So…you’re chatting away to someone and the conversation is flowing beautifully. They love your business, they are talking about how they need what you sell when, in the next breath, they ask you your prices.
And the world stops, just for a second.
In that second your brain goes into mega-overdrive mode. In the space of that second the following questions and statements flash through your head, one after another:
“OMG what do I say?”
“She’s going to be shocked when I tell her how much it is”
“She’s going to think I’m too expensive”
“This is going to be awful, what if she pulls a face or laughs”
“What if she says NO?”
“What if she says she can do it cheaper herself like that woman did the other day – that really hurt”
“I knew I was too expensive”
“What was I thinking?”
“What can I say? What can I say? Ooh I know I’ll just tell her a really low price and she’ll say yes”
“OK, that’s the plan – don’t tell her the real price”
And what comes out of your mouth is something like this:
“Well, it’s usually THIS much but I can do you a 20% discount and as it’s sunny I’ll knock another 10% off!” You say, grinning manically.
And the reply?
“HOW MUCH? I can do it cheaper myself”
How very dare they?
DOES THIS SOUND FAMILIAR????
And I see this happen ALL THE TIME! And the thing is, it just feeds our belief that we’re too expensive. We let one or two bad fit people dictate our prices and it mentally scars us for years.
We’re already lacking in confidence because being in business is scary, we have to sell ourselves and our products and our confidence regularly takes a battering so when it comes to pricing we just WIMP OUT!
I hear people who create AMAZING things say things like…
“I can’t charge very much – people won’t pay it”
“I already had the materials in the house”
“It’s ‘just’ me making them”
“I’m not a big company, I don’t need to charge much”
“I just work from home”
“I enjoy making them”
Are you guilty of saying ANY of these, by any chance? Go on, you can tell me!
Let Me Tell You The Worst Thing
No matter how cheap you make your products or services, and no matter how many discounts you apply, for SOME people (in other words the WRONG people) YOU WILL STILL BE TOO EXPENSIVE.
Some people will never appreciate the value of what you sell. They won’t appreciate how much work and time and energy went into it. They won’t appreciate what it can do for them.
They just want cheap.
And that’s fine.
You just have to remember they are not the right customers for you and you MUST NOT let them shape your business.
[Tweet “If you base your pricing on the opinion of bargain hunters, you will end up with a bankrupt business.”]
Leave that to the bargain basement stores!
They buy millions of products in bulk and make a couple of pence on each one so they can afford to charge peanuts and for some people that’s perfect. Heck, even I shop there for some things (like dog poop bags!) and I bet you do too? Sometimes the bargain basement £1 or $1 store is just what you need some days.
Your job is not to try to compete and not to say YES to people who want you to compete with the bargain stores. Let them go.
You Need To Find Your Best Buyers
Let’s see what that looks like.
If you crochet baby clothes, you don’t want to market to people who want cheap baby clothes. Even though YOU can knock out a baby jacket in a couple of hours does not make them cheap. Let me put this in perspective for you.
If you can crochet a beautiful, handmade baby jacket in a couple of hours, that is an amazing skill. I can’t do it. I might just manage to crochet something or other if you give me a few days but I can’t do all that fancy bobbly stuff and if I have to go round a corner, it’s not pretty.
If you can crochet a beautiful, handmade baby jacket in a couple of hours, you had to use wool, and a crochet hook. You have to use buttons and a needle. You have to crochet it, press it, sew it up beautifully.
You had to GIVE UP TWO HOURS OF YOUR TIME that you’ll never get back. It doesn’t matter that you enjoyed it and that you would have done it anyway, given the choice – that TIME and ENERGY and WOOL and CROCHET HOOK and NEEDLE are worth something. That baby jacket has value.
Now, the WRONG people won’t understand that and they won’t see it or appreciate it. They will see a baby jacket. They can buy a baby jacket in a discount store for cheap. They will say ‘How much? I can make it cheaper myself’ (My advice? LET THEM TRY!! But say gracefully ‘oh lovely, well yes if you can crochet you could definitely do it yourself’ *while biting tongue*)
The RIGHT people will see a BEAUTIFUL, HANDMADE baby jacket. They will see the and appreciate your skill and the complexity of your work. They will ‘ooh’ and ‘aaah’ over the beautiful stitches. They will say things like ‘oh I wish I could crochet something like this’. They will appreciate the work that has gone into it. They will see it as an heirloom piece – something expensive that they can treat their baby with and that can be handed down.
Do you see what I’m getting at?
You can’t create a beautiful piece of work like that and charge £10 or $10 because you’re competing with mass produced stuff on the high street. After your wool costs and your time, you’re not making any profit. That’s no way to run a business!
You need to price up your products and services PROPERLY – like a business owner.
You need to price them for the people who VALUE what you sell. Who appreciate that you have skills and knowledge they don’t have and that you’re providing something they can’t do or make themselves.
You need to easily cover your costs – ALL your costs, including your time (even if you really enjoy what you do).
You need to work at a great hourly rate, so if it takes you 2 hours or 10 hours to create something then charge for it. Don’t end up working for peanuts just because it’s your own business.
Often, when I teach this, I hear ladies say ‘but it took me 10 hours, I can’t possibly charge $10 an hour, that’s $100 just in time’. And I say ‘YES!’
‘But Claire, nobody will pay that!’ they say.
And sometimes they are right, which is why I say you have 2 choices.
- Price it up properly and find people who will pay you for the 10 hours of work that went into it
- Spend less time on it
Number 2 often makes people take a sharp intake of breath but I know you – you’re a perfectionist and you’ll spend HOURS tinkering and tweaking so YOU think it’s perfect. I have news for you. Your customers don’t care.
You could spend half the time on it and it would be MORE than good enough. Perfection is relative – I probably wouldn’t be able to tell the difference between something you’d spent 5 hours on and something where you’d spent an extra 3-5 hours tweaking. I probably wouldn’t care.
So What Are You Going To Say Next Time Someone Asks You Your Price?
I know every business is different and it depends on whether you’re selling your time or selling something you’ve bought or made but the principle is the same.
Don’t price your products or services based on the opinions of bargain hunters
Price your products or services based on what the RIGHT people will pay. Base your prices on what it COSTS you in time and materials and then add some.
And then be confident in announcing your prices! When somebody asks you, stop that monkey chatter in your brain before it starts and just say ‘it’s THIS! I know, it’s great isn’t it?’
Either they are going to agree and pay it (sometimes with a bit of squirming but that’s their ‘stuff’ not yours), if they are the right person or they will pull a face and say something like ‘I can do it cheaper myself’. Once you’ve pulled that knife out of your heart, you can remind yourself that they ARE not and will never be the right customer for you.
You’re definitely worth it!
Have YOU ever priced like this? What’s the WORST thing someone has said to you when you told them your prices? Come on, share the audacity – HOW VERY DARE THEY?!
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Claire Mitchell is a best-selling author of the Awesome Marketing Planner and founder of The Girls Mean Business, a mum and business owner. She has been featured in Marie-Claire, The Guardian, Closer Magazine, Essentials, The Huffington Post and on the BBC.