Are you actually charging what you're worth?
In a recent episode of Through the Marketing Lens, I talked about knowing your value so you can confidently price yourself and your services!
Ahh! This is such a crazy important topic and one that feels hard, scary, and takes a whole lot of courage to do well. Why? Because money makes us feel strange. And what comes up for a lot of us is:
Who am I to charge that much?
What if nobody says yes?
What will they think of me for charging that much?
Will everyone laugh at me?
Let’s just get that out of the way. If those thoughts feel familiar, you are NOT alone. This is a mindset issue that you have to tackle. And how do we do that? This is the work. You have to believe that you are worth it -- and the best way to get there is to go for it and prove to yourself that people will pay for it.
I talked through so many strategies to help you figure out how to price yourself as well learning your value. Listen to the whole episode here.
I'm going to discuss some of these tips here...let's get to it!
How much do you charge?
So, let's start first with the important task of how much do you charge? So, I often will challenge and ask you to think of this backward -- and I am using service-based business in this example but you can replace # of products for billable hours
How much do you want to make monthly - let’s say 10k to be easy.
How many hours per month can you commit to client work (billable hours) - let’s say 20 hours of client work weekly x 4 weeks, that's 80 hours per month.
Now divide the ideal monthly revenue by hours
That is 125/hour if you are fully booked.
The "if you are full" is important because we are essentially creating your pricing based off the idea of you being full. You might not be, and that is not a bad thing because once you are, things change again… and we will talk about that.
So at $125/hour, you are going to be on the road to making 10k.
You will then create this $125/hour into a package -- for example, you are an interior designer and you work on a 10-hour minimum. So, $1250.
Or you are a branding expert and your full package that takes you about 20 hours of work is $2500.
You can tell me that $125/hour is too little and to that, I would say, great. Let’s now re-work the math to either lower your hours or increase your revenue. That is completely up to you, but ultimately this is a simple way to calculate your rates and set your own standard.
When do I raise my rates?
Another question I often get is: how do I know when to raise rates?
And the truth is -- if you are asking me that, it is probably time, but let’s talk in literal terms here. When you are totally booked out, your hours are maxed for clients, you are going to ask yourself: OK, so where do I go from here?
That is when I would likely suggest raising your rates. There are some other components here, but for simplicity, that’s where we start.
So, when I say $125/hour for the example sake, think about what that number feels like. Scary? What comes up for you? Do you feel worth that number?
When you are growing, your rates will rise. You see this every single day and you don't bat an eye most likely..in things in your everyday life like at the grocery store or at your hairstylist.
Seeing your value
The truth is that people will pay much more than you imagine IF they see the value. Value is totally subjective, and if we are smart in our business growth, we are focused on value. What is really valuable to your ideal client is not necessarily valuable to your mom, but we are talking to your ideal client…
For example, let’s take the iPhone for example. We are paying like $1000 for this phone and pretty much everyone you know has said phone, right? That is a lot of money to most people, but most people believe it is that valuable so most of us just do it.
Now what if I told you that a pair of sneakers were $1000. Unless you're REALLY into sneakers, suddenly you don't have "enough" money. The shift there is not that you don't have the money, it is simply that you don't see the value.
I go deeper into this in the podcast episode and I highly recommend tuning in and listening to how we find value in things. You can listen below or at this link.
So, look, if you are at a place where you are thinking about either setting your rates or increasing your rates, do some back-of-the-envelope numbers… and start there. Your clients will probably pay it IF you are communicating the value…and you do that through ALL of your marketing.
This takes practice and it starts really with understanding the concept of talking about the value you bring all the time. Then it comes down to pitching with your pricing with confidence. Yes, that can feel hard, but just like anything you do -- it comes down to doing it and you get better and better with practice.
If you're interested in hearing more, I HIGHLY recommend episode 27 of Through The Marketing Lens podcast, where I go way deeper into assessing your value and determining your prices.