Do you charge what you are worth?
It is always the right time to review your pricing.
Table of contents:
· Strategy then structure
· A race to the bottom
· Know your worth
You want to make money, but you also want to make sales.
So how do you work out how much to charge?
You must charge what you are worth. This way, you ensure that you feel valued and consistently perform at your best.
Strategy then structure
What is your strategy?
- How much revenue do you need? Your prices have to cover more than the costs of what you sell. Make sure you have an understanding of ALL your costs.
- What is the market value for what you offer? Where do you sit on the scale of a bargain to upscale? Or are you middle-of-the-road and competing on quality rather than price?
- What are your competitors offering? What increased value are you offering if you offer the same thing but charge more?
What is your structure?
- Flat rate — One price and done or hourly rate and done.
- Tiered pricing — One product/service has different pricing levels.
- Pay per use — Think about water usage or electricity.
- Razor blade — You sell a core product, ‘the razor,’ then ongoing blade sales to the customer.
A race to the bottom
Many people in business get caught in a race to the bottom.
What I mean by this is trying to be the cheapest is not a plan for a business unless you are a $2 shop running on volume.
Trying to be the cheapest to win customers will mean that the customers you do win are the ones who always look for a cheaper price. If you do ever increase your prices, they will look elsewhere. Or they will always be on the lookout for the most inexpensive.
Do you want customers who are like this?
You cannot upgrade your equipment, pay yourself, and afford employees without correct pricing.
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Know your worth
Know your worth and price, analyse and adjust accordingly. Your business will be far more sustainable, and you will be able to grow and be profitable.
There is little point in your pricing being so cheap that it is unsustainable.
Are you selling a product that you make a flat rate of $10 profit from?
- How much time and effort goes into that $10?
- How many do you have to sell to earn enough return?
Would it be better to have a range that returns various profit levels?
If you are charging for your time, how much is that worth? If it takes 3 hours to make a product that you only sell for $75 and you have $30 in materials, your hourly rate seems very low! Is this sustainable when as a business so have many more costs to consider?
So, do you charge enough to have a sustainable growing business or are you going backwards just trying to stay afloat?
Take the time to review your strategy today, and let me know in the comments.
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Thank you in advance for the claps and comments; I appreciate every one of them.
Kelly
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