Price is What You Pay, Value is What You Get
“Price is what you pay. Value is what you get.” - Warren Buffet
In this blog we’re focusing on Pricing.
Over the past week one common theme within the members chat and 1:1s has been Pricing.
Are we charging too much?
Why has my client gone for a cheaper price elsewhere?
What should I be charging for my services?
It’s a very difficult subject and not one that fits all. Everyone approaches their Pricing Strategy differently but here is my take on the subject.
Firstly, it is important to start with your costs. Once you had a firm idea of how much your business needs to run + how much you would like to earn (Don’t forget this important step) you can start to price not only for your product but for your time.
So it might be that it costs you £1000/month and you want to earn £3000/month giving you a target of £4000/month.
Now if you work on your own you might want to look at working 40 hours a week as an average - so 160 hours per month as a rough guide. If you then break your target down it equates to £25/hour - now if you are changing less than this then you are going to struggle to fully achieve what you want.
The next step, once you have this hourly rate, is to look at how much time each operation or product takes. So if you make videos for example and you will be working for, lets say 4 hours with the client and 8 hours editing, you need to allow for at least £300. I would then at least double this as you cannot be busy all the time - so a half day shooting with editing should be £600 minimum.
Now the most important part next is where your price fits in with your competition.
If you were to charge £600 for your service but your competition is charging £1200 for example, then you might be seen as being too cheap and not giving a quality service or product. This will have the opposite effect on your business and you will find it hard to win work.
Buyers (most anyway!!) are looking for quality and something that will be fit for purpose and to a very high standard. This goes for products as well as services. So my advice would be to check out what your competitors are charging and then (depending on what you need to earn) I would be looking at pitching it near the top and focusing your business on the quality and value you offer.
Always think of it this way... If someone offered me a Ferrari for less than the cost of an Audi would I buy it? Of course not!
The real important point is that if you position you and your business as the ‘Ferrari’ of your industry then you can charge more and you’ll not be scrambling around as a busy fool.
If the usual objection on price comes in, don’t be afraid to stick to your guns and show the customer the value of what you are offering. My tip would be to spend a lot of time at the front end doing this so that when Price is brought up, the buyer will always think it’s a bargain.
Perceived value is really important here... You will need to lead your customer as to the benefits your product or service offers and why they cannot do without it.
Also, as part of this, work on the experience for the buyer - Why do we spend £4 for a coffee at Costa when we can probably get one for £1 from McDonalds? Is it the taste - No! It’s often for the experience, the status of the brand and how buying it makes us feel.
Every time we buy something we do it for two reasons:
1. Because we need it
2. Because we want it (and it makes us feel good)
So when looking at your product or service, find that edge that makes it stand out and make the buyer say - I want this (instead of I need this) and as a result you can charge more (Be more Costa!!)
When bidding for work the important thing is:
● To know your worth
● Offer a high quality product or service
● Never race to the bottom (or discount!)
● Fill your day with profitable and high value work
● Work with those who see the value in what you do
I hope this has been of interest to you and if you need any help with your Pricing Strategy, please do reach out to me.
