When I ventured into business, one of the biggest challenges I encountered was pricing, specifically how to set it. In conversations with my friends, those of us who had ventured into service based businesses faced a different set of challenges from those selling products. In the latter, once you aggregate the cost of the product and overheads, you only need to figure out a markup and you have a price for your product. There are other ways of figuring out product pricing, such as comparing the pricing of the products with what your competition is selling.
In businesses like consultancy, writing, training etc the playing field is different. The difficulties we face around pricing our own time and effort, as women, come from the same hang-ups we face in the workplace. Women have a history of not asking for what they are worth and not negotiating because it feels too pushy. And while in the workplace there are safeguards such as the range of pay for each position, in business it's entirely possible to price yourself so low that you make losses indefinitely. So what do we need to think about when pricing our time in business?
Research
Unlike a physical product for which you can identify the related costs fairly easily, it's a bit more complex for service-based businesses. One of the ways to identify what to charge is figure out how the rates in the market are. But when looking at existing players in the market you also have to keep in mind the size of the firm, how long they have been in the market, what their specialty is etc. in comparison to you. Fortunately, for similar even if not identical services you can price along the same range and approach potential clients, expressing a willingness to negotiate.
Another way to look at it is by evaluating your client's needs which will put you in a better position to quote for your time. Look at the market rates the client would have to budget to have a full time hire and use this as a negotiation tactic.
No freebies
When I started out, the temptation was to gain testimonials from clients by any means possible - including doing free work. Thankfully, before I did this I met a friend who had been on this journey for longer than I had and she set me straight. Think about the last time you made an investment in a course or a product. Having spent your hard earned money, you are likely to invest more time in taking care or putting the work into it to get the desired outcome.
One of the hardest things to do down the line is to convert free to paying clients so ensure you evaluate all other alternatives first.
Confidence
The minute we launch a business we enjoy or a service we like, we start to feel guilty, as if we should not charge for things we enjoy to do. Then we start second guessing our offering to the world and before we know it, we have talked ourselves out of the excitement we felt when we were preparing to go into the market. Half of starting your own business is confidence, and if there's one thing we can do it is to deal with the inner blocks that stand in the way of us feeling as if we are not enough.
TIPS
- Do not give your time away for free but you can offer to tie a free needs assessment to your client proposal.
- Learn to get comfortable with negotiating the rates of your offering.