Ever wondered how to build a solid pricing strategy? Great! Read this article to learn 9 simple keys, critical to avoid leaving money on the table – important tips for social media consultants and any other service providing business owners.
Do you ever run into price discussions? I know from my experience it can be hard to avoid a price discussion. And I’ve heard a lot of peers -selling social media services-talk about this a lot. The most asked question I see over and over is:
“How much should I charge for my services?”
Before you start thinking about you hourly rate, be sure you know your added value. Why should people hire you? Read on to learn 9 simple keys for a successful product pricing strategy.
1# Know your target hourly rate
The basic rules of product pricing are straightforward. As business owner you know your operating costs. You know how much your target hourly rate needs to be to run a healthy business with a solid operational cash flow to keep your business going. Keep this target hourly rate in mind.
2# Use package pricing
Never sell by the hour. Offer your clients modular packages. Talk about the benefits of each package and sell them for a package price. Focus on negotiating about the services included in the package and not about your hourly rate. Check Mack Collier’s Consulting Rate Sheet to get useful ideas for your own product pricing.
3# Run a reverse calculation
Ask your client about his budget. Does your client have any idea how much budget they need to get the results they want? Take this budget and divide it by your hourly rate and compare this with your target hourly rate.
4# Don’t cut your hourly rate in half
If your reverse calculation shows you: 10 hours and you know the works takes 20, don’t cut your hourly rate in half. Remember the target hourly rate!
5# Do not sell yourself short
Keep in mind that you can not run a healthy business on selling yourself short!
6# Ask Google for product pricing advice
Did you ever ran a Google search on hourly rates? You’ll be surprised what you learn! Just enter this search phrase in Google “hourly rate of social media consultant”. Here’s one of the product pricing resources I got! Very useful for social media consultants!
7# Check people per hour
People per hour helps people start and build their own business and live their dream of being independent. Check their hourlies to learn what other people in your industry offer and for what price. Enter social media consultant in their search box to learn more about other social media consultants.
8# Product Pricing depends on level of experience
If you are just starting your business, you may have to lower your fees to get your first assignments. But always keep your target hourly rate in mind. Manage your finances (expenses) and earn enough to generate a solid working cash flow.
9# Product Pricing depends on what your market will bear
Markets are regulated by demand and offer. If you are the only one offering what other people want, you could ask any reasonable price. However, in a highly competitive market you may need to lower your fees, or offer something that no one else sells. Work on your unique strategic position to avoid that Price is your main differentiator.
It’s unrealistic to base pricing solely on what someone else tells you that you should charge. So, stop selling yourself short. Don’t let your client tell you what you are worth. What you charge should be ultimately profitable for you, based on the amount of time you are spending (plus other costs). To gain enough confidence, you need to understand the value you give. Show your clients the benefits they get and educate your client on the amount of money they need to get the results they want.
Great resource: How Long Before A Social Media Campaign Shows Results?
I hope this helps you with your product pricing strategy!
Did I miss any important criteria to avoid leaving money on the table? What would you add?