What should I charge? How to find your price point.
One question that I am always asked when I am in mentoring mode is what should I charge? It is one of those questions that everyone agonizes over and the truth is there is no fixed approach that I have ever come across that is universally true, but my experience from starting a small business unit or business is that in the services or professional space when you charge for time there is a really simple model that you can start out with.
One method is to ask around, see what the competitors are charging but the challenge with this approach is that you are not your competitor, you’re unique and you’re bringing your uniqueness to market. I am sure the way you do it is different, is better and hence potentially more valuable to your audience than your “competitors” so that yardstick whilst helpful and a guide, isn’t finite.
Another approach is to ask your friends, potential clients and sponsors what they think your time is worth, but they may undervalue it as they want to keep your perception low (in case they want to use you later! Two ways to make money, one of which is not spending it) or don’t yet appreciate your unique approach or value proposition), so that isn’t particularly helpful. Value based pricing is something to consider as your business matures. As your time becomes under more pressure then you can look at different models such as projects, outcomes and innovative models – often easier when your return to your clients on their investment is more readily understood and referenceable with recommendations, testimonials and case studies.
All those years ago when I first started out the approach I took was common sense, but it appears that I may look at things differently to many.
My thought process was based purely on my own diary and hence
- My diary is empty = any price is good!
- My diary is full = perhaps I have got the right price?
- I have clients I can’t get in the diary = My price is too low, is it time to put the price up so I move forward from the less good clients and perhaps increase the value of my time.
- Someone says too expensive = do they have a valid opinion? Is it one off or have you gone too far? If a few people, of the right client type have said too expensive or not committed perhaps you have gone too far and it’s time to soften up.
Then it is time to watch, to monitor, to see how the conversion from conversation / pitch / quote to work unfolds, assuming you have to do pitches and quotes.