Transcripts
Welcome to Live With The Pricing Lady.
Speaker:I'm Janene, your hostess.
Speaker:This show is all about helping you build a sustainably profitable
Speaker:business while making an unbelievable impact on your world.
Speaker:Learn from my 20 years of experience and from my guests as we discuss their pricing
Speaker:challenges, failures, and successes.
Speaker:Pricing is a way of being or behaving in your business.
Speaker:My mission is to help you confidently charge for the value you deliver.
Speaker:Pricing is either hurting or helping your business.
Speaker:Let's make sure it's helping you reach your dreams.
Speaker:In this episode of Live With The pricing Lady, we take a look at what you are
Speaker:overlooking when it comes to pricing for profit in the service sector.
Speaker:Sit back, relax, and enjoy the episode.
Speaker:As entrepreneurs, we strive for financial freedom, but how often have you
Speaker:overlooked the power of pricing when it comes to achieving your business goals?
Speaker:Hey, there it is.
Speaker:Janene Liston, and you are on Live With The pricing Lady, the podcast.
Speaker:Today I want to talk about pricing for profit in the service sector,
Speaker:what it is that you are overlooking.
Speaker:There are certain default modes that people go into when they're setting prices
Speaker:in the service industry, and I want to share with you some of the things that
Speaker:you should be looking at that will help you to achieve your goals more easily.
Speaker:pricing is there to help you achieve your business objectives.
Speaker:In fact, when it comes to profit, which should be one of your main
Speaker:objectives, not always the most important, but it definitely is going
Speaker:to be at the top, towards the top there.
Speaker:Meeting those profitability needs, pricing is there to help you do that.
Speaker:Now, if your pricing strategy is not set up well, it can
Speaker:hinder you from doing that.
Speaker:We wanna make sure that you're looking at and doing the right thing, things so that
Speaker:your pricing strategy is actually helping and making it easier for you to meet your
Speaker:business objectives like profitability.
Speaker:Many service providers struggle with pricing, especially women.
Speaker:Women are good at undervaluing their expertise or simply saying,
Speaker:I don't care about the money.
Speaker:Is another thing I hear very often from women.
Speaker:They're also more likely to just copy what everybody else is doing without
Speaker:considering their unique strengths.
Speaker:That is the challenge that many of you are be faced with, and I'm gonna
Speaker:share a few things with you today that are gonna help you be able to take a
Speaker:step forward in your pricing so that it helps you in your business and that
Speaker:it's not so difficult for you to do.
Speaker:Let's start by taking a look at some of the common pricing
Speaker:pitfalls related to setting prices.
Speaker:The first is competitor comparison.
Speaker:Now, I say this with a little bit of love and and laughter, but
Speaker:typically service-based businesses, when they go to set their prices,
Speaker:they go something like this.
Speaker:We do this really cool thing, or I do this really cool thing, everybody
Speaker:else is charging about this much.
Speaker:I'm new, so I'll charge a little bit less.
Speaker:And that is the extent of what they're doing to set their prices
Speaker:and that is not going to help them.
Speaker:It is actually going to limit what they can do and it is going to most likely
Speaker:leave money on the table because you're not thinking about your customers,
Speaker:their needs, what they value, and how what you offer and your uniqueness
Speaker:brings value in terms of what they seek.
Speaker:Competitor comparison, you want to understand your competitors, but very
Speaker:rarely in my experience, does it make sense in a service-based business just
Speaker:to copy what everybody else is doing.
Speaker:You want to be more precise than that.
Speaker:And if you are doing competitor based pricing, you want to make sure that
Speaker:you're comparing to like competitors and competitors that are successful.
Speaker:So you need to understand if and how profitable they are, if you
Speaker:can, because for all you know.
Speaker:Their prices may not be set up for success.
Speaker:They may be targeting different customers or have different cost basis than you do,
Speaker:and if you adopt their pricing strategy and your business is not the same, then
Speaker:chances are it's not going to work.
Speaker:The second pitfall around price setting.
Speaker:,is a two-parter.
Speaker:I call it the "fear of", there's two fears that really get in people's way, and one
Speaker:is the fear of being perceived as greedy.
Speaker:So if you talk about pricing, if you focus on profit, you know, oh
Speaker:my gosh, is everybody gonna think I'm a greedy money monger, right?
Speaker:That's one fear that definitely steers your behavior in the wrong direction.
Speaker:And this is where I hear a lot of people say, oh, Janene, I'm here.
Speaker:I want your help.
Speaker:But I don't really care about the money, and my response to that is
Speaker:you have to care about the money.
Speaker:As a business owner, you have to care about the money, about the profit.
Speaker:Now, I'm not talking about chasing after profit at the expense of your customers or
Speaker:trying to take advantage of people, but I am talking about having an understanding
Speaker:of your profitability and how your prices are going to help you achieve that.
Speaker:Now the second aspect of this fear of concept is the fear of losing clients.
Speaker:So there's this fear that if you set the price too high,
Speaker:then people are gonna run away.
Speaker:And what happens is you tend to price too low, and it has the same
Speaker:effect as pricing way too high.
Speaker:It steers customers away from you.
Speaker:These two fears are not helping you.
Speaker:What you can do to counter them
Speaker:- focusing on having a profitable business does not make you in
Speaker:any way, shape or form greedy.
Speaker:And so you need to find a way to disconnect focusing on those things
Speaker:and this sort of perception that you have that people are going to
Speaker:assume you're greedy because it.
Speaker:Does not make you greedy, in my opinion.
Speaker:It makes you smart.
Speaker:I think I even have an episode on that or a little video clip
Speaker:somewhere on pricing makes you or profit makes you smart, not greedy.
Speaker:When it comes to losing clients, yes, no matter what price you set, whether
Speaker:it's high, it's low, it's in the middle, there will always be people
Speaker:who say, no thank you, and that's okay.
Speaker:Your job is to find the ones who want to pay that and they wanna pay a fair price.
Speaker:And as I said before, a fair price is one that reflects the value of your offer.
Speaker:That enough people in your target group are willing to pay for it, and it
Speaker:has to bring you a reasonable profit.
Speaker:And sure you may have clients that turn you down even when you have a price that
Speaker:meets all those needs and, but it's not necessarily because of the price, it's
Speaker:actually because they're not interested or it's not a priority right now or whatever.
Speaker:You kind of have to stop being afraid of losing clients and just focus on
Speaker:getting the right clients in the door.
Speaker:The third and last pitfall of and when it comes to price setting and
Speaker:service-based businesses is overly being overly focused on time.
Speaker:I like to say time is just the wrapper your services are delivered in.
Speaker:And I say this because we don't buy the milk for the carton.
Speaker:We buy it for the milk.
Speaker:You don't buy the cereal for the box.
Speaker:You buy it for the cereal which you're going to consume.
Speaker:And it's a similar concept when it comes to pricing.
Speaker:They're not buying it because of your time.
Speaker:They're buying it for the expertise that you have.
Speaker:Yeah.
Speaker:If you're an expertise business.
Speaker:Usually most services, some form of expertise.
Speaker:So what happens is.
Speaker:When you focus on time, then your customer focuses on time, and you're
Speaker:both overly focused on something that isn't bringing added value to the
Speaker:table, and that limits your pricing.
Speaker:The second part of that in a service-based business is that time-based rates do not
Speaker:grow with you as your business grows.
Speaker:Let's say.
Speaker:In the beginning of your business, some things take you more time, right?
Speaker:And so customers are kind of paying for that upfront.
Speaker:But as you become more efficient in what you do and get results faster, your
Speaker:customers actually end up paying less, not more for a more valuable service.
Speaker:That's what I mean by it doesn't grow with you.
Speaker:So those are three pitfalls that I'd like you to take a moment.
Speaker:You can even stop this and think about it.
Speaker:Are you in the trap of any of these three pitfalls, competitor comparison, the fear
Speaker:of, and that's greed and losing clients, or are you overly focused on time?
Speaker:Let's look at some key strategies for profit-based pricing.
Speaker:If you follow me, this will not be a surprise.
Speaker:But the first one is value-based pricing.
Speaker:So value-based pricing is rooted in understanding customer value,
Speaker:so your prices will reflect the value that your services deliver.
Speaker:To clients, it's not just about what you charge, but how it
Speaker:aligns with the benefits and the economic value they get out of it.
Speaker:For example, a boutique marketing consultancy that helps a client
Speaker:increase re revenue by a hundred thousand could charge a fee that's
Speaker:aligned somehow with that value rather than just charging hourly rates.
Speaker:Now there's many different forms that that could take.
Speaker:Would you just charge them a hundred thousand?
Speaker:Probably not.
Speaker:But you'd want them to get a return on their investment in a relatively,
Speaker:in a reasonable amount of time.
Speaker:And so your pricing might somehow reflect that
Speaker:value-based pricing.
Speaker:As I said, is rooted in understanding the customer, so you have to be clear about
Speaker:who you're targeting and you'll want to understand what it is they value most.
Speaker:Another example I made an offer to a client who wanted me to do some training.
Speaker:When I sent the offer they said, okay, that's outside of our budget.
Speaker:They wanted me to do it for half of the budget.
Speaker:So I thought, okay, let me have a look at this and see what I could
Speaker:deliver for half that budget.
Speaker:And I thought, well, the content is all relevant and important, and
Speaker:I didn't feel taking any of it out was going to do them much good.
Speaker:But I decided, well, I can deliver the, the training, but without the slide decks.
Speaker:The slide decks take a lot of time for me, so it's a labor
Speaker:intensive thing for me to produce.
Speaker:More importantly, and remember I said more importantly here, more importantly,
Speaker:they are of high value to the customer.
Speaker:Because they can use those slide decks again and again to re train
Speaker:other people in the organization and they don't have to produce them.
Speaker:They get my expertise, not just in a meeting, but they get it written down
Speaker:and structured in a very specific way.
Speaker:I went back to them, I said, yeah, sure, I can do it for that budget, but
Speaker:I will not deliver slide decks with it.
Speaker:There was a lot of value in those slide decks.
Speaker:And then being able to give them the choice of do they want the training
Speaker:with the slide decks or not meant that they had to make a decision
Speaker:about what was most valuable to them.
Speaker:The second key strategy for profit based pricing is project based pricing.
Speaker:These are fixed deliverables, so charging for specific outcomes can provide clarity
Speaker:and stability for both you and the client.
Speaker:So rather than saying, you know, this'll take me five man days and I'm gonna
Speaker:charge you, you know, X per mandate.
Speaker:You say, I'm gonna do this work.
Speaker:I'm going to charge you a package fee for this.
Speaker:For example, a career coach, rather than just offering a, package with a
Speaker:number of sessions, and a price per session would instead offer a three
Speaker:month leadership program at a fixed price based on the transformation.
Speaker:That the client is seeking or the transformation delivered is
Speaker:probably a better way to put that.
Speaker:So again, it's very fixed on certain deliverables.
Speaker:If you were helping somebody, find a job in the leadership and executive space, and
Speaker:it could be different milestones related to their resume, related to interview,
Speaker:training related to how to negotiate.
Speaker:Those could be the types of milestones that you might be looking at.
Speaker:Project-based pricing, again, you'll see a, a trend here whether we're
Speaker:looking at value-based or project-based.
Speaker:We're really setting the prices based on the value.
Speaker:Now the third one is a little bit different, but can be very helpful,
Speaker:and that's retainer agreements.
Speaker:The value that retainer agreements bring is stable income streams.
Speaker:A retainer is offering ongoing services.
Speaker:You are doing a social media package, right?
Speaker:And you might say, okay, I'll do these three things each month for you, for
Speaker:a fixed price, you pay in advance for x number of days of my work.
Speaker:If there's that much work to do, then we use it.
Speaker:if you don't give me enough work to fill that time, then you lose those days.
Speaker:But a retainer agreement usually implies that they pay upfront each month or each
Speaker:time period, and then you block that time out in your schedule to work for them.
Speaker:That's a way for you to more easily manage your workflow, which is one of the
Speaker:reasons that it can be, quite beneficial.
Speaker:It gives you a more predictable income because it's usually based on some
Speaker:sort of monthly fee, and it encourages long-term relationships with clients.
Speaker:So this is something that's often used in freelancing.
Speaker:For example, a boutique HR consultancy offering a monthly retainer package
Speaker:for recruitment and compliance support.
Speaker:That's one example.
Speaker:Those are three strategies for profit-based pricing.
Speaker:Now let's take a look at three overlooked aspects of pricing that
Speaker:you're going want to be focusing on.
Speaker:The first one is confidence, and I can't emphasize enough how important
Speaker:it is for you to feel confident.
Speaker:And if you don't like that word, you can use certainty how that you feel
Speaker:certain about the prices that you have.
Speaker:It's crucial that you feel that, because if you don't feel that
Speaker:your customers won't either.
Speaker:And this confidence comes from understanding your customers, your
Speaker:offer, the value that that offer brings, and I really mean economic value here.
Speaker:I'm not just talking about, oh, it saves you time.
Speaker:How much time does it save you?
Speaker:And what does that reflect in terms of a monetary value?
Speaker:And you have to be comfortable communicating those prices and that
Speaker:value effectively to your clients.
Speaker:This confidence makes a big difference.
Speaker:So a lot of times when I meet people I'll ask them questions about their business.
Speaker:Sometimes I'll even ask, oh, what do you charge?
Speaker:And oftentimes when I get an answer from people, it'll be $2,000?
Speaker:Like they're asking me.
Speaker:That intonation at the end is a question.
Speaker:And I'd be like, oh, don't do that with potential clients.
Speaker:Right.
Speaker:But it, a lot of times when people don't feel confident about their prices, they
Speaker:don't understand why that price is the right price for their business, then
Speaker:they will put those little inflections in there, or you know, use words that sort of
Speaker:lessen the impact of that communication.
Speaker:And that's not what you want, obviously.
Speaker:That's why that impor it's so important for you to feel confident
Speaker:or certain around your pricing.
Speaker:The second overlooked aspect of pricing is communicating value.
Speaker:Clearly, being able to articulate the ROI, the return on investment
Speaker:of your services will help clients understand why the investment you're
Speaker:asking them to make is justified.
Speaker:Yeah, that's really important.
Speaker:That's why I always say value first.
Speaker:You know, communicate the value first and then deliver the price
Speaker:because the, the price is only meaningful in the context of value.
Speaker:The last overlooked aspect of pricing, especially in services here we're
Speaker:talking about is avoiding scope creep.
Speaker:As you shift away from time-based pricing, one of the reasons that people don't make
Speaker:the shift away from time-based pricing is they're worried about, but what if
Speaker:it takes me longer than I estimated?
Speaker:That is an issue.
Speaker:But it is actually usually up to you to set the clear boundaries
Speaker:that prevent that scope creep.
Speaker:When you shift from hourly based prices to package based prices, you want to
Speaker:set very clear boundaries about the ways of working, about the timeframe,
Speaker:about what the deliverables are.
Speaker:You want to set boundaries around those things to prevent.
Speaker:Additional unpaid work from eroding your profitability.
Speaker:It also means that sometimes when clients want additional services, you
Speaker:have to stand up and say, okay, that's not part of our original contract.
Speaker:Let me make you an offer for that.
Speaker:Right.
Speaker:So you have to have the confidence to be able to communicate the value
Speaker:of that additional investment.
Speaker:Oh wow.
Speaker:That was really funny.
Speaker:I didn't mean to do that, but it worked out perfectly.
Speaker:So those are the over list looked aspects of pricing for profitability in services.
Speaker:Let me give you a few tips before we wrap this up.
Speaker:First of all, one thing that you can do is conduct a value audit.
Speaker:A very simple one.
Speaker:Look at each offer individually, understand what your customers
Speaker:value most in that offer, what it is you deliver in terms of economic
Speaker:value, and understand if your price or how your price reflects that.
Speaker:For example, you might take your signature offer and look at, okay,
Speaker:why do my customers love this?
Speaker:And what is it that they really get out of it?
Speaker:What am I delivering?
Speaker:That is, you know, reflecting that value that they're seeking.
Speaker:And does that align with my price?
Speaker:The second thing you can do is you can test out new pricing strategies.
Speaker:Experiment with different models.
Speaker:You know, try a little bit of project-based pricing with another, offer,
Speaker:something that suits a retainer better.
Speaker:You could trust out the the retainer offer and see how that changes
Speaker:customer's interest in it, your ways of working, how you like to work.
Speaker:You may find that you don't like retainer pricing at all, or you
Speaker:may find that you absolutely love it, but you'll never know if you
Speaker:don't test some of these things out.
Speaker:And the third tip, and I have to give this with a caveat, is to seek feedback.
Speaker:It's very important about who you seek feedback from.
Speaker:Engage with trusted clients to understand their perception of
Speaker:your value and your pricing.
Speaker:Clients are a good resource also, if you have a business mentor.
Speaker:Seek feedback from them.
Speaker:Maybe they can give you some additional information.
Speaker:Just be careful about seeking feedback from family and friends.
Speaker:Especially those who don't understand your business or who don't come
Speaker:from an entrepreneurial background.
Speaker:I had like to wrap this up real quick here.
Speaker:Today we've taken a look at a few different things, but all of it
Speaker:has been related to unlocking your financial financial freedom by
Speaker:helping you price for profitability.
Speaker:We took a look at some of the challenges that people face and the
Speaker:pitfalls that you may find yourself in when it comes to price setting
Speaker:in your service based business.
Speaker:Then we looked at three key strategies for profit based pricing.
Speaker:And then we look at some of the overlooked aspects of pricing, like
Speaker:confidence, communicating and scope creep.
Speaker:And then I gave you a few tips there to help you use start
Speaker:shifting things in your business.
Speaker:It's important for you to remember that pricing is more than just a number.
Speaker:It is about reflecting the unique value that your offer brings and
Speaker:communicating it effectively.
Speaker:As I said before, pricing is rooted in an understanding of the customer because
Speaker:they're the ones determining the value and the value is going to tell them whether
Speaker:or not that investment is worthwhile.
Speaker:Empowerment is really important.
Speaker:So by adopting strategic pricing practices, by being more deliberate
Speaker:about how you're setting and using pricing in your business, you can
Speaker:build a more profitable and sustainable business that truly reflects the
Speaker:value that you want to create.
Speaker:And it will help you to be there with that business, delivering those
Speaker:wonderful things that you deliver to your customers for the long
Speaker:term, which is what we all want.
Speaker:Thank you so much for joining me today.
Speaker:I've enjoyed preparing this episode for you and I hope that you've
Speaker:gotten some great insights out of it.
Speaker:As you know, I have a program called the Fair Price Formula
Speaker:and you are welcome to join that.
Speaker:You can head on over to The pricing Lady dot com slash set my prices to
Speaker:find out when the next cohort is.
Speaker:I would love to have you join us.
Speaker:Thank you for listening to this episode of Live with The Pricing Lady, the podcast.
Speaker:If you enjoyed the episode, rate, review, and subscribe to it, then share
Speaker:it with your friends and colleagues.
Speaker:I love hearing back from you listeners.
Speaker:If you've got comments, questions, or topic ideas, go on over to thepricinglady.
Speaker:com and contact me there.
Speaker:Not sure where to start when it comes to improving pricing and profits?
Speaker:At ThePricingLady.
Speaker:com you can download a copy of my Self Assessment Pricing Scorecard.
Speaker:Find out where it's going well and where you can begin improving.
Speaker:Or just simply book a discovery call with me.
Speaker:There we can discuss what's up with pricing in your business and
Speaker:how I might be able to help you.
Speaker:Thanks once again for joining.
Speaker:Remember, pricing can hurt or help your business.
Speaker:Let's make sure it's helping you reach your dreams.
Speaker:See you next time and as always, enjoy pricing.