Guest blog post by serial entrepreneur and business coach, Natalia Crawford of Social Business Bosses.
How to price your products and services for profitability
Have you ever created a product or service and then found yourself wondering how much you should charge for it?
Many times, pricing something can feel like pulling a random number out of a hat.
However, when it comes to pricing your offerings for your business, you don’t want to just pick a random number, or charge as cheap as possible so people will buy, or charge what you think others will want you to charge.
As a business owner, you want to be strategic and profitable. So today I want to share my top tips for pricing your products and services:
1) Consider the time you put in
Most times, people are charging way too low for their offering. Even though I generally don’t recommend charging hourly, I want you to consider how much you would want to make if you were being paid hourly and multiply it by the amount of hours it took you to put this offering together or how much time it will take you to deliver it.
2) Consider the value
One of the areas that is often overlooked when it comes to pricing is value. The best way to put a price tag on value is to think about the time and money you are saving someone when they purchase this offering. That’s called value.
3) Consider the outcome
What result will your offering provide for someone? For example, if you are promising a 6-figure result but charging $27 does that seem believable? No! The price needs to match the level outcome.
4) Consider the commitment
One of the issues I see with pricing things too low is the level of commitment. When you charge a fair price people will show up. If you don’t charge enough there’s no skin in the game and therefore no need to commit. Bring up the level of commitment by making it a quality investment.
5) Consider your audience
Lastly, you do want to think about your audience. This doesn’t mean your offering has to be cheap. It simply means that you can meet them where they are. For example, offering pricing plans if they tend to have lower budgets.
Follow these tips the next time you price something and you’ll walk away feeling better about what you are getting in exchange for the value you offer!
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