Tonight (5-19-2015) at 7pm Central I will be joining #InfluencerChat on Twitter to discuss how to price your products and services. Setting prices is a big gray area for many consultants, I am constantly having peers contact me asking for advice on what they should charge. Especially when they are starting out.
Over time, and through much trial and error, I have learned the three keys to pricing your products and services as a consultant:
1 – Know your worth
2 – Charge what you are worth
3 – Never apologize for doing so
I say that I learned this through much trial and error because when I started consulting 10 years ago I did *not* do this. Back in 2005 it was very difficult to determine the ‘going rate’ for social media consulting, and that was my focus at the time. So I usually based my pricing mostly on what I thought the client could afford. A lot of consultants do this, especially when they start out.
Another key mistake I made was that I didn’t mention costs upfront to the client. In fact, cost was usually the last thing we addressed. This is an obvious problem because it meant that I would sometimes spend 2-3 weeks playing phone tag with a potential client before finally learning that they need $3,000 worth of services and have $500 to spend. It wastes their time, and it wastes mine.
Today, I give all potential clients my prices upfront. If I cannot give them an exact prices then I give them as defined of a range as possible. This saves me time by setting expectations upfront. The ball is then literally in their court. After telling them my price, they typically either never respond, or tell me that their budget isn’t quite that much and make me a counter-offer, or they accept. Either way, it saves time for me.
It also makes sense to publish your rates. Many consultants balk at this, but again, it saves time for everyone. If you prefer to adjust your rates based on the client and circumstance I get that, but the potential issue that creates is it becomes more difficult for your desired clients to find you. Small businesses have different budgets for marketing services than global brands do.
This also communicates to the potential client that I know my worth, and am comfortable asking for it. Which also communicates to the potential client that I am getting my worth.
Case in point, my speaking rates for events start at $7,500.00. My rates and everything I provide are clearly listed here on my site. Let’s be honest, $7,500.00 is a lot of money for any event to spend on a speaker. So when an event planner or organizer contacts me about speaking at their event, I tell them my rates start at $7,500.00. I will also explain exactly what they will get for that $7,500.00:
1 – I will provide a presentation of up to 90 minutes (including Q&A)
2 – I will stay at the event during the day on which I speak, answering any questions that attendees have
3 – I will conduct a book signing at the event, selling my own books, which I will bring
4 – I will help promote the event on my site and via my social media channels beginning 2 months before the event
This clearly communicates to the event planner what I cost, and the value I will create for them. As a result, it becomes much easier to justify my speaking rate when events learn that I will stay for the duration of the event and help them promote it beforehand. By doing this I am not only creating more value for the event, I am also helping to ensure the success of the event. Which ultimately benefits me (the speaker) as well, because if every event I am speaking at is a success, it not only makes me look good to be speaking at successful events, it also increases the chance that I will be invited to speak at more events. For example, I spoke in Gulf Shores last week at a tourism event because the organizer had attended a similar tourism event I spoke at two years ago in Huntsville. She loved my presentation and asked me to present to her group, and I did.
So when it comes to setting prices for your products and services:
1 – Know your worth
2 – Charge your worth
3 – Never apologize for doing so
We’ll chat more about setting prices tonight at #InfluencerChat on Twitter, starting at 7pm central!
I agree with your comments completely however I feel your price needs to remain competitive (or possibly lower) to get the business. My husband and I constantly have this discussion (some would say argument) about what something is worth. His point of view would be to charge what you want to get for the job, service or product rather than pricing yourself too low….I, on the other hand, believe if your prices are lower more business may roll in – especially in this iffy economy.
Hi Christine! The problem I see with trying to have the lowest price is that you attract clients that will only do business with you because you charge the lowest amount. Which means that as soon as anyone charges less than you do (and someone always can) then you lose them.
Additionally, clients that will do business with someone strictly on basis of them charging the lowest will typically be the ones that argue the most about prices. You may offer to do $100 worth of work for $75, then they will ask you if you could do it for $65.
And the clients that will want to haggle on an already great price will be the ones that will constantly complain about the work you are doing during the project. So here you sit, doing $5,000 worth of work for only $2,500, and the client is constantly complaining that they aren’t getting their money’s worth. It leads to you resenting yourself for not asking your true worth.
In my experience, you create far fewer headaches for yourself if you ask what you feel your worth is, and stand your ground. I’ve tried both methods (charge less to get more business, charge more and don’t haggle), and in my experience I make far more money, with fewer headaches and the clients are happier with the results when I charge my worth.
Does it mean I have to turn down some clients that wanted to get $100 worth of work for only $50? It does, but I honestly don’t want to work with those clients anyway, so it works out perfectly for me.
Nice
$7,500.00 is a big amount
I want to sell my invention outright. I am going to receive a patent. I’m not interested in royalties; I need the money now.How do I determine a price to sell it for? It will cost about $20 wholesale, and $40 retail. It has the potential to sell millions of units worldwide, but of course, there’s no guarantee that any will be sold.