In today's episode, we are talking about a crazy important but scary topic...setting your prices and when to scale and raise those prices.
Ahh! This is such a crazy important topic and one that feels hard, scary, and takes a whole lot of courage to do well. Why? Money makes us feel strange. And what comes up a lot is:
Let’s just get that out of the way. If those thoughts feel familiar, you are NOT alone. This is a mindset issue that you have to tackle...and how do we do that? This is the work you have to do and believe that you are worth it -- and the best way to get there is to go for it and prove to yourself that people will pay for it.
I am going to talk about some numbers and then we are going to dive into mindset around the value of what you have to offer in your small business.
A great episode to tune into today and so impactful for your business.
Please check out my website where you can find even more free valuable content and great marketing strategies for your business!
As a side note, i'm gonna take a little break so we will back soon with even more great content for season 2 very soon!
Links:
In today's episode, we are talking about a crazy important but scary topic...setting your prices and when to scale and raise those prices.
Ahh! This is such a crazy important topic and one that feels hard, scary, and takes a whole lot of courage to do well. Why? Money makes us feel strange. And what comes up a lot is:
Let’s just get that out of the way. If those thoughts feel familiar, you are NOT alone. This is a mindset issue that you have to tackle...and how do we do that? This is the work you have to do and believe that you are worth it -- and the best way to get there is to go for it and prove to yourself that people will pay for it.
I am going to talk about some numbers and then we are going to dive into mindset around the value of what you have to offer in your small business.
A great episode to tune into today and so impactful for your business.
Please check out my website where you can find even more free valuable content and great marketing strategies for your business!
As a side note, i'm gonna take a little break so we will back soon with even more great content for season 2 very soon!
Links:
What to charge and knowing your value
0:02
I'm pumped about today's topic, which is how much you should be charging, and raising your rates. If you haven't already subscribed to Through the Marketing Lens take a second to do so as your always getting these fluff free episodes that will help you grow and scale your business. So where talking about this crazy important topic that we're talking about like raising your rates and pricing it's so hard and scary and takes a lot of courage to do well, and 100 Just think about why, like, money is a funny topic, and we all feel so many ways, about money which is a whole different conversation. But what comes up a lot when we talk about how much to charge is, You know who am I to charge that much, or what if nobody says, yes, that fear of rejection around that. And what will people think of me for charging that much.
0:51
Will everyone laugh at me? We all imagine this response like everyone's waiting around to see like what number you put on your website or however you communicate that right, and that's just not how it is. We're going to dive into a little bit about how this comes up in our everyday life. And, you know, if this resonates with you if you've ever had any of these feelings I certainly have. You're not alone. This is a mindset issue that you have to tackle in your life and in your business and how do we actually do that. This is the work, this is what people are talking about when they say you have to do the work. You have to believe that you are worth that number, and the best way to get there and to go for it and to charge that number is to prove to yourself that people are actually willing to pay it. I'm going to talk a little bit about that today.
1:51
So first of all, we're going to talk about getting the numbers, what numbers should you be charging, and then we'll dive into some of the mindset around the value of what you have to offer. So how much do you charge is a great question. And this is how I do the basic math, so that we can figure out the number that makes the sense, most sense for you, because we can dig around in your industry, and see what other people are paying and that's absolutely helpful, but it's not necessarily your answer. Okay. So, I will often have you work this backwards. If I'm a service based business, which is really what I'm talking about a lot today so if you're a product based business, You can totally do this with me just replace number of products for your billable hours. Okay. So the first thing I want you to do is think about how much you want to make monthly, not what you're making now. But, how much you want to make in this next stage and don't say a million dollars let's be realistic, and talk about your next stage, which if you're making, you know, $6,000 a month, we can say 10,000 That's still reasonable, but I want you to pick a number that you could get pretty easily in the next you know, six months.
Unknown 3:18
All right, so we're going to do $10,000 For ease purposes for calculation ease. So $10,000 a month now. How many hours per month, are you committing to play at work, billable hours so this is the amount that you could be working on client work it's not actually what you're working right now. So let's say 20 hours of client work billable hours per week, and we'll multiply that by four so it's 80 hours per month that you're showing up, that are essentially your billable client hours. Now I want you to divide that ideal monthly revenue by the hour so $10,000 divided by 80 hours per month comes out to $125 an hour. If you're full. So, the one important thing that we're talking about is we're creating this pricing based on the idea that you will get full, not that you are full now. You may not be, and that's not a bad thing because once you are full, things are going to change again. Okay, so we're basically building this out so that you can get what you want, and book yourself out.
4:31
Alright so at 125 an hour, you're going to be making $10,000, if you book yourself out. You will then create a package out of this okay so I don't I wouldn't want you to just charge 125 an hour, I would want you to create this into a package so for an example, if you are a branding expert and a full client package takes you, 20 hours of work from soup to nuts, and this may or may not be something you communicate in full to your clients. We're just talking about how much you you know on average it takes you to do. So, if it's about 20 hours and you're charging 125 an hour, that's 20 $500 for your full package. And, uh, you know, on a monthly basis, you need to be booking, about four of those if that's the only package you have which obviously that's not what I would want, but we're just keeping this really simple. So, four of those packages, would, would equal your 80 hours per month, and that would be your $10,000. Okay, so we just did some really basic math, around your rates, and you could tell me, look 127 hours just too little. And to that I would say great, because this has to feel really good to you too. So let's rework the numbers we work the math to either lower the amount of hours that you're showing up, if $10,000 is all that you want to be making which I'm sure that most of us want to be making more revenue, or you're going to increase that revenue number, and will increase your prices. Okay, so that's completely up to you, and ultimately this is just a simple way to calculate your rates and set your standard. And what I mean by that is you know what I mentioned before is a lot of times people will dig into like industry rates, but that's not, that's kind of a random because if it's not what works for your life, it doesn't matter. So that's why I like to work this backwards and then feel out the number based on you. And the standard that we're creating for you. That's all this is is what is the value that I'm putting out there when I feel that this is worth. And, and what do I want to be making. That's where this comes from, and that's really where it should come from. It doesn't mean that people aren't going to be charging, way more than you, and way less than you, and those are for other clients that are really making this use packages and these prices for your specific clientele. So the question I get. After we create this, and we're talking about booking ourselves out, and then we get to the place of okay so how and when do I raise my rates. Okay, great question. And the truth is if you're asking me that question, it's likely that you're not far from when that would happen.
7:45
So let's talk a bit in literal terms so when you're completely booked up so you're booking those 80 hours a month, consistently, and you're making your $10,000, your hours are completely maxed out you can't be taking on any more clients. You're gonna ask yourself where do I go from here. And this is where I would say, Okay, it's either time to scale, which is a whole separate topic, or it's time to raise your rates and or both. So that's the moment or raising your rates is really, that's where it would come into play. There are some other components which I was just mentioned mentioning but for simplicity, that's really where we start so we're not going to talk about raising your rates, until you're consistently booking yourself out and getting that $10,000 And then we're able to talk a little. So when I say, Oh $125 An hour for the example of say, how does that number feel to you, or the number that you did on the back of an envelope, how does that number feel to you does it feel scary. Does it feel realistic, what comes up for you. And do you feel worth that number, Maybe it's important for you to dig into that. Because setting your own rates and setting your standards is what we're talking about right here so take the space and the time to really ask yourself like is that Does that feel good?
9:15
when you're growing your rates are going to raise, and we especially women, we push back on doing that, and we always are afraid of upsetting people, or how people are going to react. But the truth is you see this in your everyday life and you probably don't even bat an eyelash. I was just at my son's barber today. And when I went to go out. He charged me 20 bucks, and he's charged me 16 bucks for years. And so the back of my head, I think that's about a 25% increases rates. Honestly, after going to this barber for years. My thought was good for him
10:02
And you know what I think most of us would think that he is not going to lose me as a client, because I already know he does a good job. My son likes the barber. I'm already in. So that's
how your clientele is likely going to feel. No, just think about that and how many other times do you see rates, raise or prices raise on basic things like produce in a grocery store and you don't even notice. Because you have assigned value to that and it's not going to make you leave. And if it does make you leave, then you probably didn't see the value right if I didn't like this Barber, and he raised the rates. Yeah, maybe I will leave that I've already assigned the value, and I'm not it's not worth it for me to dig around and frankly, like I said the thought of good for him comes up, and that's often what people are thinking, what they already see your value.
11:08
Okay, so the truth is, when it comes to your rates people are willing to pay way more than you imagine. If they see the value value value value right value is totally totally subjective. So, if we're really smart, and we're focusing on the value. That's really where people are going to get. They're not hooked because of all the features and all the nifty things that your company has, It's really about them being emotionally attached into.
11:46
So, when a big mistake that I see when people do set their rates, they might feel really good, they think that it's a number that would really work, and although it's really scary so they go and they start asking for other people's opinions, and it's just so painful because if you're asking your ideal clients, and you're ready for the honest answer that's fine. But if you're asking someone who is not your ideal client, Like for example with your mom or your husband or your best friend. That has nothing to with your business, you're not going to get the answer that's true, right, because they don't assign the value to what it is that you do, as if they would pay for it, it doesn't, that doesn't mean they don't see what you do is valuable, but they don't need, what you do.
12:41
Right. So it's important. Once you figure out like this number that feels good that you test it out with people. That makes sense, with people who need what it is that you.
12:55
I want to talk about value for a moment, because the number that we are willing to pay is arbitrary, because we base it off of the value that we assigned to it, which is truly not.
]13:15
It's an emotional decision. Let me give you an example. So, let's talk about something that we all a lot of us see. So, we are emotionally attached to this thing, and an iPhone goes for like $1,000 to say. Still pretty much everyone I know has one and its a lot of money but we believe that it's worth that you see the value. You know, think about like how much space interaction for instance right, we're just thinking about value the way that it makes us feel we feel connected because of it we everything in our lives and we don't put this thing down right so these assigns so much value to this that even if they raised it to 1500. Do it.
14:10
Now, let's look at and talk about the same $1,000 that we regularly buy every two years. Because clearly, You're selling stuff for that same $1,000 that you spend on iPhones. Now what if I told you I had this pair of white vintage sneakers. And this vintage pair of sneakers with $1,000 the same. You might look at me like I'm totally nuts and tell me like $1,000 to spend on that, and I'm probably not willing to buy my sneakers. But you were just willing to spend $1,000 on the iPhone. So, What, like, even if you were going to put the iPhone in your credit card or however you want to do it, ask a friend for money. You were going to do it.
15:09
But suddenly with my sneakers, which are the same amount. You don't have the money, or you're not willing to. And the reason is because not because you don't want the money is if you wanted them to hear it out, you just don't see the value, you don't need my dirty sneakers.
15:26
Now, what if I told you, this isn't gonna work for everybody listening but most of you listening, I bet you're gonna get this. What if I told you this, these are vintage Chanel sneakers. And would that change how you felt about my sneakers, might not. We might not be willing to spend the 1000 but we might be in a different conversation at that point, right, because it's a value issue.
15:58
But why does Chanel, make you even have a different conversation with me. You might even be willing to buy this vintage pair of sneakers. Because the fact that they're Chanel makes you feel some sort of way, the sneakers didn't change their functionality didn't change, but the fact that they're Chanel, like make you feel wealthy, or important or trendy right, it depends who you are, what it means to you. It's just about how you perceive, Chanel, and what it's going to do for you. The way people perceive you, your brand you is really the value we're talking about as value is way more about emotions than it is about function, Right, the guy just said that but it's true.
16:51
So, what is your brand, doing for them, what is the value that you are showing up with, to make your rates make sense. I'm not saying how many millions of features. Does your company have for, like, how many little tiny things are you going to give them, right. I mean, how are you gonna make their life, true better. What are the things that they want and how are you going to give that to them. That's what I mean by value so if someone's willing to spend $125 an hour on something, they're probably willing to spend. 150, even more than that 175 If you're communicating the value. Okay, so look if you're in a place where you're thinking about either setting your rates resetting your rates increasing your rates, whatever, do the back of the envelope numbers start there. And also make sure that you're communicating your value. This is not something value communication is not something that you're doing, just on a sales call, or, you know, on your sales page or your landing page. Know your value is being communicated, all the time. Right, so the things that the way they're going to feel is being communicated, all the time, so that they can perceive that you're making their life better so that when they get to that purchase moment when you say, you know, it is the package is 20,500, and it's about 20 hours of work so comes out to 125 an hour however you break that down. They're like, okay, but they already knew in the back of their mind, it didn't really matter what the number was because they already knew how valuable, what you're doing for them is this all takes so much practice. It really starts with understanding the concept of talking about the value. And you have to do it all the time. And then it comes down to pitching your pricing with confidence. So it's not the wavering right like when people first start talking about raising their prices, it's like, well, you know I just raised it to 150 It was 125 and I can honor that and, no, no, like it's pitching it with confidence, it's really saying the number and knowing that you do have the value to back that up. And they might say no, but that means they didn't see the value that really has nothing to do with number.
19:47
Yes, this can feel hard. But like anything else that you do, it just comes down to doing it
and getting past that her feeling. And then you just get better and better and better with practice and the more people you're pitching. The more times you get told no and then evaluate it and then do it better next time. Like that's the only way to the other side. You can be stopped at charging $75 an hour for a really long time, because we can make a million excuses.
20:27
But I promise you that if you start thinking about it from a value perspective, and stop thinking about it from like a fear based oh my god I don't want to lose one or two clients perspective right because losing one or two clients is, in the long run going to be a better scenario. If you're charging more. So I hope this episode all about pricing and raising your rates is super helpful. As always please please share this episode. If anyone you're thinking of was appreciated or needs it, you sharing it, because that this podcast is literally the only way that we get the podcast out there. So screenshot it on your phone, as your Instagram stories ever you share it, please tag me if you post it or on Instagram at Katrinaaaronson_consulting, and please rate this podcast. If you like what you're hearing. Thank you so much for trusting me with your time, before you leave me I want to give you a heads up that we're gonna take a little break, little time off the podcast and we are coming back with a little with some changes on the podcast. And we have a jam packed next season with incredible interviews that I'm so freaking excited about. If you're interested in learning more about business coaching, which is what I do. I am currently on a waitlist until September, I believe,
22:06
but listen, I'm always, always having value calls, which is when I freely talk to you for 20 minutes, and if you're interested, just drop me a message anywhere, Instagram, you can hop over to my website and send me a message from there or you can always directly email me and I will get you on my calendar. Yeah, so I look forward to talking to you soon I'll be back for season two of through the marketing lens. Until then, stay at it.