If you ever want to get into a disagreement, go into a group of service providers and talk pricing. It’s a contentious topic, but it’s a big part of the sales process, so we want to cover it off as part of our Sell Your Services series. In this episode, we’re getting real about pricing your services.
Here’s the scoop from Episode #63:
Pricing is a potentially explosive topic. But we’re going to dive headlong into it and dispel some of the myths and misconceptions.
So what exactly is pricing is all about? Let’s face it – it’s about money – that taboo topic we aren’t supposed to discuss. But it really is how much you get paid…and yet there is so much more.
There are so many factors that need to be considered when determining a price. Let’s break it down:
Money for services:
- It is all about exchange – a certain amount of value (i.e. money) for your services and the results are what they get in return. “Charge what you are worth” is bogus advice. Remember, the value is not about you as a person, it is about the service you provide. VERY different.
Telling a story:
- What you charge is largely a reflection of where you are in the market. How much experience do you have, how big a clientele, what your reputation is, etc.. Don’t underestimate the psychology of this. And just because you charge something today, doesn’t mean that is what you charge a few months from now as your business evolves.
Expertise/Prestige:
- The nature of the service you provide is going to vary between industries. Lawyers are likely going to command much more per hour than some other services based on the expertise and education required. Even lawyer fees will vary depending on location, nature of the work, and nature of the clientele.
So, how are you going to price your services? By the hour, by the project, or what? Great question……
The answer is – it depends. Some services such as lawyers or account managers will always have an hourly rate component. And those of you who rail against hourly and swear only by project-based pricing, remember that with that approach, you are still trading time for dollars – seriously. You really need to consider all aspects of the situation when considering your approach.
Think about all the things we talked about – your position, experience, education/certification, supply/demand, ability to deliver results/value, experience, location, operating costs, experience – did we mention experience? How efficient are you at working? Are you fast and can make things happen quickly? That definitely supports project pricing. But some clients only understand hourly pricing, so maybe you just charge higher hourly rates. All of this to say that setting your pricing isn’t a one-size-fits-all situation.
Links for this show:
- For an example of a business that uses the credit system, check out Snap Copy.
- If you want to learn more about pricing, check out the Profitable Pricing Training, available through the Small Business Boss Society.
- If you missed any podcasts and want to get caught up, you can click here to find all of our previous episodes on the Podcast landing page.
