The Everyday Entrepreneur Podcast
#17: Perfecting Your Prices: 5 Steps to Sell Your Services With Ease
Episode Summary
If you're wondering where to start when it comes to pricing your services or if you've ever regretted pricing your services too low, this episode is for you! I'm sharing my top 5 strategies to help you confidently pitch yourself and your prices, winning work with your dream clients with ease.
Episode Takeaways
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Do your research (yes, Google is a great place to begin!).
If you desire to work with large companies, speak to recruiters or key decision-makers – it’s informative to learn about what roles are out there, what skills people want to hire, and what people are willing to pay right now.
If you are doing 1:1 work, visit the websites of people who do the same thing you do (with similar experience and expertise). Figure out how much they are charging and decide if that feels accurate for your skills and experience.
Work out how much you want to take home before taxes each year – how does this then breakdown into projects/hours?
Consider the following factors: Your knowledge, experience, certifications, background, and education. Charge accordingly.
Your pricing will be very different to someone with a lot less experience. Do not underestimate your skills and experience you have built up over a lot of time.
Practice a pricing conversation – with family and friends, your dog or cat, or stand in front of the mirror and pretend you are with your dream client and practice. Imagine they have just asked what you charge. Just practice!
Anticipate every question your potential client may ask you – practice your answers.
Consider discounts really carefully, say no most of the time - if not all of the time. Think about what you can add instead for your client versus taking away from your pricing.
Pricing comes down to a perceived value and you could lose the opportunity altogether if you price yourself too low.
If you do price too low, make sure to adjust next time.
Remember…
If you get pricing wrong the first few times, you can refine and improve as you go.
You Don’t Want to Miss…
03:22 – Step 1: How and what research to do first.
07:29 – Step 2: How to create a financial goal given these factors.
09:42 – Step 3: Learn how to consider your background, expertise, and skillset when it comes to pricing.
11:34 – Step 4: Why you must practice the pricing conversation and how to do it.
14:58 – Step 5: “Do you give discounts?” How to answer this question along with a bunch of other awkward questions that happen in pricing conversations.
Chat With Me and More Free Resources At…
Website - http://hollyknoll.com/
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Email me – holly@hollyknoll.com
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Welcome, welcome, welcome back to The Everyday Entrepreneur Podcast. I'm your host, Holly Knoll. And I am here on a January day in Minnesota, it's cold and snowy and we are going to be talking about how to price your services with ease. I'm sitting in here, my office, that used to be the closet that I've made over into my office. My cat is sitting next to me, she's snoring, you might hear her and she is not excited about pricing conversations like I am.
So like I said, we are going to dive into five steps to sell your services with ease because all too often, it can be very awkward to sit in the hot seat with a potential client or customer and talk about money and talk about prices. And often we get thrown curve balls or get caught off guard and end up selling ourselves short in these conversations. Only to walk away, really regretting it, kicking ourselves for selling ourselves short, just to win the sale.
I don't want this to happen to you friend. I want you to go into those conversations to talk about pricing with ease, with confidence. And tools in your tool kit that will not allow you to back down, and that will allow you to really stand for what you're worth and be confident about it. So how about we start with step one. So step one, obviously, this may come as no surprise, but the first thing, when you think about pricing and what you're going to want to price your services, it's probably to go to Google and be like, "Okay, what does a consultant who does what I do charge?" And the results you're going to get is all over the board.
And that's going to probably be somewhat overwhelming and it's going to feel like throwing spaghetti at the wall. But I still think there is value in this exercise because it gives you a range, and you get to see what different people, with different levels of experience and expertise, are charging. So of course, start with Google. Another favorite way that I love to do research is, I primarily am business to business. So with my consulting and my freelancing work, I work with large companies. So often recruiters will call me and they'll want to talk about a role that came across their desk, that they think I'd be a good fit for.
Even if I'm working, I almost always take these phone calls because it's research for me. It is always good information. I get to learn about what's happening in the market, who's hiring for what, what are the hot skills people want to hire for? And most of all, what are people willing to pay consultants and freelancers like me right now? So case in point, I talked to a few recruiters when COVID first started and companies were pumping the brakes, cutting budgets, and they were clamping down, and holding onto their cash for their dear life.
Well, the couple of recruiters I talked to quoted me such low rates, that it was laughable. I was like, "Well, there's no way in heck I would ever take these roles because this is 50% less of what I normally charge." But it was good information. When I have these conversations with recruiters, they will usually ask me first, "So what do you charge, what's your rate? Where are you coming in at, when it comes to your rate?" They want to know my number and I almost never... I wouldn't recommend it really ever doing this, I always toss the question back to them and say, "Well, what is the range the client is working with?" Why? Because this gives you leverage. You're not pigeonholing yourself into a certain number when the client could have paid more.
So let's say that they said, "So what's your rate?" And I said, "It's a hundred dollars." And they're like, "Okay, sounds good." Then those conversations, I'm like, "Oh no, should I have asked for more?" Whereas if they were like, "What's your rate?" And I said, "Tell me what range the client is working within?" "Oh, 150 to 160 an hour." I would be like, "Oh, okay, good to know. Let me think about this." And then I would take that back and decide whether or not I want to work within that range or not, or come back and ask for more. And so, that is just an example of kind of my situation when I work with bigger companies and corporations when it comes to pricing.
If you were doing one-to-one work, where you work with individuals, rather than companies, I would recommend going to different websites of people that do the same thing as you do. So like graphic designers, if you're a graphic designer, if you're a copywriter, if you're going to start offering your legal services, your accounting services, go and do research and find the people who have similar skills, amount of experience, expertise. Find those people who are more or less peers to you and see what they're charging, go through their pricing funnel on their website, figure out as best as you can, what it is that they seem to be charging. And then think about how that might feel for you to charge that. And see if you can come up with some consistency across the different service providers that you research and see if there's a number in there that might feel right to you. If not, no worries. We've still got four steps to go through to help you really hone in on what you want to charge for your services.
Number two, consider your cost of living and what you need to make your target financial goal. So for me, when I was first starting out consulting and offering my services to companies within their technology departments, I knew that I wanted to replace the income that I made as an employee and more. So I not only wanted to make what I made working for these companies as an employee, I wanted to make more. So I figured out my target salary and then I divided that, this is like scratchpad math here. I backed out. I decided how much vacation I wanted to take for the year, I gave myself six weeks. I think the first time I did this, and then I figured out, "Okay, what does the average hourly rate look like for like a 40 hour gig? What does that rate look like?"
And then I went back to step one and I researched, is this a totally insane amount, or is this reasonable, where do I need to tweak and adjust? Also, I was living in California at the time and I was living in Southern California when I first started my consulting career and the cost of living there, I also needed to consider the cost of living. So what I might charge in living in Southern California would be different than maybe what I would charge if I lived in a small town in Iowa. And so consider your town, your city, what you want to make, what you want to take home for the year.
What is that take-home salary you want to make for the year? How many hours do you want to work or how many projects do you want to take on? And then figure out what that amount might look like. So I always think the cost of living and your target financial goal that you want to take home before taxes each year. Like, what is that salary that you want to make? How does that break down then into the work that you do, whether you charge by the hour or by the project? So that's another way that you can do the math to help you figure out what you should price your services at.
Number three, weigh your experience, your knowledge, your certifications, your background, your education, all of those different factors with your pricing. So obviously, for me, in my business, I would never go price my services in line with somebody who is just getting out of college and starting, maybe had two or three years in the workforce. No, I have 20 plus years in the workforce. I've worked on large, huge, complex, confusing, messy things. I've gained a ton of professional skills and experience and built my soft skills up and as well as those hard skills. So obviously my pricing is going to be significantly different than somebody with much less experience. That's just one factor to consider.
If you are a lawyer, think about, you have a lot degree that's highly sought after. That's a reason to bump up your prices, a CPA, another degree, I guess, not degree, but another certification that is highly sought after that is mandated that you must have in order to do certain work. So consider the painstaking steps that you've taken to get to where you are today, law school, taking the CPA exam, 20 plus years of experience in grueling situations. Figure all of that in when it comes to pricing your services and think about, do not undercut or underestimate your skills and experience that you have built up over time. And over a lot of time as a mid-career professional, which most of my listeners are, do not underestimate your skills, your experience that you have built up in wonderful corporate backgrounds over time. So definitely take that into consideration when you're pricing your services.
The next thing, number four, once you've arrived at an amount that you want to charge, practice the pricing conversation. Literally, go in the mirror and say it out loud, pretend that you are sitting across the table from your dream client, your dream role, your dream gig, whatever it is, and practice. And imagine they're sitting across from you and they ask you, "What do you charge?" When I was first starting out, I interviewed, my first consulting gig was with a small surf company in Huntington Beach, California. And I was sitting at a table with like four guys that were all older than me that were really serious, which was weird because it was a surfing company.
But they were all just really good friends, and they were definitely kind of sizing me up, and the question came up, "So what are you charge?" And thank God I had practiced this because I was like, "Oh God, I know I'm going to have to go in front of this group of people and I'm so nervous." But I practiced, and I practiced, and I practiced, and I practiced, saying the number, saying the number, saying the number, answering the question. You may be asked to justify. "So tell us what went into that number that you're quoting, what's included?" If you're working with one-on-one clients. People are going to have follow-up questions when it comes to you naming your pricing because they're spending money and people are going to want to know more.
They're going to want to know how you arrived at that number, what's included, and they're going to know why you charge what you charge, essentially, and they're going to probably want a little bit more information around that number. If you're lucky, some clients won't blink an eye and they'll be like... The best clients in my experience are the ones that don't blink an eye and they're like, "Great, sounds great. When can we begin?" But I also want to prepare you for the clients that may be just a little more interested in doing their due diligence, who may be a little bit more inquisitive about, "Where's my money going exactly, and what am I going to get?" So that's where it's really important and that's another podcast or blog post. But really getting clear on what it is you offer and the services that you provide so that when it does come time charge them, there's no misalignment around what they thought they were getting and what you'd actually delivered. Thus, that becomes a very, very uncomfortable pricing conversation. That's a topic for another time.
But, going back to practicing the pricing conversation, this is so important because I want you to be unflappable in those conversations because this, the actual conversation itself is where you're going to get the curve balls. This is where you are going to get every awkward question thrown your way, like, "Do you offer discounts, do you work weekends? How many hours does this include? Are you negotiable?" I think the most awkward for me is always the discount question or like, "Do you offer packages? If I buy a bigger package, do I get some money off?" Anticipate every single weird question that your client might ask you and think about, practice it, say it, how you would answer that question. And if it never comes up, awesome, but if it does, you're ready and you're prepared.
Number five, on the discount topic, consider discounts carefully. I'm even prone to say, nine times out of 10, don't offer them because there is a way to price yourself too low. Clients may act excited when they hear a rate that's lower than what they're expecting, it may make the conversation feel really easy because the clients are happy. Like, "Oh, we can totally afford this." But what's happening inside is their gut is usually telling them something otherwise, where they're kind of like, "Why is she so low, why is she so cheap? Does she not value herself? Does she not know that people actually charge a lot more? We're getting a real steal here."
But they may also be wondering, is there a catch? And so I think pricing your prices too low can actually cause your clients to lose maybe a little respect or trust in you as a business person. So there is, there is, there is, a price that is too low and I don't want you to ever be in that zone. So go back to the steps. One through three, research, consider your cost of living and what you want to make for the year. What is your target goal that you want to make from a salary? And then weigh that with your experience, your knowledge, your expertise, your certification, so on and so forth. And by doing those steps, you will be less likely to price your services too low.
Because see, pricing comes down to a perceived value versus an actual value. And if your actual value, think about your actual price is below what a client perceives you to be. So if you quote them like $10 an hour and they were expecting you to quote them $40, they could be hesitant to sign the deal and you may lose the opportunity altogether because you priced yourself too low. Really, it can happen and I've seen it happen, and I've had clients tell me it's happened, my coaching clients. So think about your actual value and price accordingly. Do your detailed market research and think about where you want to come in at. Maybe ask some friends in the industry and just do as much due diligence as you can.
And if you find that like, "Oh no, I priced too low." You can adjust, this isn't a permanent thing. As a business owner, the beauty is, we get to adjust our prices accordingly. So the next project you take on, you can say, "Well, I'm not going to charge that much anymore. I now am at this amount. I charge a hundred dollars an hour instead of the 20 that I originally quoted." The next client doesn't have to know what you quoted the last client. So think of it, even if you do go too low and you start thinking like, "Gosh, I really should charge more." You can change next time and you can improve, and refine, and tweak and get to a more stable place as you go. A more stable place in terms of just your confidence around what you're charging.
One of my favorite analogies that I love to use is that clients often want to pay that TJ Maxx price for the Prada purse, and you my friend, you're the Prada purse. So don't let them lowball you, don't let them try to buy you at the TJ Maxx price for your talent, and your skills, and your incredible strengths, be the Prada purse, stick your ground. And more often than not, depending on where you're at in your life or financial situation, what your ultimate goals are in terms of where you're at in growing your business, more often than not, I honestly recommend not discounting your work and not discounting what you do.
Apple rarely has sales, right? One of the highest quality products out there. Some may disagree if you guys are Android listeners. But think of the highest brand, some of your favorite brands out there do, they discount? Probably not, probably hardly ever, maybe twice a year. But think of yourself and your own business as that really high quality, highly respected brand that stands for something, that stands for a cost. Because your skills, and expertise, and experience, do come at a cost and clients have to be ready to pay for that.
So remember the five points that we talked about today. Number one, research your market. Research, research, research, ask friends, talk to recruiters if you work with corporations, go to other people's websites if you work one-on-one with individuals, see what people like you are charging out there. And then number two, consider your cost of living, the city you live in, the location you live in, your lifestyle. Think about what you want to make at the end of the year and then figure out, back into that and figure out, how many clients you would need to sign, how many projects you need to take on, or what hourly rate would you need to charge if you do hourly rate basis.
The next one is, don't forget to weigh your experience, your knowledge, your certifications, your expertise, any type of extended education that you have that is mandated to do some work again like legal or accounting, consider that as additional reasons to charge a premium price. Think about all of the skills you've coveted from years and years of working for somebody else, that you're now ready to go out into the market and be like, "Hey, I want to offer you this too." Think about all the blood, sweat, and tears you put in to get those skills, and then think about how you want to price yourself accordingly.
Number four, practice, practice, practice. Practicing will ultimately make you confident, not practicing the curveball questions, "Do you offer a discount?" Awkward ones like that. "Do you offer..." Oh gosh, I'm just trying to think of other questions I've gotten. "Oh, well, the market is really bad right now, so this is all our budget can afford. Are you willing to go lower?" Just think of every scenario that you can possibly imagine, every objection that you can possibly imagine this client having when it comes to signing on the dotted line and figure out how you're going to answer that in a way that is going to put them at ease, to help them understand why you charge what you do without over-explaining yourself. But just to give them like, "Hey, I charge this much because this, this and this." And being able to calmly reflect that back to them will do wonders in terms of moving forward with your contract or your engagement. So practice how you're going to handle those curveballs, practice how you're going to answer the question, "What do you charge?"
And number five, consider discounts carefully. Again, I'm not a big fan. I think instead of a discount, I would think of a way that you could offer them something more rather than dropping your prices, is there something you could throw in for them for free, or like, "If you sign on to work with me today," if you're working with one-on-one clients, "If you sign on to work with me today, I'll give you an extra 30 minutes of time." "I will give you one of my favorite PDF downloads." Or think about what you can add to their experience when it comes to the discount question versus what you can take away from yourself financially.
And if you're working with one-on-one clients, or if you're working with companies like I do, and they want you to drop your rate, which has happened to me many times, it comes down to how bad do you want the work? I've had to consider, "How bad do I want the work? How badly do I want this experience? How excited am I about this, where I'm willing to negotiate on my rate a little bit." What is the economy doing right now, and what is the state of corporations right now? So I've had to really consider, and there have been many, many roles that I've walked away with because they wanted to lowball me so much, that it just absolutely isn't worth my time.
So I guess that's what I would say in closing is, also be willing to walk away, if you can. I know that sometimes our financial situations, depending on what's happening in your life, you may not have the luxury to walk away always. But as a business owner know that you always do have that available to you and it's a choice you can do. I've definitely walked away like I said, last year in 2020, right when COVID started hitting April, May timeframe, I talked to a few recruiters who wanted to, again, lowball me so bad and offer this rate that was just, I mean, I dare say, insulting. I walked away, I was like, "No, thank you. But I'd be happy to refer you to anyone if I think of anyone that wants this role." Which I didn't, because I couldn't think of a single person I would tell about this role at such a terrible rate.
So anyway, just remember as a business owner, you always have the option to walk away, at any time. Even if you're in mid-contract and things aren't working out, depending on how your contract is worded, which again is another podcast, but you do have the flexibility to do something different and to make a change if something's not working out for you. So, I hope this helped you today, I hope these five steps can help you negotiate your prices, have that conversation with your clients, with ease, with confidence. I hope you learned something new today.
If you liked this podcast, head over to iTunes, leave me a review. Let me know what you think. Shoot me a DM on Instagram, I'm @hollyknoll, I would love to continue the conversation there. And if this pricing conversation really inspired you to start your own business, think about downloading my free business action guide. In six quick steps, you will have a compelling, solid business idea that you can even start pitching to clients immediately after completing the doc.
So now you've got your pricing conversation done and dusted, and you've got a compelling business idea. I mean, what's stopping you? So keep going, keep taking action and let me know, reach out anytime if I can be of any help to you, and thank you for listening today, and best of luck perfecting your prices and having those pricing your services conversations with your clients with ease. Thank you for being here today.
Thank you so much for joining me this week on The Everyday Entrepreneur. There are thousands of podcasts out there and you chose to be here with me, and for that, I'm truly grateful to you. Make sure to stop by my website and you can subscribe there to the show on iTunes, Stitcher, or via RSS, so you'll never miss an episode. And while you're at it, if you found value in the show, I'd love your rating on iTunes. Or if you'd simply tell a friend about the show, that would mean the world. Finally, check out my free guide to starting a business at hollyknoll.com/free, and be sure to tune in two weeks from today for my next episode. Until next time, keep taking action to build your business.