Published February 25, 2021 | Financial Management
Do you struggle to set your pricing and fees as an entrepreneur or small business owner?
Let’s talk about some basic models to help you create a robust flow of cash coming into your business…without stress or worry!
You wouldn’t think crafting our offers and the fees that go with them would be a place of angst. After all, we’re in business to make money, right?
And yet…for many of us the idea of asking people for a certain dollar amount can be really problematic.
Let's review how to position your business from a pricing model standpoint.
We don’t want there to be any conflict in your offerings that throw potential new clients off when they’re looking at what you’re providing and how you can help them.
When we’re talking about setting up your pricing, I like to share a really simple Venn diagram to help you visualize how you can maximize your work in terms of dollars in your pocket. It looks like this…
At any given time, we can offer two out of these three, but really we can’t provide all at once. It’s just not feasible to give top-notch quality, super fast and for a low rate. Your business will never thrive if you attempt it.
Think about which two you would prefer to market & provide (there are pros & repercussions for each):
1. Speed + Quality = Higher Cost. You can charge a premium if you provide exceptional service in a short window of time. If this is your model, congrats! It’s a great way to build a strong service business.
2. Price + Quality = Slow Delivery. Usually, lower price combined with quality services means a longer turnaround time. If this is your model, be sure you’re not also bending over backwards to provide lightning fast delivery. You’ll wind up hating your work, feel like your clients are taking advantage of you, and will likely go out of business in short order (pun intended).
3. Price + Speed = Poor Quality. When you try to move quickly for low cost, you wind up missing a lot of things. If you’re okay providing less-than-stellar services, but you rock your delivery and offer a lower fee than most, this is the version for you.
In an ideal world, your Zen Money pricing model is the pair that feels and works best for you. I will say, if you’re providing services, low cost is generally not the best way to go, because you have to sell a whole lot of something to meet your needs and you only have so much time available, so it’s extremely hard to grow and scale your business if you stick with low ticket offers.
Remember: You are not Walmart.
Why are you putting yourself out there as if you’re selling low-cost products? While it can be tempting to start out with lower prices, make sure you have a plan in place to increase your rates or establish offers that create better financial flow. Forgetting to raise your fees will definitely hold you back and you may find yourself not even keeping up with inflation, so be sure to look at this regularly.
At the end of the day, we want to set pricing that makes sense and fits with your clients’ expectations. Keep this model in mind when you think about how much you’re going to provide and how much money you’ll ask for as you grow your business.
If you’re offering some products or services that fit the Low Cost + Fast Response model, and others that fit the Fast Response + High Quality model you may create a disconnect for your prospective clients. We want to be sure all of our offers make sense when compared with each other and promote the overall brand of your business. It helps our clients and potential clients understand how we work, what to expect, and where they can go in working with us without causing any mental hiccups when they consider our services.
The Bottom Line
Your pricing is the top of your financial funnel, so let’s establish a pricing structure that encourages a “hell yes!” from your prospects.
And if it feels good to talk about and share, brings the money you want into your business, and is framed in a way that matches how you want to position yourself in the market, you’ll be in a fantastic position to grow.