“But, How Much Should I Charge for My Services??”
I see this question over and over in Facebook groups, in-person communications, in the Question box during webinars….you name it.
It seems everyone has the same question when it comes to pricing their products or services in the marketplace.
The problem is clear; you don’t want to be too cheap and imply that you’re not good. Conversely you don’t want to be top of market (or beyond) and drive away possible paying customers.
This time-tested question is most easily answered by these 2 words: “it depends.”
I know that’s probably not what you want to hear, but bear with me for a sec.
Are There Existing Models For Your Service?
What is your pricing model for your service “like?” Is it like Netflix (pay a small monthly fee for an overwhelming library of content), or Carmax (you set the price and don’t negotiate)? Does it resemble an airline, Uber, Twitter, or Candy Crush? Is it like the NFL or Mad Men?
Does 1 size fit all in your business or everything bespoke based on customer needs?
Let me tell you a story about the problem with a lack of an existing model.
I met with a client once that wanted to build a membership site using a credits system. Each month you paid actual human dollars and got an amount of credits. You could then spend the credits on different parts of the course; a video was a lot of credits, and audio recording was less credits, and then a PDF download or worksheet was even cheaper.
Then, at the end of the month you’d be hit with another payment of dollars in exchange for more credits. Want more credits? You can “fast track” the credits system with more money and get more credits.
As he was explaining this system to me, I thought, “man, that sounds complicated. You’re going to have a tough time convincing the marketplace to take you up on that because there isn’t an existing model they can reference.” In a Netflix world ($9/mo for a bazillion titles) and iTunes (about a buck per song) there isn’t an easy analog in your prospects’ mind and they will flee your sales pitch.
At one point I asked him, “have you ever experienced a course like this before?” After a momentary hesitation, he admitted that he had. Once. I pressed deeper, “How did you like it, as a customer?” He looked at the floor and said, “Actually I hated it.”
Punchline: the idea was shuttered in favor of a more straightforward model.
Please note I’m not condemning a certain model over the other; I’m merely suggesting that the more time it takes you to explain your pricing structure to the marketplace, the harder it will be to sell. If a prospect can quickly think, “Oh, I know exactly what to expect with this product because I have a reference point that I like,” you’re winning.
“Hack” Your Competition
What if I told you, “I’m going to open a gym and charge $4,000 a month! It will be the best gym in town!”
Pump the brakes, pal, what are other people charging per month? About $50 a person? OK, let’s re-think your pricing structure before launching.
If there is a lot of competition in the sandbox that you play in, what will set you apart from the rest? (read more about the Technique in my Process). This is what makes you YOU.
If there are 100 Chiropractors in town doing basically the same thing you’re doing, what makes your standard of care different? Is it education, ongoing care or a unique procedure? Is it the experience of them coming to your office and how you make them feel?
I would strongly caution about differentiating on price. The only problem with a race to the bottom is you might actually win.
Key Differentiator: Value
How much value can you add to your customer? If you’re adding value over and above the actual service then you’re unstoppable.
Over the past 2 years I’ve started seeing a professional sports massage therapist.
Now, this is not your typical masseuse. No nonsense, no incense, and no heated bed. And worst of all, no Enya playing softly in the background.
She’s there to get work done on your body. So bite your wallet and find something to grab hold of; it’s about to get painful.
But here’s the best part of her painful treatment: as she’s tearing your muscles apart she is educating you on what’s happening. Every time I leave a session with her I feel amazing; not only am I walking straighter and moving better – I am also educated on muscle anatomy and kinesiology. It’s simply incredible.
The education is the differentiator for her business and it’s what keeps athletes coming back time and time again, despite the temporary excruciating pain.
This simple chart illustrates what happens you start to add more value:
Speaking of Pain…
This is the quickest way to assess your fee structure: how much pain are you curing?
People will pay a lot more for pain-killers than they will for vitamins.
If you have a toothache and it needs to be extracted, you will pay almost anything to absolve yourself of that pain in that moment.
So ask yourself, what pain are you solving for your customers, and what are their alternatives to hiring you to solve their pain?
Can they get their pain alleviated by a different method or from one of your competitors? Is the pain so intense they are willing to pay a premium price to make it go away?
I’m not just talking about physical pain. If you own a decking and siding company, the “pain” someone might be feeling is they are embarrassed about the appearance of their house. They might be dying to have more parties and be more social, so that old busted deck in the backyard won’t cut it anymore.
If you’re a cosmetic surgeon, the “pain” a prospective patient might feel is a lack of self-confidence. They want to look and feel better, and you can help them with that.
If you’re a business coach, the pain might be that your clients don’t know the lead acquisition cost or the flow of their customers. Their business is leaking money and they don’t know where. They feel the pain of uncertainty, and are embarrassed or overwhelmed.
Marketing 101: Your product or service takes someone from this crappy, lame, “before” state to this amazing, euphoric “after” state.
And the bigger the difference between those 2 states, the more money you can charge.
If your weight-loss product promises to help me lose 1 pound in 30 days…that doesn’t move the needle much and I would be unwilling to pay much, if anything.
However, if you can educate me, hold me accountable, plug me into a support network, reshape my mindset, and help me be in the best shape of my life…that’s worth thousands of dollars.
You’re able to save me 5 minutes a week on [insert something I don’t like]…then I’ll pay you about $0.25 for that product.
Conversely if you can get me 2 hours per day back into my calendar with your life-hacking productivity system then I would plop down a chunk of change.
Let me ask you these 2 questions about your product/service:
1.) How do people feel before they engage with you? Put yourself in their shoes. Use words like: overwhelmed, tired, bored, lonely, scared, afraid, crazy, fat, unhappy, depressed…
2.) How do they feel after engaging with you? Relaxed, confident, fit, happy, wealthy, in-control…
Did you move the needle a little or a lot? Charge accordingly.
The Last Thing: Stand Up For Yourself
As I’ve worked with people over the years I’ve found that they tend to under-value themselves.
I’m no different.
In the early days of my agency the first few proposals I sent out were too low (I heard through the grapevine that people were confused why I would send them something so low). I had an extraordinarily high “close” rate of those proposals.
I engaged that first round of clients and got great results and immediately increased my prices.
Where I missed it on value: I was pricing based on how easily I could get it done and not pricing my services based on the pain I was solving. It’s a huge difference in the market (and in my business).
For my agency, if you have a webinar that will make you $10’s of thousands of dollars, or a 6-figure course outlined but not implemented, what is it worth to get those things “live” and online? What is the cost to you if it breaks during your launch sequence? Ouch.
I don’t provide integrations and funnel-builds; I provide clarity on your process and peace of mind.
Funnel-builders are a dime-a-dozen; strategy and clarity set me apart.
So, know your value and stick to it. You got this.