Are you struggling with determining a price for your new product or service? If so, you’re not alone. So many business owners are trying to figure out the right pricing just like you! While we suggest you do thorough research, planning and have a strong pricing strategy overall, we want to give you 4 ways you can pressure test what you’re thinking.
4 WAYS TO TEST YOUR PRICING
Number 1 - Can You Pay the Bills and Make Money?
So many business owners think about value, affordability and even profits without considering what it will cost to make the product or provide the service. We suggest you take the time to run the numbers. Here’s how…
FIXED EXPENSES + VARIABLE EXPENSES + YOUR PAY + GROWTH = COST TO RUN YOUR BIZ
Fixed expenses are your operating expenses, like subscriptions, rent, insurance, one-time expenses like furniture and your employee labor costs that will not change.
Variable expenses are your expenses that may fluctuate, like your wages, employee benefits, office supplies, and contractors.
PAY YOURSELF!! Your time and labor are an expense! So may business owners pay themselves IF they “can afford it”. Flip your mindset and pay yourself because you CAN’T AFFORD NOT TO! Even if it’s a small amount to start, you should earn income for your time.
Growth Expenses. Your business today, won’t be your business tomorrow. Consider setting aside a specific amount weekly, monthly or per business transaction to fund the next important phases or additions to your business.
Now you know how much it will cost you to keep your business afloat, it’s time to determine your profit margin, the amount you will charge above your expenses. This can be tricky and there are so many things to factor here: industry, time in business, and your ideal customer/client, to name a few.
Once you’ve determined your profit margin, this is where the next 3 ways to test your pricing can really help you!
Number 2 - Talk to Another Business Owner in the Industry
There are so many forums, private memberships, groups and events where your people hang out. You have to find them and talk to them! Learning what other business owners in your industry are charging, what expenses they have and ways that are increasing profits and reducing costs is invaluable. Show up in places and spaces where people in your industry show up, share what you are learning and your expertise, and ask a TON of questions.
Number 3 - Conduct Your Own Market Research
Yes, you could pay a firm or find a study, but you could also communicate with people all on your own. What are the questions you’re curious about or what information do you need about your ideal customer's behaviors? Craft 3 strong and specific questions and get to asking. Here are some ways to collect data:
Social media stories, polls and in post comments
Asking at networking events
Posting in private groups or communities (follow the community rules of course)
Hosting a coffee or lunch for a group of people
Offer a gift for survey completion
Number 4 - Test Your Confidence
Let’s face it, sometimes the only thing holding you back is YOU. You’ve calculated, tested and feel pretty aligned to your target audience, but you just can’t name your price. Maybe it’s limiting beliefs, a mindset barrier or some fear that you haven’t overcome. Whatever it is, you are clear that the problem is YOU.
If this is you, you are not alone! There are so many other female business owners who are struggling with confidence. One way to overcome it, is to practice. Practice saying your price out loud to yourself and to people that love you. Then practice saying it to people in your network and people at events that may not even be your clients. However you practice, just allow yourself to hear it over and over until it feels normal.
Before you go, we just want to caution you on a few things to avoid…
Avoid: Guessing and not doing your research.
Instead: Do your due diligence. Conduct the research, learn your industry standard, study your ideal customer. You give yourself a competitive advantage when you’ve made a well-informed decision about what you charge.
Avoid: Over-analyzing to the point that you never even launch the product or service.
Instead: Make a decision! You can make adjustments as you learn. Keep reminding yourself, perfection is the enemy of progress. It’s better to communicate a change than to never make any money in your business.
Avoid: Offering so many pricing options that your buyer is overwhelmed.
Instead: Keep in mind, value is not in the quantity, but the quality of the product. If you have a service the value is in the transformation you offer or the problem you are solving. Too many pricing tiers and packages will cause your potential customers to psychologically check out.
Avoid: Pricing based on what your customer can “afford” vs. the value of the product/service.
Instead: If your ideal customer can’t afford what your offer is worth, then consider adjusting your target. If your target customer needs to stay fixed, consider re-evaluating your expenses and revenue goals. Your customer and what they will pay must be closely aligned.
Remember, this is your business. It’s your way of solving a problem that exists in the world. You deserve to be paid for your bright ideas. You deserve your worth and to be compensated for the value that your products and services provide. We are cheering you on and we believe in you!