Last week we talked about how important it is to know about the people you’re marketing to. Some would say that a more important topic is knowing at what price that group of people will be willing to buy what you’re marketing. I have to admit that knowing and picking a price that actually works for you is challenging! There are tons of factors to consider, so today I’ll cover just a few things and I invite you to share your thoughts and challenges in the comments below.
1-you have to be able to pay your bills:
This is what differentiates you between running a business and having a hobby. If you’re actually able to pay your bills and have (even just a tiny bit of) money left at the end of the month you’re probably doing something right with your pricing (or you’re working way too hard).
2-it has to be a fair price for the service or product:
If you’re asking me to pay $100 for a bottle of water, it had better come from the fountain of youth! But if you’re asking me to pay only $20 for an hour of counseling, I might wonder why you (a certified counselor) is only charging $20. The price should reflect quality, quantity, your experience, and to some extent the time involved.
3-figuring out your prices:
First determine how much money you need to make each month to pay your bills, feed your family, and a little cushion. That cushion is not $10,000 vacations or buying a second home, but we are including some “emergency fund” money to take care of surprises. Then determine how many hours you can reasonably work in a month. Let’s say you need $10,000 per month for your bills, and can work 40 hours a week or 160 a month. This would mean your hourly rate would be $62.50. Not charging by the hour is another conversation entirely.
What lessons have you learned about prices?