As a professional speaker and a mentor, pricing what I do isn’t like pricing a can of beans. In part, businesses like mine sell knowledge, skills, experience and insight; perhaps yours does too.
We have to come up with a price for what we do that represents the quality of what we do and the value of spending the limited budgets our clients have with us. The external pressure of the market and the internal discussions we have with ourselves all drives to make business owners think the risks of higher prices are bigger than the risk of lower ones. The result is that, too often, services are underpriced.
When we sell too cheaply, we have to do more often to generate the necessary income for our business. Building better business isn’t about working harder; it’s all about giving our best for a fair price.
Quality or Value?
Price is used by consumers as a measure of value when they are close to purchase, but use it as a proxy for the quality of the product when a purchase is more distant in time. That was a finding in a study reported in Psychology Today.
Other studies, like this one reported in ScienceDaily show a strong correlation between price and quality.
What is the difference?
Quality is a measure of how well put together something is. A high-quality shirt will last longer, wash better and feel and look great for longer. We all expect that to come with a higher cost.
Value measures whether the price charged is worth what you get for the money. Sometimes the best quality is overpriced, which is still excellent but low value.
Marketing attracts your target market to you. It reminds them of your business. In “Intentional Mastery”, I discuss “Signposting” as a critical strategy. In that section, I highlight that we should not seek to communicate everything about our product at once. Instead, signpost what your potential client needs to know just when they need to. There will be a time to talk about price. If you want to tell a story about the quality of what you do, share your likely pricing early in the conversation, perhaps even on your website. Position it to reflect the quality you want people to see.
A warning here, though, is if you hide your price, some might assume that you are hiding information about the quality of your service, and they will conclude that. I discuss how to calculate a price and where to pitch it in more detail in a downloadable PDF (link). When you get into a detailed discussion of what you will do for your client, your price is more likely to be considered against a measure of value. Focus then on the customer’s outcomes, how valuable they will be for them, and how your cost pales into the background as a result.
Your price will always tell a story about your business and you, and it will be seen as a measure of the quality of what you do as potential clients assess the value they will receive from working with you.
If you would like to know more about how to price a service, complete the form below, and I’ll send you my latest paper.