I guess nearly every women in business has asked this question at some point – how do you decide what to charge, when you don’t know where to start?
I know it’s a big issue because I get questions about it every week on my Facebook page www.facebook.com/thegirlsmeanbusiness so let me help. Let me share what I teach my clients about pricing so you can get a better feel for where to start and how to make a profit.
Pricing Starts With Knowing Your Costs
It’s the only place to start, because if you don’t know what it costs you to make a product or provide a service, how can you possibly know if you are covering your costs at all, let alone making a profit?
I know lots of women who really struggle with this side of things because they are scared of the numbers , so if you feel this way you’re definitely not alone. However, I’m not letting you off the hook. Time to put on your big girl knickers and get brave, face the numbers and get some clarity in your business
What Are The Costs In Your Business?
In my business my costs are heat/light, electricity, my equipment (computers/phones, tablets and microphone for podcasts), my support team (website lady, designer, business manager, virtual assistant), my coach and advertising, specifically Facebook advertising.
I don’t have premises, so no rent, rates or taxes to pay there.
Now look at YOUR business. What do you pay out every month or every year?
Some will be direct costs, meaning they are directly related to producing a product or service. These might be:
- Staff time
- Your time
- Travel / fuel
- An hourly venue rate if you hire premises by the hour
Other costs like
- vehicles …
and other things that you need to pay but that are not directly related to producing a product or delivering service still need factoring in. Speak to your accountant about how best to do this for your business but a simple way would be to work out roughly what this would cost you in a year (as best you can) then divide it by 12 so you know roughly how much per month you need to make before you have sold anything. These are your overheads.
Ok, you are doing brilliantly so far. It’s not so scary after all, and even if you don’t have exact figures an educated guess based on the information you have is much better than doing nothing.
Now you need to work out what it costs you to produce your product or service.
If it’s a handbag, you’ll have fabric, components such as the clasp, thread and your time.
If it’s an hour of coaching, you need to factor in your preparation time (there’s always some, even if it’s just revisiting the notes from the last session) and the time delivering the coaching/training plus travel time/costs.
How Do I Price My Time?
If you’re a maker/crafter/artist or you sell your time you’re going to have to put a price on it. Where do you start? Well a good place to start is by looking at jobs – if you were going to take a job what is the minimum hourly rate you would be comfortable with? £10 per hour? £20 per hour?
Whatever you’d accept, start pricing your time in YOUR business the same way. As you get more confidence you can increase your hourly rate but if you’ve been pricing bad
ly and not factoring it in up until you, this is a good place to start.
What often happens is that we do this and then get a HUGE shock because when we price our products properly with a decent hourly rate, the price they OUGHT to be nearly makes us fall off our chair. It’s way higher than we’ve been charging. And that sets off the mind monkeys in hour head who tell us no-one will ever pay that, who do we think we are?
The trouble is, if you’ve been under-pricing, which is usually the case then you’re kidding yourself. You’re not running a business; you’ve got an expensive hobby. That’s a wake-up call, if ever you needed one.
You Can’t Un-know It
Once you know what it really costs you to make or deliver your product or service, you can’t un-know it, which means you HAVE to put up your prices.
Now before you go and hide in the cupboard with a tub of Ben & Jerry’s, don’t despair. You’ve already made a huge leap by getting clear on your costs – loads of small business owners never get that far. Stop worrying that nobody will ever pay your new prices and start working on your Super Customer (there’s a BLOG here all about that – if this is all new to you, I suggest you pop over and read it now).
Why Am I Telling You All This?
Because YOU can do this in YOUR business. It’s not rocket science, it’s getting clear on who the best fit person is for your business, your Super Customer and then spending time getting inside her head and figuring out why she should care about you and how to get her attention.
If you’re struggling, brainstorm with a friend. Even better, ask a Super Customer.
Why Super Customers Are Important In Your Pricing
OK now you understand the concept of Super Customers, let me explain why they are so important in your pricing.
You know now that you have to price properly which means your prices will be higher than the hobbyists and the uninformed out there – rest assured they are losing money.
You also know who your Super Customer is. Now you need to work out why they will happily pay more for what you sell.
Let’s look at some examples:
When Chloe was a baby I spent a FORTUNE on prams, on all sorts of equipment (most of which I never used) on clothes – I always got the best I could afford, even when money was tight.
These days I don’t value that stuff at all. If you GAVE me a £1000 buggy I would have no use for it. I might give it away or sell it but I certainly wouldn’t keep it or value it because it’s not important to me now.
I have a 9 month old Jack Russell /Chihuahua cross puppy called Meg. Rather than buying cheap dog food, I always get really good quality dog food from places like Lily’s Kitchen. It’s NOT cheap, it’s blummin expensive but it’s important to me to get good quality because I’ve committed to looking after this little dog for life. I value her welfare. Where Meg is concerned, money isn’t really an issue. Before I had a dog, you could have given me £1000 worth of Lily’s Kitchen dogfood and I would not have valued it.
The things I value change over time, depending on my needs. When something is important to me, I spend as much as I can afford on it. Price is less of an issue than VALUE – how well it meets my needs.
Do you see? You just need to work out who VALUES you and price becomes a secondary issue.
When have YOU spent MORE on something (even when it was a real financial stretch) because it was IMPORTANT to you?
What do YOUR Super Customers value about your products / services and why?
- What will make them happily spend more with you?
- Is it your quality?
- Your service?
- What is it about what you sell that makes people come to you rather than other (possibly more convenient) suppliers?
I know I’m making you do lots of thinking but I promise it’s for the right reasons because when you know what it costs you to produce something AND you know you have people out there who will happily pay the right price (i.e. a price that easily covers your costs and gives you a profit) then it’s happy days.
How NOT To Price Your Products or Services
Have you ever wondered how your competitors price their products/services, especially if they are way lower than yours?
Well, what usually happens is they look around to see what everyone else is charging, then they figure out where they are in the pecking order (better than HER, not been around as long as HER) and they pitch their price somewhere in between, usually at the bottom end.
The trouble is, everyone they are looking to for pricing usually set THEIR prices the same way. So nobody has costed out their time, they are all running at a loss and the only way they can drive more business is to drop their prices AGAIN, making even more of a loss.
Do you see now why that is a bad idea?
If you price this way – by looking around and deciding where you fit in the pecking order, rather than looking at where you ADD VALUE – there is nothing that makes you stand out. People don’t look at your value, they are shopping around on price. When your only selling point is price, the only way you can compete with other businesses is to CUT your prices. And if you haven’t been costing properly, it won’t be long before you are PAYING customers to take your stock. Hmmm.
When you price your products or services like that, based on what everyone else is charging, you are not factoring in your ME factor. You’re not looking at your Super Customers. You’re not looking at value.
So, that’s a long answer to a short question but it’s important you understand this. Start pricing properly NOW, look at where you add value, look at why your Super Customers come to YOU, love you and value you (read my blog if you’re struggling) and before you know it your attitude to pricing will have turned on its head. You won’t care what others are charging, you will be able to charge a good price and make a good profit and your Super Customers will be happy as clams.
Try it, I think you’ll like it.
Love, Claire xx
You will hear me talk about Super Customers a LOT at The Girls Mean Business™. In my opinion, getting clear on your Super Customer is the single most important thing you can do in your business to make your marketing quicker, easier and more effective.
It’s a different approach to what you might be used to and people you meet at networking events might tell you you’re missing a trick, but they’re wrong! Let me explain.
Ok let’s start from the beginning.
You, like me, are the owner of a micro-business.
It’s just us, maybe a helper or two and the dog, right?
And we’ve got stuff to do, we have a business to run, we have customers to deal with, we have children to look after, we’re BUSY! And because we’re busy and have so many pulls on our time, we have LIMITED TIME, MONEY & ENERGY to spend on marketing.
Are you with me so far? Good.
BECAUSE we have limited time, money and energy to spend on marketing we need to get really clever.
WE CAN’T MARKET TO EVERYONE
[Tweet “You can’t market to everyone! Market to the people who are most likely to buy #tgmb #supercustomer”]
We can’t do ‘spray and pray’ marketing where we just shove a load of adverts out there and hope someone gets the message. We have to put our marketing where it’s MOST LIKELY TO WORK.
So, we need to put our marketing in front of the people who are MOST LIKELY TO BUY. These are our SUPER CUSTOMERS.
Our Super Customers are the people who are a great fit for our business. You might even have some already and if so, you’ll probably know who they are.
Our Super Customers love us.
- They love what we sell.
- They value us – they never quibble about price or haggle for discounts.
- They appreciate the time and effort that goes into our business.
- They keep coming back
- They keep spending more
- They tell their friends.
- They are a joy to work with
- They are really easy to please
- They think you are a miracle worker or a ninja genius or both.
Get the picture?
Your Super Customers are a GOOD fit for your business and if all your customers were like them, life would be a breeze.
So, let’s make that happen!
IMPORTANT: YOU DON’T NEED TO SACK ANY CUSTOMERS!
This is not about whom you SELL TO. This is about whom you MARKET TO. You can sell to whomever you like but YOU CAN’T MARKET TO EVERYONE!
It might take you a bit of time to really crack your Super Customer. It may be that you don’t have anyone at the moment who fits that description but do you have any customers who fit BITS of it? Have you had a glimpse of how it could be?
You need to spend some time getting really clear on this. If you’re struggling, here’s a different approach.
Have you ever had a BAD customer?
Someone who was such a colossal pain in the bum that you never want to hear their name again, let alone deal with them? Brilliant! Have you had more than one? Even better? Let’s use those negative experiences and use them to make your marketing better.
What Does A Bad Customer Look Like?
What was it about them that made them so bad for your business?
- Was it the way they spoke to you? Their unrealistic expectations?
- Did they begrudge paying? Did they not pay at all?
- Did they keep moving the goalposts so you couldn’t finish the project? Did they disrespect your products?
I’m sorry to bring this all back but it’s worth it, I promise because whatever it was that made them so BAD, you want the OPPOSITE in your Super Customer.
Write a list (it will be quite therapeutic) of all the bad things about them and then write the opposite alongside it – that pretty much sums up your Super Customer.
Why Is Your Super Customer So Important?
Well, apart from the fact that out of everyone in the whole wide world, they are most likely to buy from you?
OK, well once you know who they are you can start filling in some gaps.
- Why do they need you?
- Why do they love you?
- What is it about your business that keeps them coming back rather than going to your cheaper rivals?
- What do you give them or do for them that they can’t easily get elsewhere?
Your Super Customer Marketing Messages
Once you know what sort of person they are and why they are a good fit, get inside their head and figure out how and where they spend their time so you can put your marketing messages in front of them where THEY hang out.
Are they on Facebook or other social media? Why?
Are they searching Google? Why? What are they putting into their searches?
Let me give you an example:
My Super Customer is a woman business owner who is stuck. She’s lacking in confidence, she can’t get focused, she has no time, she feels alone and isolated working from home, she is broke and she really needs help with marketing because she doesn’t know where to start. Oh, and often she has children too.
She loves me because I make marketing easy for her. I show her what it means and how it works and I give her shortcuts that work, like Super Customer marketing.
I teach her how to be more confident and to get more focus, I teach her how to get new customers and how to sell more to existing customers and I teach her how to sell and make more money.
Because I know THIS about here, I can figure out she’s spending time on social media looking for groups of women like her where she can ask questions and not feel so alone. She is Googling things like ‘how to sell more’, ‘how to get more done’ ‘which social media platforms are best for business’. She is scrabbling around looking for help. And I can give her that help.
It doesn’t matter where in the world she is because what I teach works anywhere for pretty much any business, so I don’t need to look locally for my marketing. I need to take advantage of the Internet and put my marketing messages in front of her, where she is already looking.
What Do I Say In My Marketing?
Because I know who my Super Customer is, I can create marketing messages that will catch her eye and resonate with her. I can ask questions like
- Are you struggling with your marketing?
- Do you wish you had more time in the day to build your business?
- Are you scared of putting up your prices?
- Are you feeling overwhelmed?
- Do you just want your marketing to WORK and bring you some sales??
And I know she’ll be nodding to herself. You can do this too. What is YOUR Super Customer struggling with? What would she love to find? What problems do you solve? What needs do you meet? How do you make her life easier or better? How do you make her feel? How do you save her time, make her time, save her money, make her money? What outcomes do you bring about?
Hopefully this is starting to get your brain cogs whirring.
Bread And Butter Customers
Every business has 2 different types of customers: Bread and Butter customers and Super Customers.
When you start out in business you tend to attract Bread and Butter customers. These are not perfect fit customers and they are usually a long way from Super Customers, but they are customers all the same and they bring in money to pay the bills. They are your ‘bread and butter’. You attract more of these because you’re not being very targeted with your marketing and you tend to say ‘yes’ to every bit of business that comes your way, good and bad.
The trouble is, after a while it gets a bit wearing and you start to see the difference between ‘good’ customers and ‘bad’ customers, and you start begrudging the ‘bad’ customers because they are hard work!
Well, we know all about them now, don’t we? And that’s great because when you start marketing ONLY to your Super Customers, you start attracting more of them. And you start attracting fewer bread and butter customers. And your business changes.
The more Super Customers you attract, the more sales you will make and the easier your life will be.
How Much Time Will My Marketing Take To Work?
Here’s the thing – marketing takes TIME to work. It takes time EVEN when you are doing clever, Super Customer marketing so it’s going to take even longer if you’re doing it the hard way.
Once you get your Super Customer marketing working, you need to give it 3-6 months of marketing CONSISTENTLY AND PERSISTENTLY before you can expect it to properly work. You’ll probably see a change in the response you’re getting to your marketing before then, but for your marketing to gain traction and get the best results, you need to give it TIME.
So, just to sum up Super Customer Marketing :
- You can’t market to everyone – you may as well market to those people who are most likely to buy (your Super Customers)
- Work out who they are and what their life is like
- Get inside their head and figure out their pain points, needs and wants and where you fit
- Come up with marketing messages that will resonate with your Super Customers based on what you know about them
- Put your marketing messages in front of your Super Customers where they hang out
- Give it 3-6 months and watch the magic happen
Let me know how you get on. Have you worked out your Super Customer? How’s it going for you? Tell me what’s working for you!
Let me tell you a story…
…a lady messaged me via Facebook and said “Claire, I’m at the end of my tether. I am thinking of giving up my Reflexology business because this marketing thing is tooooo hard. I’ve spent a fortune on Facebook ads, I’ve got a website and people still aren’t buying.”
Does this sound familiar?
So what I asked this lovely lady was – who do you want to attract?
She was stumped because she’d never thought of it that way. Her answer was ‘anyone who wants reflexology’.
Now, there’s a big problem with this approach.
Firstly, she has a reflexology business – it’s hands on. So there are only a limited number of people she can work with each day. She has young children and can only see clients for one and a half days a week, so she has limited spots to fill.
Secondly, people will only travel so far for reflexology, so there is no point trying to market to people over 10-15 miles away.
Thirdly, she loves working with women who are having fertility issues because she gets great results but she hadn’t mentioned this anywhere because she was scared of putting off people who didn’t fit this description.
As a result, her Facebook ads were general.
They were aimed at anyone and everyone. They didn’t mention her town. They didn’t mention women. They didn’t mention fertility, or pregnancy or any of those key words. They weren’t talking to ANYONE in particular. She was trying to attract anyone and everyone, but actually she was attracting no-one.
So let’s just revisit a couple of points here.
She has a reflexology business, it’s hands on and therefore she can only fit in maybe 4-5 clients each day. WHICH MEANS THAT she only needs to attract a very small number of people in order to fill her diary. She doesn’t need thousands.
Hold that thought.
So she only needs maybe 10 clients in her business initially, getting regular treatment, with a few new ones getting added on each month to replace those who drop out.
Bearing in mind that she only wants to attract a very small number of clients each month, she may as well attract people she loves to work with, right?
I mean, let’s face it, if you are spending your days working on clients’ feet, you really want the right kind of clients because you’re going to be chatting to them and spending time with them and touching their FEET for heavens sake– why would you choose to treat people you don’t like when you don’t have to?
She gets great results with her fertility clients – they all love what she does and they leave feeling amazing. And these ladies don’t want general reflexology or general anything. They want specific help. They want to see if it can help them improve their fertility and help them have their longed-for baby. They want an expert in their specific field.
So let’s approach this a different way. I’ll put myself in her shoes for a moment:
- I need to attract 10 clients into my business and then have a steady stream of 2-3 new ideal clients each month to replace any leavers.
- I love working with fertility clients because I get great results and I have some fab testimonials.
- Plus they are coming to my home treatment room so I’d prefer women rather than strange blokes turning up at my door.
My ads would say something like ‘Struggling to get pregnant? Tried reflexology? What have you got to lose? Book your half hour taster session in our Middlesbrough treatment room for just £20 now’ Or something like that.
Now I’m not going to attract hairy builders with that one. (Nothing wrong with hairy builders, I just don’t want to touch their feet!)
Or young guys with football injuries.
Most people will take no notice of it.
Unless they are near Middlesbrough and struggling to get pregnant. And there are lots of ladies in every town in that position.
The right ladies will take notice. The right ladies will see that ad and contact her. The right ladies will see her as a godsend, as a person who might be able to help them. The right ladies will value her.
So she’ll get more of the right ladies calling her and booking appointments, meaning she gets to fill her diary with people she loves to work with, who value her and recommend her to friends, and keep coming back because they love what she does.
Doesn’t that sound GREAT?
And don’t get me wrong. She doesn’t need to say ‘no’ to people who want reflexology who don’t fit that description. If local hairy builders want reflexology and approach her, she can say yes IF SHE WANTS. But she won’t MARKET to them.
Get it, gorgeous girl?
Now how can you apply that to your business?
Off you go!