Have you ever found yourself pricing a product or service in your business based on what you would pay in your current financial circumstances? Did you stop to think about whether your personal perspectives are in any way a good match for your ideal customer?
Pricing is a choice. But rarely do business owners exercise that choice with awareness of the potentials created by different price points. Let’s consider a brief case study…
Erin is a natural health practitioner who specializes in a couple of healing modalities. She is making $60 an hour and sees clients for 20 hours a week on average. This equates to $1200 a week – not quite enough to put her into GST territory, but getting close. By the time you take out taxes and costs of running the business (eg marketing, hiring space, training etc), Erin brings home closer to $30 a session - $600 a week is not a lot to live on!
So, let’s have a look at the common small business traps Erin has fallen into: She is doing what she loves and is great at, but is not reaping the financial rewards – she needs to charge what she is worth.
- She is swapping time for hours – there is no leverage in her business – if she doesn’t work, nor does the business
- She has not differentiated her service sufficiently so that clients will pay a premium.
- She doesn’t believe people will pay more than she is charging – but she hasn’t tested a higher pricepoint.
- She doesn’t like asking for money for helping people - her beliefs are in conflict with her purse!
Need inspiration for making more money in your business? Book your place for the April 19 2010 Playshop: ‘Show Me The Money’ – you’ll discover more about money and your business than you thought possible!!