Today, we are excited to welcome Markey Read, one of our Premier Success Coaches, to the eWomenNetwork blog as our guest writer. In the article below, Markey shares a formula we can use to ensure our pricing reflects our true value. Welcome, Markey!
Profitable pricing is more than guessing a number or matching market standards; it's about reflecting the true worth of your expertise and attracting clients who value the solutions you provide. Undercharging leaves money on the table and undermines your professional credibility.
Step 1: Establish Your Baseline with Cost of Services Sold (COSS)
What does it cost you to deliver your high-quality services? Understanding your baseline costs is an important first step in elevating your pricing strategy. This includes hard costs like software and professional fees. It’s also important to factor in intangible costs such as your time and education.
Add Up Your Professional Expenses:
Certification or license renewal fees
Memberships, subscriptions, or industry journals
Continuing education and conferences
Tools, software, and other essentials
Value of your Services: To find your Value of Services, add up your professional expenses to get the basis of your COSS. Understanding your COSS is the first step to truly embodying the value of your time and expertise.
Consider Your Experience Investment: Remember to factor in the intangible value of your education, training, and real-world application when calculating your value.
Marley’s Wise Words: The more expertise and wisdom you can share, the more value you bring to your clients.
Step 2: Calculate Your Effective Hourly Rate
While not recommended for strict billing purposes, knowing your effective hourly rate provides a better understanding of whether your pricing supports your business goals.
Calculate Your Hourly Rate: If you are the primary service provider, assume you have about 1,000 billable hours per year (20-25 hours of billable time x 48 weeks). Divide your total annual sales – projected or historical by 1,000 and you will have your effective hourly rate.
Reflection Questions To Consider As You Calculate Your Hourly Rate
Does your actual hourly rate match what you thought you were charging?
Does it reflect the value of the transformation you offer?
If there’s a significant discrepancy, it's a sign your prices need adjustment.
Pricing Strategy Building Block: When calculating the price for your services, consider how many hours of delivery, preparation, and follow-up are required to be effective.
Markey’s Wise Words: The more clearly you understand the value of your time, the more able you are to charge what you’re W.O.R.T.H. Learn more about my W.O.R.T.H. guide here.
Step 3: Develop Your Value Ladder & Tiered Offerings
Having a range of offers or several pricing tiers makes it easier for clients to engage with you at various levels of support and price points.
Evaluate Your Offerings: Keeping your services accessible to a wide range of people often means suppressing your prices inappropriately. Creating multiple levels of services allows more people to access your wisdom. Remember that your potential clients need to know, like, and trust you before they purchase your fabulous signature program.
Levels of Tiered Offers Include:
Introductory Level: Lower-priced offers like masterclasses, audits, or starter consultation packages. This allows folks an opportunity to benefit from your methods and wisdom as they get to know you and develop trust.
Intermediate Level: More comprehensive services like multi-session programs or small group intensives. This provides real solutions to urgent problems in their business as they deepen the relationship and see results.
Advanced/Premium Level: High-touch support like 1:1 VIP days or extended coaching programs. This allows clients to go deeper, experiencing the breadth and depth of your wisdom, methodologies, and tools as they become part of your community.
Markey’s Wise Words: The more opportunities you provide for people to benefit from your wisdom and solutions to their challenges, the more likely they are to become loyal clients and raving fans.
Step 4: Implement & Refine Your Pricing Strategy
Pricing is an evolving process. Once you’ve calculated your costs, set a target hourly rate, and created tiered services, begin rolling out your new pricing.
Start with New Clients: Implement new rates with new clients to ease the transition.
Emphasize Benefits: Focus on the benefits and transformations of your services, rather than the price.
Add Value with Bonuses: Enhance service value with bonuses like books or extra appointments.
Test & Track: Monitor client responses and conversion rates.
Markey’s Wise Words: The more you use your pricing strategy, the easier it becomes to confidently price new programs and evaluate current services.
By recalibrating your pricing strategy, you stop leaving money on the table and properly value the transformative results you provide. By understanding your COSS, and setting up tiered offerings, you establish a solid foundation for your business’s growth. This ensures your pricing resonates with clients who truly appreciate and benefit from your work.
Remember:
Know your numbers (COSS, effective hourly rate).
Create tiered offers that reflect varying levels of transformation.
Confidently communicate benefits & outcomes when changing prices.
You’re well on your way to achieving a pricing model that celebrates and compensates you for the true value you bring. Keep advancing, and remember, you're worth every penny!
Markey Read is a business strategist & pricing expert who guides women solopreneurs from expert to CEO. With over 30 years of experience, she specializes in aligning inspiration with practical strategies to create a business that you love and loves you in return. Connect with her here.
Want more advice on how to grow your business? Join eWomenNetwork, the #1 Business Community for Women Entrepreneurs, and learn how to grow your business with the support of like-minded women!
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