What Should You Charge?
Pricing Part 1
How to decide what to charge
I began my business as Virtual Assistant (I used to be called Crystal Virtual Assistants) a number of years ago now, and something that initially stopped me from getting more clients and growing my business was pricing.
- I didn't want to deal with this topic at all.
- Charging for my services made me feel really uncomfortable.
- I didn't understand my true value to others.
- And my business was young, and I still felt like I was 'playing' at being a business owner.
Now you might be wondering why I'm talking about this as I usually chat about productivity tips and tricks rather than things like pricing. Well, in my opinion, anything that keeps us stuck is a productivity problem. It's not just about hacks, apps, tips and tricks, it's about making decisions, it's about moving forward and it's about growing the business that you love.
So what do you need to consider when determining how much you charge?
Well, there are a number of factors, such as.
- What is the competition charging?
- Your skill set and level of expertise
- What your target market are willing to pay
- And your income goals
Let's take a look at these in a bit more detail.
Checking out the competition is going to take a little bit of detective work and research. I initially did the same thing for my VA business and found a big difference in pricing. The variety you find here will depend on your industry and your niche within that industry.
Something important to remember here is not to undervalue yourself. Don't assume because you're a new business for example that you have to start at the bottom of the pricing ladder. Your value is also determined by your level of skills and expertise which we come onto in a moment.
Your Skills and Expertise
If you work in an industry where certain qualifications or certificates determine your value and what you charge then this can be easy. However, usually, it's not that clear-cut. You first need to identify what you can class as a skill. Ask yourself, what do I give to people who want to work with me?
Now if we go back to the example of my VA business, this is relatively easy as I know what services or packages I can provide to my customers and how much time will be used to provide that service. However, when it comes to the other side of my business - The Productivity Princess - I provide business support services and online productivity programmes.
So how do I determine my level of skill and expertise for this side of the business?
It's actually done by looking back at the results I have already obtained from serving others. This comes in the form of success stories and testimonials. It's results driven. My worth increases when the results I obtain increase.
Your Target Market
Your target market is a very important factor in determining your pricing. This is the price where what the buyer is willing to pay meets what the seller is willing to accept. Makes sense, doesn't it?
So if you're target market are start-up business owners with a tight cash flow then you probably won't be able to charge as much for your services compared to a target market of well-established business owners who already expect to pay out for the service you provide.
Your Income Goals
And finally, we mustn't forget your income goals. There is no point charging an amount won't ever help you achieve your income goals.
To keep things really simple, I'm just going to use some basic numbers to demonstrate what I mean.
If I had an income goal of £2000 per month and charged £10 per hour. I would need 200 hours of paid work to come into my business each month.
However, if I still had the income goal of £2000 per month and charged £40 per hour, I would then need 50 hours of paid work per month.
Can you see the difference?
If you spend a bit of time playing around with the numbers based on the hours you have available to work, the unpaid work you will need to do to generate new business, and your income goals, you will start to see where you need to be setting your pricing.
You can then pull this all together with the information about your competition, skills and expertise and you should now have a figure in mind of what to charge.
Don’t forget that pricing is never set in stone. It’s flexible. If you find you’re attracting the wrong market (or no market at all) you can always change your rates. If you find yourself working too hard for not enough return, then you can raise your rates.
Remember, it’s your business. You get to call the shots.