by Dr. Cindy Briggs
What should I charge for this product? How do I know if my service is worth this price? What if people don’t want to pay what I am asking?
These are all questions I hear so often from entrepreneurs. We know that our product/service has value, but we are unsure of how to set a price for what we do or what we sell. If we charge too much– we may lose potential customers, but if we don’t charge enough we may not be valued.
So the question becomes…. how do we determine what we should charge?
If we are selling a product, it may be a bit easier. You determine what it costs you to create each item and then you add profit to that to get an asking price. Typically, people won’t argue too much on pricing of an item because they can touch it, and they leave with an actual item.
However, if you are in a service-based business, it can be tougher. You are helping someone with a problem, or you are giving them knowledge they may not have had previously. Determining how to charge for a service can be harder when starting as an entrepreneur.
I think everyone has a different way to do this, but I will give you the way I have handled this with both my business coaching business and with my husband’s chiropractic clinic. The first thing we did in both cases was look for the market rate for what we were providing. We looked at the industry as a whole and then we looked at communities that closely resembled ours. In both instances we found a wide range so we looked to the middle of the range.
Here is the part where so many people struggle– but is a reality. For example, when looking at my pricing I thought of my overall education. I have extensive advanced degrees that when put together give me a different experience than other coaches.I have a larger breath and depth of knowledge and it is OK to charge for that experience. (Trust me this was very hard for me at first… I found myself apologizing often.)
One area to consider is this.. you are allowed to make profit. Profit is not bad! I always liked this quote from Inc magazine, “The reason you went into business selling services to customers was to make a profit. If you were giving away your services for less than cost, or just breaking even, you’d be operating a non-profit venture – or a business that’s likely to fail. “
Determine what you want and need to make doing your business. If you are doing this full time, you will need to base your individual budget on your entrepreneurship. What do you honestly need to make to continue to do this business?
You can hear more details on this subject in my podcast, “The Hard Question: What is the value of my product/service?” Just keep reminding yourself that this is your business and you have to feel comfortable with your price (whether low or high). Don’t apologize for your price. Be firm. I have never heard anyone selling a Mercedes apologize for the price, or people selling a designer purse– you know when you pay the price you are getting quality. YOU are the Mercedes, Louis Vuitton, Chanel of your industry— be proud!
For more entrepreneurial tips, visit us at www.cindybriggsphd.com. We provide programs dedicated to helping entrepreneurs and communities THRIVE!