My mom was on track to be a social worker after college, but the city froze hiring right after graduation. She had to figure out a way to support herself FAST while looking for another job. So she decided to follow in her mom’s footsteps and teach piano lessons.
When it came time to set her prices, my mom felt like she should charge less than the average. After all, even though she was an excellent pianist and great with kids, she was “just” a recent college grad who hadn’t had much teaching experience.
My grandma stopped her and said- “No, no, honey. You charge top of the market. You’re a GREAT teacher, you’re great with kids, and you’re gonna get a lot farther teaching them how to play Elton John than some stuffy old fogey who makes kids play nothing but Beethoven. When people see your top-of-the-line prices, they’ll know- they’ll assume- you’re a top-of-the-line teacher. You’ll have more respect, more motivated students, AND more $ in your pocket.”
So my mom set her prices at the top of the market (doubting anyone would sign up) then went door to door letting families know she was a private piano teacher who would come to their homes to teach. Soon she had a full schedule of engaged students paying top dollar. A whopping $6 per half hr lesson. She’s still in touch with many of those students to this day.
I know it’s tempting to charge less because you feel like you won’t be letting people down if they’re disappointed. (Imposter syndrome, anyone??) But remember: your prices aren’t only about charging your worth. Your prices act as a filter for the kinds of people you want to work with. If someone is willing to invest in your product or service at top dollar, they’re going to be much more engaged and MORE WILLING TO TRUST YOU & your expertise.
More often than not, we started our businesses because we wanted to HELP people. And sometimes, asking for money can feel like we’re withholding that help, sometimes from people who might need it most. (Is this sounding familiar?).
We’ve all heard and read so much about Imposter Syndrome, and yet when it comes time to actually set (and stick to!) our prices, we go all wobbly and we overexplain – or worse, apologize! – when we quote our rates.
SO, in the spirit of acknowledging that setting prices is really effing hard, here are a few actionable tips you can use (or not- whatever, you do you, boo) to first, determine a price that rides that line of high enough to make you feel uncomfortable asking for it but is still absolutely fair for the service or product you’re selling, and second- and this is the thing that gets overlooked WAY too often! – acknowledging that your price is PART of your brand voice. How you speak about your prices, the language you use, the signals you put out (conscious or unconscious) are part of your branding and business strategy.
How to set your prices
OK, this is gonna sound obvious, but it’s truly the best way to figure out how much you should be charging for your product or service…
Step 1: Make a list of 5 competitors who have the same ideal customer base as you. List out their offers, how they’re charging (by the hour or by project), and what they’re charging (the actual number after the dollar sign).
Step 2: Determine the average cost for comparable services (services that are either exactly the same or very similar) by finding the average of your competitors’ rates.
Step 3: List out your offers (and your current prices, if you have any), and how you’re charging (by the hour, by the project, etc).
Step 4: See where your rates fall with regards to the average you calculated in Step 2. Are you undercharging, are you floating somewhere in the middle, or are you at the top of the market?
If you JUST launched your business (and I mean truly, like you’ve never had a client before) start out by charging the industry average or just below. BUT!!!!! Let clients know FROM THE BEGINNING that they’re getting a special, discounted introductory rate and that you’ll be raising your prices after X amount of weeks.
If you’ve been in business for 3-6 months and have some experience under your belt but are still learning and testing, charge whatever the amount is that falls right between average and top-of-the-market (like if the average is $50/hour and top of market is $100/hour, you should be charging $75/hour).
If you’ve been in business 6+ months OR know you have expert-level knowledge: CHARGE TOP OF THE MARKET.
Because it’s about more than just the monetary amount…
Your prices ARE part of your branding & brand voice
The way you talk about your pricing MATTERS. It signals to potential clients and customers not only the value they’re getting, but whether or not they should feel good about their investment. If you’re apologetic or unsure when someone asks you for your prices, they feel like you have something to apologize FOR (even if you don’t!) and won’t trust you with their money.
Your pricing should also be CRYSTAL CLEAR to avoid any confusion. Those of us who struggle with imposter syndrome have a hard time being super clear about our rates and often talk/write ourselves in circles. We overexplain why our stuff costs what it does and we offer a bunch of different “packages” and “pricing plans” because we don’t want anyone to be alienated because of money. BUT!!!! This has the OPPOSITE effect of what we hope to achieve. Confusing pricing makes customers feel like they’re getting charged for every little add-on rather than getting a deal on “a la carte” products or services. If people don’t immediately understand what their money is getting them, they’re not gonna spend it.
Discounts should be rare & exciting! If you discount your stuff too often, people will just wait to buy until the next time your stuff goes on sale, and even then, they might de-value you because your stuff is always on sale. Beware of the side effect of imposter syndrome that makes you feel like you have to discount all the time!!
Once you set your price: OWN IT. Put it in writing. Put it on your services page. Post it on your FAQ page. Create a pricing chart that you can send out as an easy attachment in emails. Make it easy on yourself to share your rates quickly, clearly, and with confidence. Because…
Your prices are a filter for the types of clients you want to work with! When people are paying top of the market prices, they already trust your opinion and expertise. If a potential customer tries to nickel and dime you, trying to get discounts for this or that, wanting a bunch of extras or insisting on a bunch of free introductory calls…IT’S NOT WORTH YOUR TIME. Your rates are as much about respect as they are about money. Don’t forget that.