Ep. 016: How to Set Your Prices & Not Freak Out
Figuring out how to price your offerings can feel like a nightmare. You want to make money, but how do you "get paid your worth" and also have prices you're not scared to talk about?
On this episode I give you some insight into how I look at pricing, and why I'm not a big believer in the advice: "Just raise your prices!"
So if you feel nervous about undercharging, overcharging, or you don't even know where to begin, give this episode a listen.
LINKS & RESOURCES MENTIONED TODAY:
Get my free No-Sleaze Sales Method delivered right to your inbox: Get Instant Access Here
Join my free Facebook community for additional tips & support: The Sell it, Sisterhood!
-
Erika Tebbens: Welcome back to the podcast. I am so excited to be talking about pricing today. Because this is a really, really, really sticky subject for a lot of entrepreneurs.
Because not only do you kind of have carte blanche to decide whatever the hell you want to charge, but also when thinking about pricing, it really goes hand in hand with how we view what we're worth or our value and all of these other things. And it's just, it can be so hard, uh, emotionally and mentally and the whole thing. But at the end of the day, we have to make sure that we are pricing accordingly because we have to make enough money to stay in business. Right.?
We're not running non-profits, we're not running charities. We are running businesses. So you gotta get paid. So I know that for me, this has been a big struggle and I have learned a few things along the way that, uh, run counter to what other people will suggest. So I'm just going to give you my 2 cents on what helps me and what I have told some of my clients, and it has helped them too, so that hopefully you can start feeling better about your prices and what you charge and maybe even raise them or change them, if you need to right now.
So just to give you a little bit of background on this, my previous business was in direct sales. So that meant that I was a consultant, an independent consultant for a larger company, and I sold physical products. So it's mostly handbags and home organization stuff.
So in that business, they create all the products, they set all the pricing, they did the monthly promotions, they made the catalogs and all the marketing materials and everything. So I didn't have to think about any of that. It was just, I just show up and I sell it, and maybe every once in a blue moon, I would do like my own special or something, you know, or pay for shipping or, uh, if I had some cash and carry on hand, I would sell that at a discount. But for the most part, I never really had to think about pricing. I simply had to promote what the pricing was or what the monthly special was. I just had to talk about it and let other people know so that they could decide if they wanted to buy, but I didn't have to actually come up with it myself.
So when I started my consulting business, it felt like a total nightmare to have to figure out my packages and my pricing. It was awful. I remember having so many conversations with my mentor about it. It was so, so hard and, uh, and it brought up a lot of feelings and emotions and I just, I didn't, I didn't love it. It was awful.
And since then I have helped a lot of clients to reconfigure their pricing and to make it work for them, to make it work for their clients and, uh, so on and so forth. So first up, I will say that one of the things that I have found to not work for me is when people say, "Just raise your prices, just raise your prices, just have a, a high ticket offer, and then just try to sell that." Right?
Especially when you're getting started. So, in theory, this works. And I know there are case studies out there of people where it has worked. But here is what I found for myself and in my clients. If you're just getting started on a new endeavor, so maybe you're changing businesses, maybe you're going from the workforce where you are getting paid either a salary or by the hour, and now you are setting prices for your own stuff. If you just say, "Okay. Yeah. Great. We are going to work together for. Uh, the next three months, and that's going to be $5,000."
Like great. And you have zero clients, right? You you're just putting this out there. You're building your website. You're um, putting your, you know, doing your work with me page on your website. And you're like, "Yep. This is the package that I'm creating and it's going to be $5,000."
So, if you do not already feel super freaking confident about the value that you will give, when somebody spends $5,000 with you, when you are right out of the gate, you will sabotage yourself along the way, because you don't feel comfortable telling somebody to pay you $5,000 for that service. Right.?
So you're just getting started. Let's say you don't have any testimonials yet or anything, unless you have a really high, uh, like self-confidence already going into this, you're going to feel really, really, really awkward when you're having those conversations with people, at networking events or on discovery calls or wherever, and they seem interested and they want to, you know, maybe they want to work with you. They want to get more info about it. You're going to have a really hard time confidently saying, "Yeah. So the rate is, uh, so it's, you know, $5,000 or X amount of money per month, blah, blah, blah. Uh, do you want to start with together?" Like for most people that's for most women, I should say that's not going to happen.
Uh, it would be, it'd be wonderful if it could. But 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. Okay?
So first up is I do not believe that you should work for free just for the exposure or the testimonial per se. Right? I think that there's a way that you can go into it, at a lower price point, to kind of get that, those first initial people, so that you can actually feel good about what you're doing with them. And also because it helps because 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.
So here is my case in point. My very first client ever, it's the guy who I go to to get my tattoos. So he actually reached out to me when I launched my business and I quoted him my price and we worked together for a month and my initial thought was, uh, I'm going to create this whole report of my suggestions and I'm going to get it bound and it's going to be all beautiful and I'm going to drop it off and then we'll have follow-up call. Right?
So, I did not love that. I loved thinking about it. I loved coming up with the ideas. I loved, uh, sharing those ideas, but typing up a 45 page document felt like I was in school all over again. I didn't like it. So I ended up knowing, I was like, "Okay, I need to change how I work. I need to have it just be a conversation like maybe a 45 minutes to an hour coaching call, where I email over some notes and a recording afterwards. That's how I'm going to move forward, because that feels fun. And it doesn't feel like homework for me. And they are still getting my suggestions. They're still getting the value out of it."
And actually it's even better because who has the time to sit down and flip through a 45 page thing and then implement all that stuff. Like not many entrepreneurs. Right? But I wouldn't have known that if I had, at least tried it to realize that I didn't like it and it would not be sustainable for me going forward. And then, later on, so fast forward, when I started my Success Squad, a group coaching mastermind program, I really had thought, "You know, I'm gonna wait till 2019. I'm going to plan it all out. I'm gonna have this whole marketing plan. I'm gonna, you know, do this, that and the other."
And then what happened was, was I was doing a bunch of discovery calls all at once, and I had a ton of really cool women who wanted to work with me, who couldn't afford my private one-on-one rate. Because at that time I only had a course, my Sell It, Sister course, and my private one-on-one. So then I was like, "Hmm, what if I grouped everyone together, and I made it a lower cost per person, and we did a group program." And that's what I did. And that's how the Success Squad was born. So no fancy marketing. I literally sent private messages to people who I wanted in it.
I got nine people and we got started in October of 2018. Now it's my primary offering. It has grown. It is, uh, the, the main thing that I offer, I absolutely adore it. But I would have waited to start it if I was really overthinking it, if I was like, "Oh my gosh, I have to make it, you know, this huge thing. It's gotta be this, um, this high price offer." And so on and so forth.
So it was really helpful for me, even though there were people, and even though my, you know, from my own point of view, uh, there were people, well, who were saying that, "Oh my gosh, this price per person is, is so low. Like you should be charging more."
And I was like, "No, I know that." I, and I even said going into it the first round I, everyone knew when it's January, when these three months are over or the price will automatically, um, be going up. So that is all to say that I knew that the price was lower than it could have been. However, for me, it was less about a huge revenue source and more about a, this is something I was curious about trying, this is an easy way.
I got, you know, I have these nine fabulous women and we're going to work together for the next three months. And from there, I'm going to see what I liked, what I didn't like, what I should change. And all sorts of other variables. So that way I can change it and tweak it and improve it going forward. And that is what I have been able to do.
And since then, I have raised the price three times and I know I will continue to raise the price, but I had to do what felt good for me. So I feel like, and I, and I didn't feel at any time, like I was being taken advantage of, I didn't feel at any time, like I was resentful that I wasn't making enough money.
It felt good. And it felt exciting. And I knew that that price was temporary. So if you're just getting started and you're like, "I just want to get the experience of working with people. I just want to help people. I just want to get testimonials, like, I just want to do this thing already."
It's not terrible to start out at a lower price for a select amount of clients and then know that you will raise it.
So let's just say you're a life coach. Okay? And right out the gate, you're like, "Okay, this is what I'm going to do. I'm going to, uh, work with someone for two months and it's going to be $120 a month. And we're going to have two sessions, two hour long sessions a month or two, you know, 30 minute sessions a month." Whatever it is. You could say, "I'm only going to do this for the first five people."
And then you can even say, "I, what I would really love because I'm doing it at this lower rate is I'm going to give you a, uh, survey at the end that I need you to fill out, to give me feedback so that I can improve for the future." So now what you have is you have the experience of working with five people.
You have testimonials from five people. You have 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.
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 making a course and designing a course is working with people one-on-one first, because you can see what they are really struggling with, their pain points, uh, what worked and what didn't work to help them and all sorts of other things so that you aren't guessing when it comes time to make a course. Right?
So those are all helpful ways that by offering something initially free limited time or limited quantity, they lower price can actually help you. It can also be used as a good way to funnel people in. So here is an example for you.
Recently, I taught a workshop. And I actually, uh, I only price it so I've done a few different speaking things for free. And then I've done a few low cost workshops anywhere between like $25 a person to about $40 a person. So this was one that I did was only $25 a person. And I had seven people and there was one woman there who really resonated with me. And then she ended up buying my course, my Sell It, Sister course.
So if I had been somebody who was like, "I'm not going to teach this course for $25 a person." I mean, I left there and I had, I had seven people, so I had, you know, I was like, wow, I just, for, you know, two hours of work, I made almost $200. Like that's cool. And I love, love, love teaching. So it wasn't, it wasn't like it was a burden or anything.
I love doing it. So I was able to meet new people. Uh, I was able to make connections with some people that I might work one-on-one with in the future. And then I also met this amazing woman who then ended up buying my course. So for me, I use speaking engagements and workshops like that as a sort of top of my funnel, my sales funnel activity, 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, if they would like to work with me and then they can convert into a higher paying client later.
So I'm not suggesting that you just go out and you work yourself to death, uh, doing a bunch of free trainings. I'm not saying that you even work yourself to death doing a bunch of low cost trainings. But what I am saying is that it's not always a horrific thing if it feels good for you, if it feels aligned with you, to be able to offer something that's at a little bit lower price point, especially as you're just getting started.
Because then here's what happens as you keep going. Like, as I've kept going with Success Squad, it gets better and better every time. We have a training hub that has tons of trainings, in it. Every single month we get more, it just grows. It's awesome. I get stronger, uh, on the coaching end of things, all of that. So as it progresses, I can confidently raise the price and go, "You know what? There is a lot of great value in here and it is truly worth this price." And so that is the price that I am asking for it.
But if I had started right out of the gate and I was like, "I'm going to make it-", you know, again, this price that did not feel aligned, I would not have had,, it would not have felt good for me to, at that point, be pitching that program at that price. For somebody else, maybe it would have been fine.
Again, I know there are people out there who are going to disagree with this. I know there are people out there who are going to say, "No, you should just offer, uh, you know, like if, if your goal is you want to make $6,000 in a month, you should just have a $3,000 package because then you only have to get two people."
Okay, well, what if right now, what if I don't feel comfortable speaking to the people who want to pay that, right? Like, what am my best friends. Uh, Kendra Hennessy of Mother Like a Boss. She has two courses. Uh, well, technically three, but nothing that she offers is more than two, $300. Right? So these lower cost offerings, she is a multiple six-figure earner. She has done that because she knows her audience. She knows the course. Could she increase the price in the course? Yes. Has she a little bit, yes. Will she in the future, perhaps that's for her to decide. But she has had a lot of financial success on something that is not a quote unquote high ticket offer.
So you have to do what feels right for you first and then you can improve on it. Okay? So here's like a regular way of looking at it. If you had only ever worked at target as a sales associate, right? For like, let's say you work at target as a sales associate for five years. You know, you are an amazing sales associate, but you've never been in a leadership role ever.
And then you go over to Macy's and you say, "I see that I saw on LinkedIn that you're hiring for a district manager. So I would like to apply for the role of a 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, even though you've been there for, you know, for five years, so maybe you could be a lead, right?
Maybe you could be a key holder. You're probably super qualified for that. You could be in management, right? You could get a pay increase, you could get responsibility increase. That makes sense. And I'm speaking from this as somebody who used to work in retail management. So this is sort of my barometer of, of understanding, right?
But it's going to be really hard. You're going to feel really not great about trying to have to convince them that you should now be, uh, the manager of all the stores in the district. Right? Even if you feel like, "You know, I'm hella smart. I could figure it out. Like I'm hardworking." Whatever, all of that, is going to be a pretty hard sell. Right?
So there has to be some point in between where, uh, where you go, "You know what? I actually need some more experience under my belt. I need a little bit more, uh, time in this different role to get comfortable there, to kind of reacclimate to that point. And then I'm going to make another jump." Right?
Because we, um, kind of like, I don't know if you've ever read the book, The Big Leap by Gay Hendricks, but we, we all have an upper limit that we're comfortable with. And when we go too far out or jump too high, we can often, not always, but often self-sabotage to get back to an equilibrium of where we feel more comfortable.
So that is my, that is my tip to you. You also, uh, just as an aside, you do not always need to be the lowest price in order to succeed. I have lots of experience and stories and I could go off on massive tangents about that. You do not need to undercut the competition on price. You are not Walmart. You are valuable, you are amazing.
So don't do that. Don't work for free. People won't value it. You know, don't give away all your stuff. People won't do it. But 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. It can even be one person because that will give you the confidence to then move to the next level.
And you, there might be a point where you go, "You know what? This is ridiculous. I'm fricking quadrupling these prices." Because you energetically, you have reached a new level where you feel. Like, you know, you want to get, and you are worthy of four X, what you're charging now, but you cannot go from for most people, especially women, you cannot go from zero to four X, what you're thinking of charging and, uh, feel internally good about pitching that to other people.
You will just self-sabotage every single time. Okay? And if you sell a product, when thinking about pricing, one thing to keep in mind is, uh, make sure you're covering the costs of what it actually costs you to make the thing. So all supplies and things like that. Make sure you cover your time, make sure you account for whatever tax is there.
And also for shipping. And one little funny piece of sales psychology is we are now so conditioned to just expect free shipping. That, and I've seen people ask this question online and I've seen the overwhelming response is 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 if it was, you know, it costs $5 to ship it, and the cost is $20 to you, that's what you want to charge for it, you will actually get a better, um, conversions, if you list just listed at $25 with free shipping, because psychologically we love the idea of getting something for free. So just make sure that you are really taking all of that into consideration when it's a physical product, because nothing is worse than realizing that you've spent all this time and money and energy into creating something, and then when you do the breakdown on the back end, you realize you are either not making any money on it really, or you are barely making enough to keep going.
If you have thoughts on this, I would love to know. I will also say one thing that is going to be super, super, super helpful for you in even closing, whatever lower or mid range price that you are, um, pitching is you need to have a confident way of selling that to people. So I have a free resource for you. It's my no sleaze sales method. This is how, when you are talking to those people, when you've decided on your pricing and you feel really good about it, um, you're going to need to use something, so, this is when, you know, when you've, uh, 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, and then you can hopefully close them and start working with them. Right?
So in order to learn my no sleaze sales method, you have to go to, uh, bit.ly/nosleazeselling. So again, that's bit.ly/nosleazeselling. So when you do that, you can get free instant access. Uh you'll you can read through it about 10 minutes. It's really simple. And then you will know the exact same method that I use in order to have really confident sales conversations with people.
If you are struggling still with pricing, cause I, you know, it's, I know that I'm not covering every single little bit in our 20 minute podcast, but if you're still struggling, always reach out, tag me on Instagram, @erikatebbensconsulting, slide into my DMs, whatever, because, uh, this is something that I help people with all the time, and it's really essential if you want to get where you want to be, you have to figure out your offerings and the pricings on those offerings. So I hope this was helpful. Uh, reach out, let me know. I'd love to hear from you. Get that free guide, download that free guide ,and as always, happy selling.
