Should I Put My Prices On My Website? And Other Pricing Questions.
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By far, the topic I receive the most questions about is pricing.
People are clueless when it comes to setting their prices. And for good reason.
There's a whole range of prices no matter what you're selling. The price for an hour therapy session might range from $50/hr to $1,000/hr. Cars range from $500 to $500,000. So with such a wide range, where do you land?
This I know for sure: Most people undercharge.
Why is that?
We usually set our prices based on the value we place upon ourselves...and sadly, most people don't value themselves very highly.
HOW DO I COME UP WITH MY PRICES?
SERVICE BASED:
If you are comfortable with your price, then it's too low. Back in the day I used be a Certified Financial Coach with Dave Ramsey. I had NO clue what to set my prices at when I first started. I mean, I could have just as easily said $150/hr or $300/hr.
I had no idea.
I asked my coach if he had any thoughts... He asked me what I was comfortable charging. I said probably somewhere in the $200's/hr.
His response?
"I encourage you to charge $325 an hour."
$325 an hour?!?! What was he thinking?!
But I came away with 2 thoughts from this conversation -
He obviously thought people would pay it or else he wouldn't have suggested it.
He obviously thought I was worth that value or else he wouldn't have suggested it.
Knowing that he saw value in me that I didn't see gave me permission to charge that rate. And guess what? People paid it!
I found that I got MUCH better clients because the high price eliminated people that weren't going to take the coaching process seriously. When someone is only investing $50/hr, it's very easy to not show up to a session or not change their financial habits because they don't have a lot to lose. But when they're paying $325/hr, they show up.
PRODUCT BASED:
If you're selling a product, then you need to base your price off of your cost of goods sold (COGS). COGS is any cost you have invested in a product before you sell it. This includes the cost of the actual item, any labor you had, if you hired someone to take photos and list it on your website, etc.
You'll also need a wholesale and retail price. Typically COGS is 25% of your retail price and wholesale is 50% of your retail price. Here's an example:
$60 Retail
$30 Wholesale
$15 COGS
You may be thinking, "Why is retail so high?!" or "Why is wholesale so low?!". You need healthy margins between these two numbers for 2 reasons:
1. Whoever is purchasing the item at a wholesale price needs to have enough margin to mark it up and make a profit. If the wholesale price is $30 and retail is $35, that is not much incentive for someone to purchase your products at a wholesale price. They'll never make a profit at just $5 an item.
Typically if someone is purchasing items wholesale, they're purchasing a large quantity, so you can afford to sell those items at a lower price since you're selling more.
2. By having a higher retail price, you can run discounts and offers and STILL make a profit. People LOVE saving money. Several years ago, J.C. Penney restructured their pricing and did away with coupons. So instead of using a $20 off coupon and buying a $40 item for $20, they just started offering everything at the lower price ($20) so that you didn't need a coupon.
And you know what? Their sales dropped.
Why?
Because people like to know that they're getting a good deal. You will sell more $40 items at $20 than you will $20 items at $20. People are paying the same price in both scenarios. But they're saving money and getting a higher value item in the first example.
Here's a newsflash for ya: You are not catering to all people.
The goal is not to have a price point that everyone can afford. Know your audience. You may need to spend some time thinking about who your target market is first.
Do you think Tesla cares that I cannot afford their car? No. Because I am not their target market. And they aren't worried about that AT ALL.
SHOULD I OFFER MULTIPLE SERVICES?
I heard a fascinating study on pricing once.
They found that when you just offer one service, people ask themselves IF they should buy it.
But when you offer multiple services, people ask themselves WHICH ONE they should purchase.
I can tell you from experience, once I started offering 3 packages of financial coaching services, I started getting more clients. People were no longer saying yes/no, they were asking "which one is best for me"?
Donald Miller has an excellent podcast on pricing, specifically the rule of 3. His guest, Allan Langer, tells a really fascinating story about a movie theater whose sales were mostly comprised of Large popcorn simply by adjusting their pricing structure on popcorn (starts at the 15:38 mark). There's so much psychology around pricing and this entire episode is worth a listen (it's only 26 minutes!).
HOW HIGH IS TOO HIGH?
There really isn't a limit. I'm sure people will disagree with that statement, but if you can convince someone of the value, then there isn't a limit.
Let me give you this tip: Start high. Because it's WAY easier to lower your price than it is to raise your price.
I used to have group coaching calls with other coaches when I did financial coaching, and I cannot tell you how many people I saw that were struggling to raise their prices. Once you set a (low) price, you adopt that mindset that that’s the amount you’re worth.
And it is SO hard to overcome it mentally when you decide to raise your prices. I saw coaches that believed they were a "$100 coach" really struggle to become a "$200 coach".
One coach asked, "If I double my prices, how do I double the value that I'm bringing"?
Fair question.
My response was, "What if you've already been bringing them a $200 value? And everyone you've been coaching so far has been getting a $100 discount?" If you're struggling to raise your prices, consider the fact that the value you're bringing is higher than what you're currently charging.
I recently heard a podcast with celebrity chef, Brooke Baevsky, that charges $300 for a peanut butter and jelly sandwich. Now, you might think that is absurd, but people are actually buying it. She talks about how she sets her value and how to deal with "no's" at the 53:37 mark.
She also talks about why it's ok if 80% of the people she pitches to say “no” because she only needs 20% of people to say “yes”. Which leads me to the next point...
HOW MANY "YES'S" DO I NEED?
This may be counter to what you've been taught, but the goal is not to get 100% of the people you pitch to to say "yes". If you are only hearing "yes" from people, then your prices are too low.
Did you know that hotels do not want to be booked 100% every night? If they are, then their prices are too low. They raise them just enough so that they're booked at a 70% occupancy (on average) each night.
Rich Litvin likes to say that "yes" lives in the land of "no". What does that mean exactly? You're going to hear "no" from people. And the more "no's" you have, the more you're going to find a "yes" in there somewhere. So don't be afraid of a "no". It's going to lead you to a "yes".
I had someone challenge me one time to collect 100 "no's" in one week. That not only forced me to speak to more people (which increased my chances of getting a "yes"), but it also took the sting away from hearing "no". The more you hear it, the less debilitating and scary it is. You start to get immune to it after a while and stop taking it personally.
Also, the higher your price is, the fewer clients you need.
Back when I was doing financial coaching, my hourly rate was MUCH higher than the other coaches that I worked with, sometimes 3x higher. That meant if they were coaching 18 clients, I only needed to coach 6 clients to make the same amount of money. When each client represents one hour of time, that's a lot of hours saved!
So, how many "yes's" do you need? Not as many when your prices are higher.
HOW DO I KNOW IF MY PRICES ARE TOO LOW?
Here are some signs that your prices are too low:
You're constantly busy and have no time.
You have a waiting list.
You're comfortable with your prices.
You're barely making a profit.
Everyone is saying "yes" to your offer.
If you can relate to any of those (or more!) then it’s definitely time to increase your prices.
WHY SHOULD I CHARGE A HIGHER PRICE?
We've pretty much talked about this in other points, but to recap:
You eliminate people who could never afford you.
You don't have to work as many hours.
You'll have better clients who take the process more seriously.
You'll be more profitable.
Clients will value you more.
Here's something to consider: People perceive the value based on the price.
If I'm going to get a massage, I don't want a $30 massage. I want a $100 massage. Yes, it's more money, but I'm expecting a $100 massage to have a lot more value than the $30 massage.
Same goes with your prices. If your prices are cheaper than most, you're sending a message that your product/service is cheap too.
I don't know about you, but I don't want to be known as the cheapest. Cheap most certainly does not mean better.
HOW DO I RAISE MY PRICES?
It's way easier than you may think.
You know how you do it? You just do it. Right now, go on your website and raise your prices.
Done.
You just got a raise.
SHOULD I INCLUDE MY PRICES ON MY WEBSITE?
I do, and here's why.
People go to a website looking for answers. They're on your site because they have a problem and they're looking for you to solve it. When someone comes to my site, I want to give them all of the answers to their questions - what services I offer, how the process works, expected time frame, etc. And that includes prices.
Why would you hide that?
It's like saying, "I have the best vacation package for you - sandy beaches, first class seats, warm weather, and a personal chef, but you have to guess the price!". How many people would take you up on that offer?
The same concept applies to restaurants that don’t include the prices on their menu. I can tell you right now, I am not going to that place.
Recently I took a trip and was looking for a place to eat dinner. I had a few recommendations and took some time to look them up online to see what kind of food they offered. The places that didn't have a price was an automatic 'no' for me. I'm not going to go to some place blindly and then be surprised once I get there to see if the price was higher or lower than what I anticipated.
Here's a common objection I hear: "But I don't want to scare people off!"
Guess what - you WILL scare some people off, and that's a good thing.
Posting your prices helps to eliminate people that could never afford your services. I've met with people before who had to pick their jaw up off the floor when I quoted them $4,000 for a custom website because they expected it to be $250.
Posting your prices will save you from wasting time on people who have no interest, desire, or means to spend what you charge.
Pricing should not be a guessing game for your client.
If they leave your site wondering what you charge, guess what... they are going somewhere else. Most people will not pick up the phone or send an email. They want to find the answers online. And if you don't give the answers, they'll find someone that does.
There's a saying, "To be unclear is to be unkind".
So, post your prices.
LESSONS I’VE LEARNED
After being in business for myself for several years now, I've had some takeaways when it comes to pricing. Here's some things you need to know:
A “no” does not lower your value.
You're going to hear people tell you "no" or that they think you’re too expensive. Just because they think you're too expensive doesn't mean you're too expensive. Do not take it personally. Maybe they just had a $3,000 bill on their car or their heater went out last week. There could be a plethora of reasons that they say "no" - and it does not mean that you aren't worth it.
Take my Tesla example from earlier... do you think they are insulted or question if their price is too high just because I think their price is too high? Not a chance.
People will value you for not backing down.
I've had more than one person come back to me for a website who originally thought I was too high. When you start to back down on your price it sends an automatic message that you're desperate for the sale. It also places doubt in the customer's mind that you don't know your value to begin with, therefore why should they trust you with ANY price?
Let me be clear - if I'm working with a nonprofit, I don't mind discounting my services a little. But I never say, "It will be X (discounted) amount". I always say, "Normally it's X amount, but since y'all are a nonprofit I'm discounting it to X amount." That way, they realize they are getting the same value as anybody else.
The more you say the price, the less intimidating it is.
This sounds silly, but practice saying your price to a friend or in front of the mirror before you ever quote somebody a price. You may THINK saying a number is no big deal, but just wait... when the time comes, you'll suddenly get a lump in your throat, stop making eye contact, and start stammering. This is the curse of death when you're trying to make a sale!
Practice, practice, practice. The more you say your price, the more comfortable you will be with it. PLUS, if your prices are on your website, then (hopefully) people have already seen them, which makes saying it even less intimidating since you aren't delivering new information to them. Say it often and say it proudly. Do NOT be ashamed of your price.
If you're struggling to raise your prices or know your value, I'm giving you permission. I don't even have to know you to know that you're selling yourself short. Know how I know? Because everyone does it. Honestly, I should probably raise my prices too.
Just imagine... a life where you can work fewer hours and make more money. It really is possible. And it starts with knowing your own value. If you struggle with this, ask yourself why. Send me an email too. I'd love to help you overcome this (and probably pay you a compliment or two 🙂).
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