At a recent talk I asked the audience of business owners if they’d like to make more money. And if they’d like
to charge more for their services.
Unsurprisingly, every hand in the room shot up.
I asked, “What’s the difference between someone who charges $150/hour or $5,000/hour?”
As one wag quipped, you could charge whatever you like, but getting someone to pay the $5,000/hour might be a problem.
Seriously though, often there’s very little difference between the two consultants. On the surface.
The major difference lies in two deeper areas.
Their mindset and how they value themselves. And how they communicate that value to their clients in terms of process and crucially, the outcomes they can deliver.
We all have a “money thermostat”. Beliefs about how much we can comfortably charge. Then we act out those beliefs and get paid what we feel we’re worth.
But that’s not necessarily what the market will pay. Not by a long shot.
Right afterwards I had a chat with a participant struggling with just this.
She makes superb home cooked Italian food. All done from scratch. Including hand kneaded and rolled pasta.
She sells a lasagne tray for $25 to her direct clients. Most of whom are friends.
The local butcher sells her trays for $30.
A local café cuts the tray into 8 slices and sells each for $8. That’s $64 for the same tray. And the pieces fly out the door.
Price is elastic.
So what was stopping her putting her prices up?
Two thoughts surfaced.
One was she felt guilty about raising her prices. These were her friends. And the second was she wanted to be liked.
In a way not surprising.
Most people want to be liked. And the guilt often stems from thinking thoughts like, “I love to do this stuff, it’s really what I want to do, so maybe I shouldn’t charge for it.”
My response? “You use only the freshest ingredients. You make the dishes with love. Everything is handmade and takes hours. Your clients really value you and your food. So why not charge what it’s worth?
And if you don’t feel comfortable raising the prices to your friends, charge new people more. They don’t have any expectations of price and will happily pay more.”
So if you find yourself wondering what to charge and struggling with putting your prices up do two things.
The first is communicate the value you provide in terms your clients will appreciate. Don’t talk about “quality”. Break “quality” down into a process of how you create whatever it is.
Then get out of your own way and put your prices up with new people. Keep doing so until you get major resistance.
You’d be surprised what people will pay if you just take the trouble to explain the value in terms they can relate to. Most businesses lose massive profits because they are too fearful to put their prices up.
Learn from this, go forth and prosper!
Rashid & Barbara.
