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5 ways to price your product

Pricing is an absolutely tricky sticking point for so many freelancers and entrepreneurs.

So how do we price our services and products? I’ve come up with the top 5 ways I see people put pricing into action, including my thoughts on the pros and the cons of each.

1 – Look at your competitors.

So, you have your product and you have to put a price on it. If you’re worth your business sense you will already have had a good look around at what other people in a similar field are asking for.

You judge yourself against them based on your skills, the amount of time you’ve spent doing what you’re doing and how great you feel up against your competition.

And then generally you settle nicely for somewhere in the middle, not too high, but then again not too low. The ‘just right’ approach.

This approach certainly has its merits. Looking around at what people are paying and what people are charging gives you a sense of what’s impossible. Or what has been done so far.

But it puts you on the back foot (unless you think you are absolutely fabulous and can charge whatever you damn well please, thank you very much). You start judging yourself on the appearance of others.

You don’t really know what qualifications they have to be where they are, you don’t actually know how much money they make a year and it’s not always easy to work out just how successful people actually are, or the journey it took them to be where they are. Instagram and social media is not the best measurement of this!

2 -  What’s my hourly salary

The next approach is generally doing a calculation based on what you’d like your hourly salary to be. So you price your product on the hours it takes you to do what you do.

This approach is fine. But that’s it, just fine.

If you go down this route, make sure you also add in the time spent emailing, marketing your business on social media, purchasing – basically all the extras you do to keep your business afloat.

3 – The yearly income

This is really an alternative of 2. So rather than working out what you want to earn an hour, you look at the bigger picture of how much money you want to make in a year.

From here you can work backwards. So I want to earn x amount a year, divided by how many weeks a year you want to work, divided by how many hours you want to work in a week. Then you price your products accordingly and work out how my customers or clients you need to make that yearly salary.

Also a fine approach, advocated by lots of business coaches around the globe.

4 – How many clients, products can I make?

So instead of looking at how much money you want to make yearly or hourly, you look at how many people you can actually serve without killing yourself. And you price accordingly so that you make enough to pay the rent.

There’s nothing wrong with the first 4 approaches, but they can get you a little stuck. If you’re looking at your service hourly, you can feel a little crazy upping your prices. It leads your brain to the thoughts – am I really worth this much? Can I really charge this, who am I to ask for this? And then you go back to playing it safe.

5 – What is it worth?

Now this is the sweet spot. But it’s a lot trickier to answer, so most people go back to one of the top 4 options.

But stop and think here. What is your product worth to your clients and customers? What service are you fulfilling? How are you changing their lives for the better? What are you bringing to their table?

Now I want to give a rather sticky example here. I have been deaf for the past 2 weeks. A rather sexy build-up of wax in my ears meant that I was living in a quiet bubble. Now I went to the NHS and dutifully waited for my appointment to get my ears cleaned (which still hasn’t arrived!). So yesterday I went to see a private ear doctor who did the job in 5 minutes and charged me £80.

£80 for 5 minutes work! Now had that Doctor gone down one of the other routes I’m sure he wouldn’t have come to the £80 for 5 minutes solution. But what price can you put on hearing? What value was his service to me? I can hear and I happily paid £80.

So before we all drop our pens and run off to become ear doctors, consider the value that you add to your customers and clients?

Do you really want to limit yourself to payment by the hour, or sit happily in the middle of your competition and be the baby bear? (think porridge!)

Or do you want to value your worth and what you bring to the table and price yourself and your products accordingly?

I know where I’m going to be!

Looking for more business advice? How about:

The 5 steps to making sales

Believe in Yourself