“We make a living by what we get, but we make a life by what we give.”
In this article I want to talk you about pricing. It’s something that confuses a lot of business owners and a topic that evokes a lot of strong opinions, read on for my response to some of those opinions.
The first thing to say is that I don’t have a pretty, one size fits all approach to pricing that I can lay out for you here and you can happily go away and implement in your business. It’s simply not that clear cut. My own journey with pricing has been all over the place throughout the years but I’ve arrived at a place that feels in integrity for me.
“You should charge the highest price you can”
When I first started my first online business, the advice I received from my mentors and peers alike was to go for premium pricing. Many of the coaches whose advice I followed, were charging very high prices, figures like $75,000 for a year of coaching, $25,000 for a 6 month program and up to $500 for single, one hour sessions. I myself spent $15,000 on a 6 month program with my first business coach.
During our time together, I was encouraged by my coach to raise my prices over and over again. I started my business with my very first client paying $400 for a package of 8 sessions. Just over a year later I was charging $5,000 for an 18 session program. So, within that timeframe, my price per session went from $50 an hour to nearly $300 a session.
When my prices were at their highest, I had a full roster of clients and money was flowing. I should have felt great about my business, but it was actually around this time that I really began to fall out of love with it (you can read more on that here). Amongst other reasons, I didn’t feel in integrity charging those kinds of rates. Not because I didn’t see the value of my work but because it just didn’t feel good to me to see people investing thousands and thousands of dollars to get access to my work. I love over-delivering for my clients and I came to the conclusion fast that when you are priced high, it’s quite hard to over deliver without burning yourself out.
Fast forward several years and you might have noticed that my coaching programs no longer cost $5,000. In fact I’ve been steadily reducing my coaching rates for the past few years, much to the shock and horror of some, but not all, of my colleagues. It’s actually pretty unheard of for a Business Coach to suggest you might lower your rates but I can tell you right now that I have made this suggestion more than once.
Why? Because sometimes it’s the wisest thing to do.
I think you would be genuinely surprised if you knew just how many people I’ve coached who have premium price tags attached to their services, yet have never enrolled a single client. They have those prices in place because that’s what the mainstream marketing advice has told them that they should be charging, because that’s what they say is the market rate.
But charging premium rates when you are a beginner in business doesn’t make sense to me, especially when it comes to services like coaching, where the case for charging more can be made when a coach has hundreds, if not thousands, of hours of client sessions under his or her belt and the case for his or her level of expertise and experience can well and truly be made.
To charge premium pricing as a beginner in business is a dangerous trap to fall into, both for the service provider and the client. If you, as a business owner don’t believe in your price, you’ll never enrol clients at that price. There has to be alignment and integrity when we state our prices. We have to believe that it’s truly a sound investment for the person before us if they are to believe it too. This works as much for over-charging as it does for under-charging. If you don’t feel aligned with your price, neither will the customer.
My advice. Don’t charge premium prices unless you feel ready to and you want to position yourself as a premium service. And remember, not all online services have to be premium or only be accessible to those who can afford it. You can still offer high value services and charge more accessible pricing (and make a good income to boot!).
“If your prices are low people won’t value your work”
I have had several business mentors over the years and I’ve paid for some pretty expensive coaching — a whole $15,000 worth for 6 months of weekly sessions with a relatively new coach, bringing the price per hour to a whopping $625 and I’ve paid as little as $100 an hour for a coach with many more years experience and also himself making 6-figures, without charging premium rates.
Was the premium coaching good and did I value it? Hell yes! It was amazing coaching and it took me from thinking about building a business to running a profitable business in a relatively short period of time. I learned a lot. Which goes to show that you can be a great service provider even without decades of experience under your belt. But would I pay that much money for coaching again? Not likely. Now that I know that excellent coaching doesn’t need to cost a small fortune, I doubt I would pay that kind of price again.
Was the cheaper coaching good and I did I value it? Hell yes! The business I have today is in large part because of my work with one of the most experienced, successful and affordable coaches I know and is at the time of writing, my go to person whenever I want to tackle something new in my business.
On the other side, I’ve also coached people who paid my $5,000 rate and took little action in pursuit of their goals and had people do wonders as a result of 1 or 2 free sessions.
My conclusion — Price doesn’t dictate value. What is valuable to one person, won’t necessarily be valuable to someone else. Something that costs $15,000 could be a huge rip off, whilst something else with the same price tag might be the bargain of the century. Just because something is valuable doesn’t mean it has to be expensive and just because something is expensive doesn’t mean it has to be valuable.
“You need to charge what your worth”
If I’ve heard this once, I’ve heard it a thousand times and it makes me shake my head every time I do. The premise is that somehow your worth and the value of your products and services are linked. Nothing could in fact be further from the truth. Your worth as a precious human being is not quantifiable and it is definitely not defined or dictated by your business model.
George Kao, one of the most respected Business Coaches in the conscious business space, says this:
“Have you heard that you should “Charge what you’re worth?”… that in your pricing, you should “claim / stand up for your value” ?
Let’s look more deeply at this.
How much is your value?
How much are you worth? $25/hour? $150/hour? $500/hour? $10,000/hour?
Does this mean that people who charge more are worth more?
Words matter. It shapes how we see other people and ourselves. Connecting fee structures to “worth” sets up a very unhealthy comparison.
Are you worth less than someone who charges more?
Truth: You are worth infinity.
You are an incredibly precious human being whose odds of being born are 1 in 400 trillion!
“Charge what you’re worth” is an insidious lie, started by some high-priced coaches who needed to justify how much they’re charging you.
I have seen many people raise their prices (because they’re “worth” much more!)… and then guess what? They saw their business decline.”
I couldn’t agree more.
It would be foolish to ignore the fact that many people collapse around pricing and chronically undercharge, partly I think because they’ve bought into the “charge what you’re worth” idea and have low self-esteem. If that applies to you and you consistently undercharge because you have a hard time seeing the value of your offering despite evidence to the contrary, then I implore you to face your fears and raise your prices. Asking for a dollar amount does not equate to forcing people to pay it. Each and every one of our customers is free to choose whether or not they say yes to our price. They get to decide how valuable they think our service is to them.
“If you charge more, you can work less”
Now I get it. I get that you might desire a certain lifestyle and you need to make a certain amount of money to make that a reality. I also get that there are only so many hours in the day so if you don’t raise your “hourly” rate, you place a limit on your earning potential. I also don’t doubt that if you stick at your business and see it grow over time, there will come a point when raising your prices not only makes sense, but becomes a necessity. You may for example get to the point where you need to outsource or hire staff and to do so, you need to make more money.
So here’s the thing. I’m not against making lots of money — in fact quite the opposite.
My beef is with the advice and misinformation we’re sold online about how best to make that money and at the same time live the life you want to.
Let’s work through an example.
Let’s say you’re a coach who wants to make $3,000 a month.
If you charge $300 an hour for your services, in theory, it will take you 10 hours of 1:1 work to hit your goal.
By comparison, if you charge only $150 an hour for your services, it will take you 20 hours of 1:1 time to hit your goal. Therefore the idea that charging more saves you time does, on the surface of it, make sense. But let’s look a little more closely.
Let’s consider how much time you need to spend to get someone to pay you $300 an hour versus how long it would take to enrol someone at $150 an hour. How many more hours of marketing would you have to do? If you are charging premium prices, how much more might you need to spend on a fancy website, branding and glamorous photos to present a premium image?
Let’s also consider how much easier the sale is when the ask is a no-brainer for the client. Thing about your own experience investing online. When I see an online training that costs $100 or less, if I want it, I’ll buy it and not think twice about it. When I see an online training that costs closer to $500 or $1,000 I do have to think twice and I need to feel much more convinced that the investment is worth it before I’ll stump up that kind of cash.
In my own business, I’ve found that my 3-month €2200 coaching program was a harder sell for people than my €300 a month coaching subscription is. I’ve also found that I can in fact hit my financial goals more quickly and more easily with a lower rate than I can with a premium price tag. Why? Because I’m enrolling more clients more often. Not only am I making more money than before I had this more affordable option available, but my clients are happier — because they are getting the same level of service/value for half the price. That’s what I call a win-win.
I’m not against making big money from your business. In fact I’m all for it. What I’m sharing with you here is the idea that big prices don’t necessarily equate to big income. In fact for many people the opposite happens. The bigger the price, the harder they have to work to get the sale and the less income is being generated overall. I also know some wonderful conscious businesses out there who charge lower than the market rate but are still making 6-figures a year and have thousands of people who love and respect their work to boot.
I’m also not saying that lower prices is the right way to go for you. What I’m inviting you to do here is to tune out the noise online about pricing and to tune into what feels right to you as a business owner. I’m inviting you to consider what kind of business you run and what model you want to apply and screw what other people say (including me!)
I would love to hear what this brings up for you. Where do you stand on pricing? What did you take-away from this post? Feel free to leave a comment and let me know.
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