HOW TO CHARGE WHAT YOU ARE WORTH

A Presentation for PNCA January, 2014 !By: Jackie B Peterson www.bettersmarterricher.com; www.bizcenter.org

Failure to Charge Enough• The cause of many business failures • Small businesses are not dependent on volume, they are

dependent on price • Why do small businesses undercharge?

• Fear of losing customers • Lack of confidence • Lack of knowledge • Unfounded fears about competition • Inability to talk about money • Inability to talk about value

FACTS• Often people do not know how much to charge and

therefore start too low. !• Do your Research: Find out what others in your field are

charging !• Price yourself at 85% to 95% of the range • Small Business CANNOT AFFORD to compete on price!!!

FACTS• You have to decide how much your work is worth-

customers ASSUME you know your value! !

• Know about the competition so that you can look for gaps in offerings; those gaps might be ways that you can differentiate yourself or your business. !• Be sure your clients see you as an expert and a specialist.

We expect to pay more for an expert.

Facts about selling value• It is critical that you be able to regularly, clearly and

smoothly articulate your value proposition !

• What is it that differentiates your product, service, or the way that you do business?

• Do you support local? • Do you craft products by hand? • Do you have service you provide in addition to the item? • How is your packaging? • Are you selling to the right people? • Are you pushing for volume rather than quality?

FACT!

• If Customers clearly understand your value, they will usually buy value rather than price.

• If Customers cannot differentiate you or are not clear about your value, you are like a commodity and will be shopped for price (i.e. like wheat futures or pork bellies)

• The Expert Photographer story……

FACT• There are multiple ways to price rather than just $ per

hour: • Value billing- bill by the project • Offer packages • Unbundle- have a price for assessment, follow on price for longer

term work (men's pajamas) • Mark up prices of work assigned to sub contractors • Minimum billing • Bundle (Costco)

FACT• Charge more for rush jobs • Bill by the project • Raising your prices will shake out clients who are not good

clients for you (but who hang on because they know they are getting a good deal!)

• Quote high- you can always give a discount, but you can never go up!

• My learning story……

Fact• Offer a high end product and produce the value and quality

that support the price you are charging. • Be constantly improving • Deliver the value your price represents

EMOTION OF PRICING• Most of us have been told: “Your work is wonderful, but

don’t count on making a living at it- you had better get a business degree so you can have some security and get a job!”

• We know having a job is not security in today’s environment.

• What IS security? Tapping into your own unique set of skills, talents, and view points and bringing your individual work to the world.

Emotion of Pricing• Pricing is an art form • Think about the value to your customer of your product or

service • Think about all the training you have that has made you so

good at your work • Think about the study, work, focus and concentration that

has gone into what you do • Do not be willing to give that away

EMOTION OF PRICING• We all have to deal with FEAR !

• Fear of: having no money, having no customers, not being good enough not have enough money to support ourselves, meet our obligations, educate our children, retire etc. etc. !

• Anyone who tells you they do not regularly wrestle with fear is lying to you.

Here is What Happens if You do Not Charge Enough Money • People will not respect you or what you do !• People will not refer you to the high end clients you want !• Low end work only leads to more low end work !

• People do stereotype you by what you charge !• AND………

Here is What Happens if You do Not Charge Enough Money • You will not have enough money to be able to:

• Hire the people you need • Take time off for continuing education and skill development • Take time to reflect, plan and let your creative side come through • Have the time to strategize and market to the right people • Take time off for renewal- you will run out of time, energy, money

and health • Retire or take a vacation !

• You Can fall into the time/money squeeze

Here are the rules for solopreneurs • Focus- stay in one area of work or product- when we offer

a broad array of services people think we are not very good at any of them.

• Create a deep and narrow niche so that your name/product is synonymous with what you offer

• Reduce competition by specializing- brand yourself • Make sure you are delivering a wonderful product or

service • Stay on track- avoid “mission creep.” –do not let

distractions disguised as opportunities lead you astray.

Here are the rules for solopreneurs • Know your numbers

• Business budget • Personal budget • Cost to produce your work • Time to produce your work • Manage your time to produce and sell what you need to meet your

budget requirements. Treat your enterprise as a serious business Have a set of books Read your profit and loss statements Make forecasts and plans Raise prices regularly

Focus your marketing as much as you focus your work.• Analyze your sales; identify your target market • Create a customer profile

• Age, gender, income level, buying preferences, how they found you, if they are a repeat customer, do they refer?

• Figure out exactly who buys from you • Figure out exactly what message they respond to • Figure out where you will find them or how to reach them • Then, spend your marketing time delivering your exact

message to your exact target customer • Market every day

Determination • Determination is more important than talent !• Commit to yourself- say Yes to Wealth !• Determine what your new prices or rates will be !• Institute the price increases

• Get more work ( customers believe you are worth more ) • Get better work

Determination• If your product is significantly better than that of others,

charge for it! • Be prepared to constantly get better • Remember, you can always discount but you cannot

increase a price once stated. • A discipline: When you are tempted to lower a price, get

better instead

PRACTICE,PRACTICE, PRACTICE • Do not get caught unawares or flat footed • Go into the bathroom, shut the door, talk to the person in

the mirror until… • You feel comfortable, not vulnerable • You can state your price without laughing or cringing • You have confidence to go forward • You can articulate your unique value proposition as easily as your

name

Life Lessons About Asking for What You Are Worth • People will buy value vs. price if they understand the

value. (that is definitely your job to make it clear) • People who question your price are really saying: “I do not

understand your value proposition, can you explain it to me again?”

• There are some who will play on your emotions: I can’t afford to pay you your fee…..

• If people reject you, they are not the client you want; target more carefully

Life Lessons About Asking for What You Are Worth• Remember that not all clients are good clients

• Know who is a good customer for you and your business • I think they are repeat customers who value you and your work • They send you referrals • They pay your bills • They do their part of the engagement- on time- in other words they

are respectful of you !The Only Person who will do this for you is you. Change your assumptions; assume others want your expertise and talent and are wiling to pay for it.

Contact Me• JackieB@JackieBPeterson.com !!

• www.Bettersmarterricher.com (check out the radio pod casts!) • 503-224-5910 !

• Thank YOU! !

• Better Smarter Richer on line course available at www.opensesame.com/jackiebjackiebpeterson.com • And at www.bizcenter.org/BOL