New and seasoned business owners, alike have wondered at one time or another, what to charge for their products/services. The dialogue probably went a little something like this, “If I charge more I’ll lose business. And, if I lose business, I won’t make any money and if I don’t make any money, I won’t be able to pay my bills, and if I’m not able to pay my bills, I’ll have to go get a job.”
Fear and lack of confidence keeps far too many business owners stuck when it comes to pricing and achieving their revenue and profit goals. The list below includes mistakes to avoid when setting your prices.
- Pick me, my price is lower – This pitfall can cause you to choose a price that is lower than your competition in an effort to get more business.
- What’s it worth – How much is an hour of your time worth? It’s important to know this because it will help determine which tasks you should delegate and outsource to others.
- Excluding expenses – It’s important to know, track and monitor your business expenses so that your prices are set accordingly.
- Getting caught in the story – Let’s be clear – everyone has a story. But letting someone’s story determine your prices makes it really hard to forecast your revenue, profit and cash flow.
- Letting one “no” represent the entire market – Not everyone will buy your products and services even if you think they should. Don’t let one person’s “no” determine the price you charge everyone else.
- Assuming versus asking – You could be charging less than your market is willing to pay. In other words, you could be losing money – lots of it. Do your research and ask them what they’re willing to pay but also get clear about the value of your products/services.
- Not charging – You may love what you do so much that you’d do it for free but that doesn’t mean that you have to work for free. If you’re in business to generate a profit, then charge for the products and services you provide.
Your thoughts must be in alignment with the results you desire otherwise, you’ll find yourself struggling to charge what you desire and deserve.
Let me help you take the guesswork out of your pricing, grab a copy of my Price for Profit template here and start charging with more clarity and confidence