The top five things I recommend you consider when creating your pricing
For creative independents who need to put a price on their services, these are the top factors I recommend you prioritize when coming up with your pricing sweet spot.
While these might seem obvious, you would be surprised at how many people do not actually do them!
1. Know how much you need.
Do the math to figure out what is okay, good, and great.
Okay = how much money you need to cover your basic expenses
Good = how much money you need to meet your financial goals
Great = how much money you want to make to feel quite proud
Understanding what you need can be the foundation to customize your pricing.
**Here is a spreadsheet tool I created to help you determine how much you need to cover your basic needs and meet your financial goals. Use it. It’s free!
2. Understand your market.
Yes, Google it.
Yes, look up your competitors.
Yes, do prospective client interviews and ask how much they would pay.
Yes, validate what they actually will pay by running tests like pre-sales of an MVP of your offer. If you notice there is quite a large range of pricing in your market, consider Factor #3 and #4.
3. Know your ideal client's budget.
The tough and infuriating (but also liberating?) thing about pricing is that it's all made up. You could be offering the same service to two different clients and be paid 10x less or more simply based on the budget of the client. Get clear on who your ideal client is and how much they will realistically pay for your kind of service.
How do you figure this out?
Talk to people who are already doing the work you’re doing (but don’t see you as a competitor because of some obvious distinction between your offerings)
Interview your target client and literally ask them!
Do a little sleuthing to see what your competition is charging
Test and iterate. If you put out a price that people continue signing up to pay, chances are you’re at a good place or could even raise your rates. If prospectives are not ‘converting’ into actual paid clients, you can even ask them what their hesitations are and most will likely tell you if you are too expensive for their budget.
4. Be real about your current skill level and confidence.
You may be a seasoned professional but if you are offering a NEW service, then you are still a beginner. If you start with rates that far exceed your experience, that disconnect is going to show up in your sales calls (unless you are really good actor) and it will be obvious that you are not yet comfortably able to state your rates confidently. Practice stating your rates out loud and see what you can say without breaking into a laugh or throwing up.
5. Remember you can always change your pricing.
Your pricing is not forever cast in stone. You get to change it, just like you get to change everything else about YOUR business. So remember that you can always increase your rates as your skill level and confidence increases. I now charge 4x what my initial session rate was.
If you started out too high and no one is biting, then you might need to test out lowering your prices to find what your ideal clients will actually pay. If lowering your prices won't work for you, you're going to need to find a new ideal client or start experimenting with something new to offer.