Are You Charging Based On What You Know, Or On What You Imagine?
The whole issue of pricing is a dilemma to many small business owners. In fact, I’d say it’s the area where most people have doubts, uncertainty and sometimes downright fears. “Am I charging enough?” or, “Am I missing out by being too expensive?” are questions many business owners ask themselves over and over again.
In my experience, many entrepreneurs worry they are not charging enough, while at the same time being concerned that if they raise their prices, they will lose out on clients – or worse, perhaps even be viewed as having an inflated sense of their own worth.
You know that niggling little voice in the back of your head – the one that tries to make you doubt yourself? We all have it.
Not long ago, I arrived at the premises of a new prospect. To reach their door, I’d driven through the most run-down looking industrial estate for miles.
The best thing you could say about their offices is that they fitted in with the rest of the area: from the outside, they looked somewhat dilapidated.
Things didn’t improve when I stepped inside. Looking down at the floor, it was clear they needed new carpets. A glance at the desks told me the same about the computers, which were almost certainly running a several editions old version of Microsoft Windows.
But they were a good bunch of people and it was clear everyone was doing their best, given the limited resources at their disposal.
While I was there, that little voice in my head started saying, “There’s no way they’re going to be able to afford your usual fees. You’ll have to drop below your usual price level to be able to get any business from them”.
Experience tells me to boot this thought out of my head as soon as it pops up. Why? Because it is telling me to reduce my price based on what I think I’m seeing. By allowing it in, I’m jumping to the conclusion that they won’t be able to afford me.
Of course, what’s prompting this negative thought is fear: specifically, fear of being rejected for being too expensive.
Instead of allowing these imagined scenarios to dominate, I’m better off sticking to what I know. What I know is that I have something value to offer.
Another voice that pops up says, “Put your price up, so you don’t have to work in this place”.
Whether you decide to do that is your choice, but you’ve got to bear in mind that quoting unrealistically high prices might affect your reputation in the long run.
A more balanced approach is to stick to the rate that you KNOW is fair to them, and which reflects the value you provide to your other clients.
Are you valuing yourself highly enough? Is your current pricing fair to your customers and prospects? if not, then sooner or later you’re going to run into difficulties.
The best way to set your prices is to stick to what you know. Don’t allow your fears or other imagined scenarios cause you to waver from what your experience already tells you is a fair price for the value you deliver.