Much of the marketing advice out there encourages you to set prices that are a “no brainer.”
That is, a price that is so low, compared to the value you are offering, it would be silly for customers not to buy from you.
Sounds like a smart strategy, doesn’t it? But if you’re a coach, consultant, or freelancer, there are two big problems with this approach:
1) It works: you get a ton of clients, but your prices aren’t high enough to create the revenue you want. The result is you look successful but feel like an overwhelmed failure.
2) It doesn’t work: few people buy because your low price positions you as a beginner or someone who isn’t very good. The result is you both look and feel like a failure.
I know how much these two outcomes suck because I’ve experienced both of them. And yes, they nearly ruined my business because I either believed I wasn’t good enough to make it or I couldn’t keep up the pace necessary to make it.
Both conclusions turned out to be completely untrue.
By learning how to catapult my own income as well as a wide variety of clients over the last 3 years, I’ve found a smarter strategy that works in nearly every kind of business or niche.
STEP 1: WORK OUT HOW MUCH YOU NEED TO BE CHARGING
Set a reasonable capacity for your services and then make sure your price per client adds up to the revenue you want for your business.
To make the math easy, let’s say you want to earn $100,000 in revenue and you can comfortably handle 10 clients per year. This means, on average, you’d need to price your services at $10,000 per client.
STEP 2: RAISE YOUR PRICES TO THAT LEVEL
It’s not the math that holds people back. The REAL problem is that you don’t think you can charge that much. You don’t see a path from the “no brainer” price model to the premium price model.
I get it. To go from say $1,000 to $10,000 for the same service feels, well, uncomfortable.
How in the world do you justify such a radical change? Won’t everyone be shocked and angry at your arrogance? The voice in your head almost invariably starts yelling, “Who the hell do you think you are, anyway?”
But here’s what you probably haven’t considered.
WHY YOUR CLIENTS FEEL LIKE YOU’RE TRYING TO SQUEEZE MORE OUT OF THEM
Making a big leap in prices is often easier than small, incremental changes.
I know it doesn’t feel intuitively right, but I’ve done this so many times now, I can assure you it’s true.
Small, incremental prices are hard to justify. It says nothing has really changed about your business, you just want more. And, in fact, this is often how entrepreneurs try to explain such price changes. They argue they haven’t raised prices in years. Or that it’s in line with what their competitors charge.
But your customers don’t care about any of that. Incremental price changes often feel like you’re trying to squeeze more out of your customers. And they don’t like it.
Big jumps in pricing, on the other hand, require quite a bit more boldness and creativity. You can’t keep to the status quo. You (and your customers) will require a perspective shift to wrap your mind around this new number.
HOW TO RAISE YOUR PRICES EXPONENTIALLY (WITHOUT ALL YOUR CLIENTS DESERTING YOU)
I use about a half a dozen strategies to help my clients earn previously unthinkable prices in their business, but here’s one you can use after just a couple hours worth of work.
Change the way you frame your business.
There’s no doubt that how you describe your services establishes a point of comparison and sets the ceiling for what you think you can charge. If you’re already at the high end of your industry, here are two ways around that issue:
1) Give yourself a new title. There are two main reasons to change what you call yourself: you either want to put yourself in a profession with a higher perceived value or you want to get out of an oversaturated market. For example, the term “virtual assistant” suffers from a relatively low perceived value whereas a website developer, marketing consultant, or online business manager can easily command much higher prices. A life coach suffers from low perceived value and is also a saturated market. Better descriptions might be an executive or career coach.
2) Increase your specialization. Specialization is an easy way to essentially double the expertise you get paid for. For example, I worked with a client who called herself a freelance editor. But much of her experience was helping professors edit technical research grants and papers. Emphasizing this specialization helped her to increase her prices 20% overnight within that sub-community of clients.
The obvious caveat is that your new title or specialization has to be accurate. You shouldn’t call yourself an executive coach if you’ve never worked with executives before.
And of course, beyond your title and specialization, how you describe what you do and the value it produces matters tremendously as well.
Unfortunately, most people get this wrong, even if they’re whizzes at marketing, because they’re just too close to their own story. I’ve seen brilliant entrepreneurs vastly undersell themselves because they simply can’t see the true value of their work.
How much of a difference does changing the way you frame your value make? The proof is in your bank account. One of my clients used these exact techniques and got mind-blowing results, such as:
- A new offer that even her existing clients want to buy, earning her an additional $4400 in the first two weeks of pitching it
- A better way to package and price her monthly services, so one new client paid her as much as all her previous clients combined
- A monthly revenue increase from $1906 to $9766 (after working together just two months)
Most people think leaving a stable job to start a business is a huge risk.
But the biggest risk is that you’ll stand in the way of your own success.
Many people hold themselves and their businesses back because they think they have to stay competitive.
Today, I’m giving you permission to charge for your value, not someone else’s.