Sometimes, we don’t know what to charge at all. Sometimes we pay for things, that were just not worth it.
Sometimes, we pay a fair price and expect fair service but it’s just not the case.
And sometimes, everything goes wrong.
I paid to upgrade my broadband to 100Mb.
I have invested in a new shiny Macbook Pro.
I got a new assistant, too. Because hey, my business is growing at a light years speed.
And none of those investments above played nicely with each other.
I didn’t huggle, I didn’t skimp – I wanted the best – yet still, things went wrong and I was without the internet for my masterclass last month. And I had to change the date to next week, because this Tuesday? Things went wrong again. My shiny Mac wasn’t able to keep wi-fi connection stable enough. My assistant didn’t send out email reminders in time. It was bang-my-head-on-the-desk moment.
Now, why I am saying all that? Because think how SCARY it is for your customers to buy from you, if the reputable, global companies inexplicably drop their service levels and simply don’t deliver.
Apple is one of the most valuable companies in the world. But I am not the only one troubled with the fickle wi-fi on my newly bought Apple product.
It always comes back to trust.
People are not afraid to spend money, if they trust you to deliver.
And it’s easy to raise your prices, when you are in high demand.
It’s a bit trickier, when you are starting out and simply don’t know what to charge.
Usually, because you don’t trust yourself just yet.
Because we have this employee mentality – paid by an hour – that stops as from growth.
It doesn’t matter how much you charge, but if you charge per hour you will eventually hit the income ceiling, because there is a limited amount of hours in the day. No escaping that.
And if you charge per hour – your clients will always challenge you, if you could deliver it in less time. Or they will start shopping around, because it makes them uncomfortable to pay someone per hour more than they pay themselves.
If you charge per hour, you fall in the trap of the in-built mistrust from the client, as well as put penalty on your skills:
- Clients know, that if you are paid by an hour you have no incentive to complete project faster. Why would you (integrity aside), if dragging the project would mean getting paid more?
- And, most importantly, the better you are, hourly rate penalizes you more. When you are better and faster at completing projects and delivering results – less hours doesn’t mean you get a bonus, you are paid less than if you were less skilled. Mind boggling, right?
And if you charge to little, regardless if it is per hour, per product or per project – they won’t trust you full stop.
They won’t implement. They’ll ask second opinion. They cancel mid project. They will actively look for reasons to be unhappy with the service. Because paying under market value makes them feel like they cheated themselves a little, like they doubted their self worth a little – and no one likes it. In the perfect world it wouldn’t matter.
But right now?
- That more pricy painting is more ‘art’ (even if it looks like a splatter of paint).
- The food in a pricier restaurant tastes that bit better.
- The coach who charges ridiculous amount makes you feel sick about wasting all that money so you hustle harder and you get better results. (And that’s a whole other discussion!)
Truth is, we don’t really know the value of things we are not experts in. But we don’t readily admit it ether.
So we judge based on price. Because that we can compare.
Because your pricing is a part of your branding and a watch at the market stall is most certainly fake.
It doesn’t even matter if it’s real. You will always have doubts.
Besides, the clients that pay you most, are also the ones with more skin in the game.
They implement straight away and get better results.
SO YOU BOTH WIN!
Now, how can you raise your prices?