21/08/2023
Your income goals are not your clients’ responsibility.
Raising your prices, therefore, is not the simple answer to reaching higher income goals.
Before you get upset, I'm not saying you don't deserve to make money.
What I'm saying is that increasing your prices should never be based on simply the objective of wanting to make more money.
Pricing is complicated... especially ethical pricing.
But, in my opinion, it should be based around some kind of weird brain algorithm including these factors:
- cost of doing business
- going market rates
- your ideal customer
- your comfort level
What do I mean when I say your comfort level should impact your pricing?
I mean, you have to be comfortable and confident asking people to pay whatever number you're asking for.
Some of this is a ~mindset issue~ and some of it is your gut/instinct telling you ethically and morally what is a reasonable amount to charge.
Don't raise your prices because a coach tells you that you should and pushes you to practice asking for more money than you KNOW in your gut is a reasonable and ethical ask.
How does your ideal customer factor into your pricing?
Folks, I'll be real, sometimes I love working with massive established businesses, influencers, or even celebrities who want to launch podcasts. It can be fun and exciting.
But my favorite thing? Every day people who want to build their own platform and use their voices to help people, shake up their industries, raise awareness about something that's important to them, and establish their expertise.
(That may not be your ideal client, and that's okay. I'm just sharing mine. You might relate.)
Every day people have a different budget than celebrities. Point blank.
This is tricky. It takes more expertise and more man-hours to support people who are new or less established. So basic math tells us that should cost MORE.
But core values built around genuinely wanting to support other people means NOT charging a rate that my ideal customer literally can't afford.
No, pushing them financially does not make them more likely to get results. It makes them feel icky, less trusting, have bigger (unrealistic?) expectations, and it literally causes a financial burden.
If your offer can't be reasonably priced for your ideal client, or prices you out of working with the people you most want to work with, then you don't have a "sales problem" or a "mindset problem."
You have an offer problem.
You need to tweak your offer.
What would it take to tweak your offer to make it affordable for your ideal client?
THAT is service.
How to figure out market rates for your industry:
- You can search platforms like Glassdoor, Fiverr, and Upwork
- You can check out your most equivalent "competitors" in your industry
- Make sure to consider what is ACTUALLY included in the offer to determine true comparison
Should you charge less than everyone else in order to be more competitive?
No. You de-value the service or product when you shift the going market rate by undercharging. And, you might be shocked to know that people don't always buy the "cheapest" option.
Think about it: do you 100% of the time buy the least expensive option at the store? Sometimes the name brand has better value, or a value pack costs less per item or includes more items, or you have brand loyalty.
Or, there's a core values match.
If you figure out that you're charging significantly more than the going market rate, should you change your pricing?
1. What does your gut tell you?
2. What is the experience level difference?
3. What are the differences in your actual services or product?
4. Assess the other pricing factors I mentioned above...
5. Again, check your gut. Your gut will tell you a lot.
This is why it's so important to listen less to coaches and more to what you already know.
How to assess your pricing based on cost of doing business:
- What are the actual costs associated per client or sale (hardware, software, wholesale costs, etc)
- What do you have to pay your team members per client or sale
- How much time goes into each client or sale
What is your expertise level and how long/what costs went into establishing that expertise?
So yes, if you have been doing this for 15 years and have certifications or degrees, you might charge more than someone brand new on day one in the same industry.
Follow your instincts
The median salary for women in America in 2021 was literally just over $50,000 (and of course, considerably less for women of color than for white women).
If you're charging more than, say, $10,000 for your services and your ideal client is the average American woman, consider that that is literally 20% of the total money they make in a year.
That client has to pay for housing (in a literal housing crisis) and utilities, eat (and feed their family), and pay for transportation and communication expenses... at minimum.
I know you also have those expenses and you would like to make more than that median number, too. That way, you can afford not just the minimum to live safely and healthily, but also have recreation and comfort.
But take a moment to consider if you're trying to "serve" clients by literally depriving them of financial security in order for you to have more recreation and comfort. (Or, do you know anyone who wants to deprive YOU of financial security to fund THEIR recreation and comfort?)
Many people then decide they'd rather serve the influencers and business owners making way higher salaries in order to justify higher prices on their offers. And that is definitely one option.
It's one way to acknowledge what your gut is telling you when you know you want to raise your prices.
But where does that leave the everyday people? The people just getting started? The people who need help the most? And sometimes, the people we most like serving... at least, they're some of my favorite people to serve.
In that case, it all goes back to tweaking and diversifying your offer(s).
(If you're wondering how this has shown up for me, I'll transparently share that I have made decisions to a) lower my prices at a certain point in my business, b) subsidize offers for projects I really want to work on with clients from underrepresented demographics in my industry, c) created custom packaging, deposits, and payment plans to make my pricing as accessible as possible... with no additional cost for opting for a payment plan, and d) created an alternative offer at an incredibly reduced price point in order to support more people who do not have the budget to work with my team on podcast production, but still want access to our community and strategic consultation.)
So, if you:
- feel judgmental over your prospects' spending on things other than your offer
- are trying to tell yourself (and your prospects) that spending more than they want to is actually in service to them
- have to help your clients afford your services by making suggestions like "take on another side hustle" or "sell your car"
- genuinely care about serving everyday people but want to charge more than 10% of their annual freaking income in one year...
It's a good time to reassess.
Takeaways:
Yes, you need to be profitable.
Yes, it's reasonably ethical to set revenue and income goals higher than what you've made in the past.
Yes, there are circumstances where raising your prices is not inherently problematic.
If your gut is telling you that your pricing may not align with your ideal customer, or with your personal core values... then listen to your gut.
So much ~mindset coaching~ is teaching you not to trust your own intuition.
Listen less to that, so you can listen more to your instincts.
