Your Three Step Formula to Pricing Your Services

Podcast

Mar 15

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As a business coach, one of the biggest areas my clients ask for advice in is around pricing their offers. Listen in as I share my three step formula to how to confidently and strategically price your services.

The episode:

Katrina Widener: Hello and welcome to the Badass Business Squad podcast. Where I help entrepreneurs like you feel lit up in their businesses by connecting them with the best community, education, and business strategy. I'm your host Katrina Widener. Tune in each week for bite-size episodes where I'll share implementable advice, interview guest experts, and highlight key takeaways from real hot seat meetings inside the Badass Business Squad Group coaching program.

Hello everyone, welcome back to the Badass Business Squad podcast. Today you are getting a little note from just me. If you're new to the podcast, my name's Katrina Widener and I am your host. We're going to be talking today about something that I get asked about a lot, which is why I decided to do a solo episode this week.

So instead of doing a guest expert who's coming in and giving tangible advice, I'm going to share with you one of the most implementable and most asked about things that I do with clients or in free sessions, or really that I have talked about to other communities as well. And that's pricing. I know everyone is sitting here being like, "Oh my gosh, yes Katrina pricing is one of the banes of my existence. It's so difficult. How do I know that I'm pricing the right amount?"

And I think that one of the big things that I want to start off with is really laying the foundation that whether or not someone chooses to work with you, it does get affected by what your price point is. But there are ways to really strategically and honestly... formulaically? If that's a word, it is one now... approach pricing so that you're able to convert customers more regularly. I mean that's like one of the number one reasons why people ask me about pricing, is because they are afraid that they're not converting because of their pricing.

The second thing that I want to say before we dive into any of the nitty gritty, is that the other big thing that we hear about pricing all the time is "price your worth". And I'm going to be the first to tell you that that has no place within deciding your pricing range or deciding how you are going to have your services or offers or product be priced. Because pricing your worth is something that is so abstract and nebulous and like this huge gray area. And as human beings, how do we say like, "What is my worth?"

So I just wanted to really start off this conversation around pricing by setting the expectation that if you are someone who has been struggling with pricing, who has heard "price your worth", who has had all of this kind of back and forth confusion or self-doubt around what you want to price your services and offers? That's completely normal. That is something that you can approach from a super strategic, formulaic place. And we don't have to incorporate in like who you are as a human being and what your worth is in order to price your services and offers accordingly.

So now that I have set this stage... I approach pricing with my clients, almost literally with every single client, from a place of looking at three different things and walking through three different steps. And the reason why I want to set this expectation is because if you're listening to this right now and this is something that you've been struggling with, I want you to save this episode. Listen to it now, yes. Listen to it the first time through, and then save this episode and come back a second time with a notebook. Or go on to the show notes on the website and look at the full transcript so that you can see what the three different steps are and actually go through this exercise in live time with what we're talking about.

Because it's not one of these like mushy gushy, "What are your feelings about pricing?" sort of exercises. It is something where I'm actually saying, "Do this research, look into this thing, and then you'll come up with a price range. And then you can determine within that price range what the best number is for you and your business." I really want to take a lot of the emotion out of pricing. It is an emotional thing. I mean, when we are entrepreneurs our finances and our ability to support ourselves on a day-to-day basis are so intrinsically tied to what we price, and how we handle our finances and all of that kind of situation. But I want to make this feel like something that you feel really confident about, something that feels really easy to you, something that you're just like, "Okay, I can sit down, do this and move on."

So now we're going to move into the actual exercise. So when you're sitting down with your notebook, the very first thing that I want you to look at before you think about your business, before you think about your clients or anything else that when it comes to your pricing, I want you to sit down and look at your industry. I want you to think about who are some of the people you follow? Who are some of the people who are maybe a little bit ahead of you in your industry? And who are some of the people who are maybe a little bit behind you in your industry? And the reason why I'm asking you to do this is because I want you to get an actual physical number. Like an actual range of numbers of what people are pricing within your industry and what levels they're at.

So for me as a business coach, I might look at someone who is just starting out, who is just beginning their business as a coach and see what they're pricing. And then I might look at the person who I worked with, or the person who I would love to work with and see what their price point is. I would look at my colleagues who are in the same level as me and see what they're pricing. I would really get a very clear understanding of what the industry standards are for what I do, and what the pricing range is for the competition and the other people within my industry.

And I want to say this with one small caveat. If you are someone who is like, "All of the other X, Y, Z people in this range or people in my industry are doing this thing, and I really want to stand out and I really want to do something different, and I really want to do this." Still do this industry pricing range analysis and research so that you can then act accordingly and with information and strategy behind you. We want this to be intentional. We want you to be proactive about how you're viewing your pricing and not just reactive in the moment. And that is why even if you are intentionally trying to step aside from what everyone else is doing, it is still helpful to know what everyone else is doing.

So for example, say you are a wedding photographer. I'm just going to use photographer because it seems like a pretty straightforward example. If you look at some people who are pricing ahead of you, if you are looking at some people who are pricing below you, people who are pricing in the same range as you.... you are also going to be able to take a look at what they're including in their packages. Maybe if they have like something laid out on their website about their customer experience. Like you get a gift or you get these things when you're done. You'll be able to really see how they communicate each of these price points. So that then you can say, "All right, if I want to be pricing at the top end of my industry, I need to be doing these sorts of things. If I want to be in the middle, I need to be doing these sorts of things." And really figure out what that is so you can have a strong foundation of where to start when pricing yourself.

Once you have done all that research, once you have looked at the industry standards, that is when we move along to step two within this pricing formula. And that is fully understanding who you are working with. I know so many people who get really turned off by the idea of doing a ideal client avatar or figuring out your like ideal client and asking yourself all these things and creating a profile. And I hear you. I understand it. This is still the number one most important thing with almost every single thing in your business, is clearly understanding who you're working with and what you do for them. And so having a very, very, very thorough understanding of your client is actually maybe the most important part of pricing. Because if you know exactly who you are working with, you will also know what they can afford. You will also know what other things they're spending money on.

Again, if we go back to a wedding photographer. Say someone has not looked at the industry standards and has not looked at who their ideal client is. And they are charging at the top end of that industry standard, but are marketing towards someone who maybe doesn't have full understanding of wedding photography. Or maybe doesn't have the money to invest in their wedding quite the same way that someone who the top of the industry is marketing to? You will not convert. And this part right here is where I see the most people have that disconnect between their pricing and their conversion rate, is because they do not have a clear understanding of who their client is and therefore they are not speaking to or pricing their offers accordingly. And then they get a lot of people hopping on calls saying, "I would love to do this, but I can't afford it. I would love to do this, but I can't afford it. I would love to do this, but I can't afford it."

Sitting down and having a really, really clear understanding of who your ideal client is, is going to allow you to have that strategy and to have that confidence behind setting your price. So if you sit down and you're like, "Well, my ideal client is someone who maybe shops at Anthropology and West Elm, who is really interested in these like little details of their wedding. Who is willing to put the money toward their wedding to make sure that this is something that they can show off on social media after the fact. That all of their guests are having a great time, that the venue looks absolutely beautiful." Then they're going to be able to say, all right, "I can price according to this audience." Whereas if their audience is someone who is most often shopping at someplace like Target, they are more likely to buy their things for their house from Yellowbird or some online opportunities instead? They're a little bit cheaper. People who are more likely to look on Facebook marketplace or buy like things based off of referrals as opposed to searching for the highest quality of something? You're going to be pricing separately for someone who shops at Target versus someone who shops at Anthropology, right? Getting that clear understanding of your client is going to allow you to understand where your client is within those industry standards, and therefore where your pricing is within those industry standards.

I want to make a very small caveat here and say that if you are realizing the client that you have is not the client that you want, that's a whole different story. That's where we need to talk about how your marketing, what your messaging is, what your positioning is. That's where we need to be really, really clear on those things as opposed to being really, really clear on providing the highest customer experience or those sorts of things. So understanding your client is also going to help you understand your pricing. But then again, your marketing, your messaging, your positioning, et cetera, et cetera.

So once you kind of have that range of your industry and where each of those different prices fall within those industry standards. And you have the range of what your particular client... or your ideal client if you're looking to make a shift, can afford. That's going to give you a smaller range within those industry standards. So what we're really doing is we're taking this large range within your industry and narrowing it by really adjusting it to who your unique client is. And then that's where we come in and look at you. This is the third step.

So the number one thing to determine your price point within this new narrow down pricing range, is how sold are you on yourself and on your service? This is where the feelings part comes in. This is where we're talking about very specifically who you are, what your experience is, what education you have or are investing in, right? Are you taking courses to improve your craft? Are you working with a coach to improve your business? Like what are you investing in yourself? What confidence you have, what results you've been able to get? The ability to make what you do and what you offer be absolutely repeatable for every single client you work for. This is where we get the clear number within that narrow down range, so that you can come up with your pricing number.

Obviously this is the Badass Business Squad podcast, so I'm going to bring Human Design in at least a little bit. When you come up with these numbers... so you get the industry standard range, you narrow that down into your ideal client range. You narrow that down and you get the range of, "How sold are you on what you're doing? Can you price at the highest part of that range? Do you price in the middle or the lower and then do the work on yourself and on your services to be able to price to that higher point of the range?" This is where we bring that feeling aspect into play, and this is where if you are not sold on yourself it's really, really going to make a big difference. And where I'm talking about the Human design part is where I'm saying, "When you know your decision making authority really, really, really well, and that is really your most optimal way of making aligned confident decisions? This is where you can utilize that to be like, 'Is this the right one for me? Yes or no.'" Or depending on what your decision making authority is.

So what we're really saying is you are taking into account the industry, the client, and yourself, and then utilizing your decision making authority to pick from that narrow down range of numbers, what you are going to price and what you're going to charge.

And after you have done all of these things, really what I want to suggest is feel confident in that number, because you have the strategy and the facts behind it for why that is the number you picked. This also means that you can one, really utilize this in sales calls. You can be really, really confident and say, "Here's why I have priced this amount. I know that the people who should work with me can afford this. I know that this is what you're going to get out of it, because I'm really sold on my service. And I know that this fits within my industry and that's why this is the price I'm going to have." So when you're on a stance call, it feels way.... I don't want to say defendable. Because we don't need to defend our prices, but it allows us to have that confidence behind it every single time we bring this up.

But it also really allows you to say like, "This is something that I have done, and then in six months I can do this exercise again and reevaluate it. And then six months after that I can do this again and reevaluate it. And maybe I'm coming up with the same number and maybe I'm coming up with a different number. Or maybe like I mentioned beforehand, I'm realizing that the client I have is not the client that I want. And I can make shifts in my business and my marketing and my operations to meet this new client, so I can have this new price point."

And I love utilizing this with myself and with my clients because it really does give that clear picture and that clear understanding of a confident pricing system that works for you and works for your clients so that then you are converting more regularly.

So, I hope this was helpful. If you have any questions, again, you can go back and look at this on the website in the show notes. It'll have a full transcription there. Or feel free to DM me or get in touch and we can talk about this for you if you're really stuck. So I hope that this was helpful and I will be back with you all next week.