Today I want to talk about how to avoid 4 pricing mistakes.
When I started my second business as a coach in 2010, I transitioned from the mid-six-figure healthcare technology PR business I’d started in 1997. I wanted to work directly with people instead of representing a product.
When it came to pricing my coaching services, I did what all the other coaches were doing – I priced my services by the hour.
I followed the herd mentality and did what everyone else was doing. This is one of the biggest mistakes you can make.
Before you think about pricing your services, the first thing I want you to do is this:
#1: Decide what you want to earn monthly.
If you need to calculate a starting place, decide how much you need and want to make each month so that you can pay your necessary home and business expenses.
Mistake #1 – don’t price your services by the hour.
If you’re in the business of working with clients (coach, healer, health coach, copywriter or in any business where you’re selling a service, you want to read this article.
Most women cringe when it’s time to price their services because they’re not clear about the value they’re providing in exchange for their services.
Most of us were never taught about how to manage our personal finances nor were we taught how to sell our services.
Pricing brings up self-worth issues.
Never say this phrase: “I’m going to charge what I’m worth.
You’re worth and the value of your services is not the same thing. Know that you are priceless.
When you’re a new business owner, you aren’t quite sure of the value of your services. This is why you want to practice and never stop coaching or teaching or doing what you do.
Staying in action and getting experience gives you confidence.
Mistake #2: Don’t charge what everyone else is charging
When I finished life coach training, I did what the herd of coaches were doing – they were charging by the hour and my colleagues were charging $125 an hour or $150.
I did the same thing – big mistake. I never considered my own experience and the value of my services.
Mistake #3: Do not use these words when you talk about your pricing.
Don’t say “discount” – use the word “savings” instead.
Don’t say “price” or “cost” – use the word “investment.”
I recommend that you read this book – Words That Sell or search this topic on Google and download the pdf.
Mistake #4 – Charging premium rates when you’re starting out.
Now this is individual and it depends on your experience.
If you’re brand new to business and you don’t have any clients or experience doing what you’re doing, you must start out with tiny packages – say a 4-pack of sessions.
Once you make sales and have clients – don’t stop the momentum. Always keep momentum going so that you maintain the confidence and continue to take action.
You can offer a 30-minute Breakthrough or Clarity Session that targets their challenge – it might be the first step they need to take in working with you. Then at the end of that session you can offer them a small package of 4 to 6 sessions to help them solve that challenge or struggle.
If you’re new to business, start small so that as you make sales and help people, you’re building confidence and getting testimonials (social proof) for your work.
Bonus Mistake #5 – Don’t discount your services
Undercharging and “discounting” your services is something many people do when they start in business. Watch for places where you’re giving away your services for free or undercharging.
How to price your services:
- Hourly vs Value-Priced – I recommend to all my clients that they price their services as a package. Add value to the package of sessions. Let’s say that you’re already selling your services but you aren’t making what you want because you’re charging by the hour.
I have my clients calculate their package pricing based on what they might like to make by the hour – even though they aren’t charging hourly.
Let’s say you’d like to charge $125 per session if you’re a service provider.
If you’re selling a three-month package and you offer 3 sessions per month, it might look like this:
Package Pricing Tips
$125 x 3 sessions = $375
3 months x 3 sessions a month = 9 sessions in your package
Your package price is $1125
You can offer a monthly payment plan of $375 per month.
The total investment of the package would be $1,125.
I like to offer a pay in full option where the customer can save 10% if they pay in full. So for this package you could offer a savings of $112, which would be a pay-in-full investment of $1015 (round it up).
Now if you follow this method and if feels too low, then you can bump up the overall price 10 to 15%. You want it to feel edgy – not too comfortable but not too far out of line for your experience.
To make your package of services valuable, you can offer an additional 15 minutes to your first 60 minute session. This can be a planning session where you and the client decide on a roadmap of where they want to go with you.
Focus on the outcome – the transformation they want and need because that’s what they’re investing in not the “how” you’ll do it.
Most coaches and service providers are undercharging.
Remember even though you’re working with a client for an hour, you have prep time to factor in.
When you’re new to business, I want to make sure that you understand that you have to start out with small packages / offerings so that you get used to selling yourself and your services.
You get to decide what you’re comfortable charging. When you feel confident getting clients at a certain price point and you feel like you are beginning to have demand for your services, then you can edge up your prices 10 to 20%.
Price your services with confidence and clarity so that don’t compete on price if you can avoid it.
Compete on service, or other factors that set you apart.
Perceived value to the customer.
This is where a lot of the subjectivity comes in when setting a price for a service.
To your customer, the important factor in determining how much they’re willing to pay for a service may not be how much time you spent providing the service, but ultimately what the perceived value of that service and your expertise is to them.
Biggest point of this post:
You’re selling the outcome (transformation) your clients want and need. This is the outcome they want to have as a result of working with you.
If you want to learn my 4-step system for how to find your ideal clients, check out Get More Clients. Make More Money here.