How to Price Your Offers
How to Price Your Services in Your Business
A roadmap to pricing your offers so you can impact deeply and hit your financial goals
"Price is what you pay. Value is what you get." — Warren Buffett
If you’ve ever asked yourself “how to price my services” or have been looking for a service price calculator and want some pricing of services examples, then this blog post is for you.
We’ll dive deep into how do you determine the offer price, how do you come up with pricing for services, and even show you a service price calculator that you can use.
Many service providers find themselves stuck in the cycle of getting confused about how to price their services and often charge less than they should. Many service providers such as coaches or expert businesses also do hourly rates, or discounted bundles if a client purchases more than one or two session, however this pricing strategy leads to burnout and potentially dissatisfied clients.
Imagine a world where your pricing boosts your profits, and you are charging what you are worth. Let’s dive into how you can transform your pricing strategy to achieve just that.
Common Mistakes in Pricing Services
There are too many businesses that haven’t priced well, we don’t want that. Because if you price to low, you will burnout for your services. Avoid these pitfalls:
Time-Based Pricing
Charging by the hour or based on time might seem straightforward, but these methods can leave you feeling drained and your clients questioning the value.
Charging by the hour, limits your ability to scale because you or your team are constantly tied to time. Your client is also basing the results you deliver on time, instead of the value you are delivering.
Even doing a bundled packaged on time doesn’t really help you, because now your services are valued less.
Some service providers do a standard bill-out rate and charge a markup. This again is a one sided win - you as the service provider are making money, however, your client is putting your value to the time you work. They will want more results faster.
Instead, focus on the value and results rather than the time spent. Use value-based pricing to reflect the true worth of your services.
Pricing Too Low
Even if you’ve switched from hourly pricing to value based pricing, you might be setting your prices too low.
This isn’t good for two reasons: it can undermine your perceived value and it won’t help you reach your financial goals with ease.
Higher prices often correlate with higher perceived quality.
Improper Market Positioning:
If you’re charging premium prices and have premium offers, you are needing to show up premium.
It’s important that your offers and your results also reflect how you are showing yourself out in the world.
Position yourself correctly within your market to attract the right clients. And make sure your brand reflects the premium nature of your services.
Underestimating Perceived Value:
Sometimes when we are really great at something, we tend to underestimate the impact that it has on our clients.
This typically has to do with your money mindset or belief system. When we underestimate the perceived value, we are not able to truly step into our power and our price.
Take some time to understand how clients perceive the value of your services. Make it part of your process to regularly gather feedback and adjust your messaging to align with client expectations.
Shifting Your Money Mindset about Pricing Your Services
The first part of making a shift in your pricing is to do some work with your money mindset and your belief system around pricing in general.
If you’ve been charging by the hour or session, and now you’re thinking about moving towards a new model, what comes up for you?
Do you believe it’s going to be hard? Do you believe people won’t pay you?
Assess what’s coming up, because those are your beliefs right now. You’ll want to make a shift in these beliefs if you want to make a shift in your income.
Now, one of the biggest limiting beliefs that comes up when you shift your pricing strategy and your pricing model is ….
They Just Can’t Afford It.
Let’s dispel this limiting belief.
Is there someone out there offering a similar service at a price point that is higher and not by the hour? The answer… YES.
Clients can afford your services; and if you have heard those 4 little words “ I can’t afford it…”
Then you might not be attracting the right clients, or your positioning, branding, and messaging might not be showcasing the value you bring to the market.
Learn how to lean into being able to hold that price with confidence. Otherwise you won’t show up as your highest self during your sales presentations and calls. And without confidence in your price during these important meetings, clients will see and feel the lack of confidence.
This is where the work comes in when we think about money mindset. Some questions you can ask yourself could be .. Do I believe I’m worth it? What would happen to me if someone says no? How do I deal with rejection?
Make sure you spend time and energy focusing on your money mindset. We can support you in your money mindset.
Improving Your Marketing will help you Increase Your Prices
As an accountant by trade it took me years to understand the power of good messaging. When you can uncover the value that you are bring your clients, everything will change in how you provide services to them and how they see your services.
Some basics that you’ll want to make sure that you’ve mastered is the ability to clearly articulate the unique benefits and transformations your services offer. You’ll want to show this on all of your landing pages on your website, throughout your marketing materials, and even as you are presenting yourself.
You will also want to use testimonials and case studies to demonstrate past successes and value. This will help your audience understand that you’ve been providing value for quite some time. When someone can see results in someone like themselves, they will be more likely to trust you.
And of course, you’ll want to make sure your messaging resonates with your audience’s pain points and desires. This is a fundamental of marketing success. Take time to analyze your target market. Research your ideal clients’ willingness to pay. Conduct surveys or interviews to gather insights on pricing expectations.
Positioning and Personal Branding will help you Increase Your Prices
I’m going to go with the Elon Musk example. He’s built a much bigger brand than Tesla, and when we think of Elon, we think of Tesla. The point is, people buy people. Even if you’ve got a team underneath you, it’s important to focus on building your personal brand and positioning yourself correctly. Develop a strong brand identity that communicates your expertise and reliability. Position yourself as the expert in your field.
If you’re charging premium prices and have premium offers, you are needing to show up premium. It’s important that your offers and your results also reflect how you are showing yourself out in the world.
Increasing Your Rates and Prices - Let's take some action
Leveraging Value-Based Pricing to Elevate Your Service Pricing
Imagine a bottle of water priced at $10 in an airport versus $0.35 in Portugal. While the product is the same, the price reflects different factors such as convenience and scarcity. This example highlights how value perception impacts pricing.
Price is just one factor in a customer’s buying decision. To truly showcase the worth of your services, it’s essential to delve into your customer’s needs and demonstrate the full value you provide.
Without this understanding, you might find yourself frequently justifying your prices, which can hinder your long-term success.
What is Value-Based Pricing?
Value-based pricing focuses on the benefits and transformations your service offers, rather than just the cost of time and materials. This approach helps clients see the true worth of their investment and appreciate its long-term value. Here’s how to implement value-based pricing effectively:
1. Understand Your Clients Deeply
Identify What They Value Most: Gain insight into what your clients prioritize. This understanding will help you tailor your messaging and align your offerings with their needs.
Communicate Effectively: When you understand your clients' values, you can articulate how your services meet their needs, leading to quicker recognition of value and justifying higher prices.
2. Highlight the Long-Term Benefits
Emphasize Outcomes: Focus on the long-term gains clients will experience from your services. Use data, case studies, and testimonials to support your claims and illustrate the tangible benefits.
Showcase ROI: Detail how your services save time, reduce stress, and enhance profitability. Provide clear examples of the specific problems you solve and the positive changes clients will see.
3. Identify and Communicate Your Unique Value
Pinpoint Client Benefits: Clarify the specific advantages clients gain from your services.
Differentiate Yourself: Compare your offerings with competitors to highlight what makes you stand out.
Detail the Transformation: Describe the outcomes clients can expect and the improvements they’ll experience.
By focusing on the unique value you provide and how it aligns with your clients' needs, you can effectively use value-based pricing to enhance your pricing strategy and build stronger client relationships.
How to Increase your Rates and Prices with Existing Clients
Increasing your rates with existing clients can be a challenging decision, but it’s essential for growing your business sustainably. You essentially have two options:
Raise Rates for New Clients Only
You can choose to implement your new pricing structure solely for new clients. This approach allows you to transition gradually while maintaining your current client base at their existing rates.
Implement Rate Increases for Existing Clients
If you decide to raise rates for existing clients as well, it's crucial to plan how and when you’ll make the change. Be prepared for the possibility of losing some clients, but remember, this is part of the growth process.
Communicate the value and benefits of your services to justify the increase. Ensure your clients understand that this adjustment is a reflection of the enhanced value and results they receive.
Addressing Price-Sensitive Buyers
Even with value based pricing, you will have different types of buyers. These buyers are considered purchasing archetypes.
There will always be price sensitive buyers. And most of the time Price-sensitive buyers are often concerned about value. Show them how your services save them money and hassle in the long run.
The simplest strategy to satisfy a price sensitive buyer is to give them a vivid picture of the benefits this investment will get them in the long run. We all want to know we’re going to get a good ROI.
You want to show and communicate your value well to the price sensitive buyer. Highlight the quality and long lasting impact of your services, and how investing in your offerings is a smart decision.
Another tactic to help move price sensitive buyers along the journey with you is your positioning and the quality of your services. Integrating sales funnels into your sales process can also support price sensitive buyers to seeing and valuing your services. Emphasize the superior quality of what you have to offer, and make sure your offer is aligned with that quality. You can also use comparisons to show how higher upfront costs lead to better outcomes and fewer issues.
Pricing to Profit
When you price to value, you should be already pricing way above the costs. But one important area that is often overlooked or underestimated is the actual cost of your services, especially if you have a team in place.
So now we are at the moment when we’ve got to do some math.
Offer Price - Offer Cost = Pricing to Profit
You’ll want to be able to know for each service offering both the labor costs and any service costs. Make sure that you do a time analysis on each of your offers to see the real costs of your offers. If you need any help with this, book a call and we can help you do it.
The Bottom Line
Pricing your services correctly is essential for long-term success. By focusing on the value you provide and positioning yourself strategically, you can attract the right clients and ensure your business is both profitable and sustainable. In our Profit Guide, we walk you through a profit checklist that helps you get more clear on your pricing.
