My approach to pricing services

One of the reasons I love doing coffee chats in my business is they often challenge me to think differently about my business. Hearing other perspectives on business are great for helping me question the stories I’m telling myself about how business should be. As an introvert I find it very easy to get caught up in my own thoughts!

But last week Betty Cottam Bertels asked me what my approach to pricing was. It made me realise that I’ve never really talked about this even though I offer a service helping people to price their services 🤦‍♀️

I’m still working on how I explain it but this is the nuts and bolts of my approach is know your numbers, benchmark against the market and then with this knowledge go with what feels good (or go with some other creative method for picking your price).

What this means in detail is:

Step1: Work out your numbers – how much do you need to charge to be able to pay yourself an amount that means your business is sustainable, what other expenses do you need to cover and how much time do you have available to earn an amount that covers both these amounts.

Step 2: Do a check against the market. Two reasons why I recommend doing this even though you have to be careful not to get comparisonitis:

• You don’t want to be the cheapest. I don’t think the people looking for the cheapest option are bad people. But they are often people who are pretty stressed about their finances and that can make working with them very stressful. There are other ways to help people who are financially stressed.
• You probably don’t want to charge a lot more than your competitors unless you are exceptional at marketing (and as introverts this is often not us!). If your numbers say you should be charging a lot more than your competitors then make sure you are really comparing apples with apples. You might be offering a much higher touch offer and that is great to know for your marketing.

Step 3: Now that you have a minimum you are going to charge from doing your numbers and have an idea of a range you can charge from looking at the marketing go with what feels good. Or if you incorporate spirituality in your business then ask the universe for a sign. If all that feels too hard then do something fun like using a dart board to pick.

It’s much easier to have sales conversations if you feel positive about your pricing. And if you can’t land on a price then just pick one. You can always change it. Its your business.

If 3 steps sound like too much work then just do step 1 and make sure your prices are high enough to pay yourself and cover your expenses.

The easiest way to do step one is to add up all your business expenses for the year and then add an annual salary for yourself. Divide this by the number of weeks you want to work this year. Make sure you allow time off for holidays and emergencies. This gives you a weekly amount you want to earn. Divide this by the number of hours per week you have available to do client work assuming you are fully booked and this gives you your hourly rate. Don’t forget there are quite a few hours in your business that aren’t going to be client work – think marketing, admin, planning etc.

This doesn’t mean you are going to charge by the hour but rather work out on average how long your package takes to deliver and multiply that by your hourly rate. This is what you then charge for your package. Sometimes it will take you longer to do the work and sometimes less. If you aren’t sure how long a package takes you to deliver then download an app to track your time an get measuring! I use Toggl track for this – the free plan is all you need.

If you are a coach then don’t forget to include the time you spend preparing for a call or following up in your hours.

If you would like help working through this process then check out my Pricing for Confidence program.