How to Price Your Products and Programs to Increase Your Income
Clients often ask me how they should be pricing their
knowledge or expertise-based products, programs and services. Most are
undercharging and losing a lot of income as a result. My new clients often tell
me that they wanted clients so much that they charged the least amount possible
for fear that their client wouldn’t pay more. This approach has left them with
not enough income and clients who don’t really value their services.
When you’re pricing your services you need to pay attention to 3 things--
Understanding and Communicating the Value of Your Results
Make a list of the results your client will get when they use your product or service and be very specific. Is it a measurable result, like more time, more income, less weight? Or is it a life enrichment benefit, like more free time, more happiness or better relationships? Now give those results a lifetime value.
If you can help a client make more money year after year, that’s worth paying you a substantial fee, isn’t it? If they feel lousy most of the time and you help them restore their energy and health isn’t that worth a very good price? By undervaluing your services and undercharging you demonstrate that you don’t really believe you’re worth more. You end up attracting clients who hope to get a lot for a little and who will often not follow through because they haven’t invested much.
People buy based on PERCEIVED value. So it’s important that you pinpoint every single benefit, result and deliverable that your client can expect to receive when they buy, so that they perceive that they are getting even more than they’re paying. This is where how you communicate your offer and the marketing language you use becomes crucial.
Also look at what your very top competitors are charging as this will give you a price range. Then push yourself a bit outside your comfort zone to match those prices if you are delivering equal value.
Understanding the Buyer’s Set Point
People have buying patterns and set points, in fact we all do. One person may only be willing to buy a product under $50, but will do so again and again. At the end of the year that person may have purchased 20 of these $50 or under products and have spent $1000 without realizing it. Each of these products provided them with a little bit of the help they needed, while another person would rather delve deeply into mastering a solution that will help them get results quickly and wouldn’t think twice about investing the entire $1000 at once.
You may want to only work with people who see the value of investing in a higher-priced, higher-results, comprehensive solution, or you may provide products at different price points to start building a relationship with the lower price point buyers by offering them a solution that involves less of your time, with the hope that they will keep buying from you. People usually have to have a real “aha” moment or be frustrated enough that they are ready for real change before they change their buying set point.
Assessing Your Pricing Mindset
Are you scared silly at the thought of raising your prices? If you are, ask yourself why. Just for fun take the amount of sales you generated in the last six months and multiply that amount by 150%. That is equivalent to raising your fees by 50%. Now divide the answer by 6 to give you a monthly sales figure. Look at that figure compared to what you really made and you’ll see an example of how much money you may be leaving on the table. So if you had 20 clients each paying $400 a month and you now had 20 clients each paying $600 a month, you would be making $4000 more per month. That’s a simplistic example but it’s also eye-opening.
You will start to find that more dedicated, high level clients come your way when you improve your marketing language to get clear about your results and when you charge what you’re really worth. If this scares you, ask yourself why.
· Do you fear that less people will buy?
· Are you afraid that making more money will mean more time working? This is a myth I hear often and the truth is actually the opposite.
· Do you give away too much for free and feel guilty when you charge?
· Are you worried that clients won’t think you’re giving them enough for what they pay you? Ask the clients who have worked with you. Were they happy with the results? I bet the answer is yes.
Whatever is holding you back mentally from adjusting your prices so you can create a robust business and a great income is something you need to face and work on overcoming.