09 Jun How Do I Price My Services or Products?
By Phoebe Dray CPA
Do you ever scratch your head and wonder “How on earth do I price my services or products?
It is a question that I am asked a lot when working with clients, and the answer is often not a simple one.
Pricing can be a particularly challenging part of business. Often lots of uncertainty is linked to how to price one’s services or products and can be impacted by a business owner’s confidence. Fears and worry about what the client or customer will think, and whether the proposal will be accepted or rejected based purely on price alone. Which is often not the case.
To be perfectly honest, I too struggle with how to price my services. I have moments of doubt, is this too high, too low.
I worry over questions like:
- What will my prospect think?
- Will they purchase from me?
- If they perceive my services as too cheap, will they believe I am not good at what I do?
- Or what if they believe I am too expensive and not worth the investment in my services?
Have you ever had these same questions & fears come up when you are setting the prices for your products or services?
How to Price on Value not Time
A great strategy to help you evaluate your prices is to determine the value you are providing your customers, by doing a “Value Proposition” exercise.
This is a great activity where you review:
- how you add value to your customers,
- how you help them to save or make money, and
- the transformation that you provide.
Value Proposition Exercise
For example, if you provide a service of setting up a professional online client portal for business coaches that creates a more professional client experience, creates efficiencies in their business, and streamlines their processes so they can serve their clients at a higher level.
To price your services on a Value basis rather than time, you can complete the following Value Proposition activity to help you determine your prices.
- Calculate how long it would take the client to set up the system themselves, multiply the time by their hourly rate.
- Evaluate the time savings & efficiencies your service will create in your client’s business, multiply the time saved by their hourly rate.
- Estimate a value based on how many clients they could potentially win because of their professionalism and improved service due to their new online system.
Once you have written all of this down, look at the value your service has now added to this client.
Do you still think your prices are correct or do you need to increase them?
Another quick way to determine if you have set your prices too high is when you receive three ‘Nos” to your proposals purely based on price alone.
Pricing can often be a form of artwork; I love working through this process with my clients and showing them exactly how much value they bring to their clients and the marketplace. Helping them to set their prices at their true value so they can be, do and have more.
Do you need help with how to price your services or products? For a free, no obligation strategy session where we can discuss how to price your services or products, or anything business, click the following button to book a time in my calendar. I look forward to meeting you.
Hi, I’m Phoebe. and I love business! As a sought-after qualified accountant, I come from a place of experience, with over 15 years of running my own accountancy firm, MGA Accountants, I scaled the business to double the size before successfully selling in 2015. Now I am focusing on what I love, helping Professional and Trade service business owners step up from being the Technician to the true CEO of their business, to create more profit and time freedom to live the life of their dreams.