get acclimated to a management role.
When we go too far out or jump too high, we can often (not always, but often) inadvertently self-sabotage to get back to an equilibrium of where we feel more comfortable.
Make Sure You’re At Least Covering Your Expenses
And if you sell a product (or anything else that has some overhead or operating costs), make sure your prices are at least covering what it actually costs you to make the thing.
Make sure you cover your supplies, your time, and that you account for taxes and shipping.
(One funny piece of sales psychology is that we are now so conditioned to expect free shipping that people don't mind if you fold pricing into the cost of the product, as long as it means they get free shipping.)
So just make sure that you're really taking all of that into consideration when it's a physical product, because there’s nothing worse than spending all this time and money and energy creating something and then when doing the breakdown on the back end and realizing you are either not making any money on it or you are barely making enough to keep going.
Lastly: Don’t try to be Walmart
Finally, know that, in order to succeed you do not always need to undercut the competition on price. You are not Walmart.
You are valuable, and your work is valuable, so don't work for free.
You have to pick a dollar amount that sits right in your gut at first, and at least get some people to sign on at that level, even if it’s just one person.
That will give you the confidence to raise your price a bit.
But don’t try to be the cheapest option at the bottom of the barrel.
And later on, there might be a point where you go, “You know what? This is ridiculous. I'm freaking quadrupling these prices.”
When you've settled on your pricing, and you feel really, really good about it, you're going to need to be able to convey that to somebody else with confidence in order to sell your offer.
My No-Sleaze Sales Guide will help! You can grab that here: https://erikatebbensconsulting.com/no-sleaze-selling
