There are a few clues that will let you know you’ve hit the pricing sweet spot, or are getting close to it, so if you’re not experiencing these things it might be time to review your prices.
You communicate your value
When I first started my business I set my prices way too low (a story for another day). And if your prices are significantly lower than other people in your niche, sure you’ll win some business, but people will wonder why your prices are so low.
Think about it – we expect what we pay for. If my Kmart shoes fall apart after 2 months I’ll be sad (they’re super cute!) but probably not too surprised because they didn’t cost very much. Similarly, if your prices are too low your clients will most likely think ‘Bargain! But why is she so cheap…?’ and have some concerns about your experience or the quality of your work or product.
You attract the right clients
Pricing is a positioning tool and therefore helps to communicate what you have to offer and to whom. So your price should reflect the value your product or service will provide to your clients. For example, an online business manager charges a higher rate than a VA because they support their clients with some of the thinking, strategy, and project management in their business, which frees up the client’s time and mental load, leaving them more space to serve their clients or create new things in their business. Which has value.
When you understand and respect the value you provide, you will attract clients who do the same. When your prices are too low, you can end up with clients who treat you simply as a person who can do a thing. Which isn’t a criticism of those clients, and isn’t necessarily a bad experience, but the relationship can feel very transactional and hands off.
Instead, when you work with clients who recognise the value that comes from having you on their team, the relationship tends to become more reciprocal and you are a respected contributor to the success of their business (in my experience). And working within those relationships feels pretty damn good.
You feel satisfied by your work
You’re more likely to spot this one by the absence of feeling shitty. Pricing too low kicks off a rollercoaster of different things including money stress and feeling pressure to take any work just to get the money in. When my rate was too low I was working SO MANY HOURS just to make ends meet. And there were many days when I found myself consumed by resentment – about the hours I worked, about the work I was doing, and about the clients who treated me like I wasn’t an experienced and knowledgeable businesswoman.
Really, that resentment should’ve been aimed at me. I created this situation because I didn’t think enough about how to set my prices properly and so I didn’t attract the right kind of work or the right clients, and money stress meant I had to work too much just to get by. I ended up feeling burnt out and fell out of love with my business. Not fun.
When you price properly you can get yourself out of that feast-or-famine cycle that’s so common for freelancers and service providers, and making money feels a bit easier, which does wonders for your mindset and attitude (which in turn makes it easier to attract good things – it’s a good cycle!) It also lifts enough of the financial pressure that you can afford to be more thoughtful about who you work with and the projects you’ll say yes to – which (say it with me now) will help you attract the right clients.
Now it’s over to you
When was the last time you reviewed your pricing? The best way to know if it’s time for a change is to do a gut check, keeping in mind the things we’ve talked about in this article. If it’s not feeling right, set aside some time to play around with your numbers and come up with something that feels right. You can do this x
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