Guest post by Cass Mullane, Entrepreneur Coach, Right-Brain Business Plan® Licensed Facilitator, Prosper Creatively, LLC
One of the more challenging tasks you may have to do in your business is setting a price for your products and services. If you go too high or too low, people might not buy and you will find yourself in a cash crunch rather quickly. While pricing is critical, it will make no difference whatsoever if you’re not in front of your real customers.
You must know your customers. Spend time looking closely at who you are serving and who you really want to work with. When you’re very clear on who your customers are, price becomes less of a factor in the buying decision because your customers already want what you’re offering.
For example, I regularly hear “people won’t pay me that much.” When you say that, what you immediately need to do is stop, step back and take a hard look at who you are marketing to. Are they really your peeps? If they will not pay you for your work, you may need to look for another market. And believe me, there are tons of markets out there. Put your creative muscles to work and broaden your horizons.
I have a client who makes beautiful textiles but who was not selling much at shows. The feedback was that her work was too expensive. So we took a close look at the shows she was participating in. She regularly bought booth space at several local craft fairs and often her booth was between or in close proximity to booths with mass-produced, very low-end items. The people that attended these shows were not the people who were buying higher end textiles for their homes and offices. The next season she bought space at two interior designer and two legal industry trade shows. The booth cost was quite a bit higher, but the investment paid off because her work sold well and she received commissions for future work. All she did was look closely at who her real customers were and made a change so she could put herself in front of them.
Once you’ve really gotten to know your actual and your desired customers, what I’d like you to do first is not get hung up on what the price of an individual item or service should be. Instead, approach this from another angle: How much you need to net each month to be comfortable?
Pay yourself first. Is it $500 per month? Is it $5000? Whatever the number, once you set it, you can more easily figure out how many items or services priced at $40 and how many priced at $4,000 you need to sell to earn that amount. It becomes a simple math exercise, not an emotionally laden mental roadblock.
In my next post, I’ll talk about simple math and four important factors in pricing: Materials, Overhead, Production Time and Value of Your Time.
Pricing is a flexible process. Set your revenue goal, find your real customers and price accordingly.
©2019 Cass Mullane – All rights reserved
Cass Mullane’s calm, comfortable approach consistently yields positive results for clients. Her business and personal coaching practice, www.prospercreatively.com, specializes in delivering solid left brain business skills in a fun, visual way. Cass in an international best selling author, a contemporary artist, and creator of the Cool Stuff Jar™ coaching program. Her book, The Cool Stuff Jar: Three Simple Ways to Live a Happier Life, is available on Kindle. You can also visit Cass on Facebook!