Many of the problems and frustrations experts experience are directly related to undercharging their services. And this remains one of the reasons why coaches fail to scale their business.
In this episode, I’m going to share four things to consider when pricing your coaching programs. Having the wrong pricing model prevents business growth and if we don’t know how to set the right pricing, we lead a path straight to burnout and we undervalue ourselves.
IN THIS EPISODE YOU’LL DISCOVER:
- Why a wrong pricing model holds experts back (01:25)
- Four things to consider when setting pricing (02:15)
- Why underpricing equates to not valuing yourself (02:20)
- The impact of confidence on pricing (03:55)
- Pricing based on outcome, not on hourly rate (04:27)
- The outcome of not pricing high enough (07:50)
- Discounting (10:07)
- “Get paid for the value that you provide.” -Samantha Riley
- “People are buying your knowledge and experience, they’re not buying your labour.” -Samantha Riley
- “Don’t ever think that someone can’t afford your product, the only reason they can’t afford it is because they can’t see the value in it right now.” -Samantha Riley
- “Your pricing is based on the outcome you help your clients achieve.” -Samantha Riley
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On this quick 15 minute call, we’ll:
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CONNECT WITH SAMANTHA RILEY
Samantha Riley Snippet (00:00):
Do you feel undervalued? With the service that you provide? Are you feeling like you’re heading towards burnout? Just think about this. If you seven external pricing tomorrow, would you get a spring back in your step? Many of the problems and frustrations that entrepreneurs experience in their business can directly be related back to undercharging. So today, let’s talk about pricing and start getting paid for the value that you offer.
My name is Samantha Riley, and this is the podcast for experts who want to be the unapologetic leader in their industry. We’re going to share the latest business growth, marketing, and leadership strategies, as well as discussing how you can use your human design to create success in business and life. Inside and out. It’s time to take your influence, income, and impact to the level you know you’re capable of. Are you ready to make a bigger difference and scale up? This is the Influence By Design podcast.
Welcome to Episode 426 of influence by design in our 30 and 30, where we’re releasing an episode every day for this entire month. For the month of September, we’re focusing on the theme of stepping into your power, being the unapologetic leader in your industry, so you can build your elegant empire.
And today I want to talk about pricing because having the wrong pricing model or a pricing model that doesn’t work for you is what I see holding so many experts back from growing and scaling their business. Now a lot of people talk about being paid what you’re worth. And I prefer to say, get paid for the value that you provide. Because when people think about what they’re paid for their worth, they directly relate it to their self-worth. And if someone doesn’t feel like their self-worth is that high, then they’re not going to charge a high fee, rather than stepping away from that thought being very logical and saying what value is it that I provide, and then creating a pricing model around that? No, maybe that resonates with you.
But today, we’re going to discuss four things to consider when setting your pricing. And number one, and we’ve already gone here is underpricing. And this is all around not valuing yourself. Now, there’s quite a few pieces that come to this, like I just mentioned, it can be linked to your self-confidence.
But the other thing that I see often is that your zone of genius comes so easily to you. And you can often think that everyone can do what you do you undervalue the amount of value that you have to offer. This is about really understanding what your zone of genius is, this is something that I personally have found almost impossible to do on my own. This definitely requires other people to help because other people can point out and see and will have experience working with you in and be able to see things that you can’t.
So you can go about asking people that have worked with you. So past clients, may be colleagues may be friends, and start to ask them, you know, what is that? What is my zone of genius? Or what is where is the value that you’ve received from me, and this is a really good place to start to begin to understand what is this value you actually provide?
Now, sometimes, there are going to be people that charge more than you do. And I’m pretty sure someone just came to mind for you, someone who does charge more than you do. And they have this one thing that you don’t have when it comes to your offer or your pricing model. And that one thing is confidence.
Now they could have more confidence because they have more knowledge, more industry experience, maybe they’re higher qualified, the new, this isn’t what I’m talking about. What I’m talking about is in most incidents, it’s just having more confidence in themselves. So we have covered this on quite a few episodes during this month so far because it is such a big part of you showing up to be this and be successful in business.
So number two is pricing on outcomes, not on an hourly rate. Now, I heard this story. It’s probably a little bit exaggerated, but I liked the idea of this. And then when I heard this story, it was set on the production line back in Adelaide in the days when they were still running the production line for Holden’s, which are cars. And the Holden plant used to have three different shifts that worked so it ran 24/7
And each shift would be worth hundreds and hundreds of 1000s of dollars. If the production line stopped, they would be losing a lot of money very, very quickly. One evening, the production line came to a halt quite abruptly. And there were, you know, a heap of people that came to try and figure out what to do.
They were trying to figure out sort of up the line, what was happening down the line, you know, was it a fuse? Was it electricity? You know, what was it? Why did the production line stop? Anyway, the line was stopped for all of that evening. The next morning, someone suggested that they call in Ian, who used to work at Holden’s for over 20 years, he really knew what he was doing.
He spent a lot of his career there. And he was usually someone that had an answer to some of the problems that happen on the line. And they called Ian in and he came in and he walked in, and he walked, he walked straight over to one of the little boxes that were sitting next to the production line, turned a little screw quarter of a turn, and the production line would back to life.
Obviously, everyone cheered him, they couldn’t believe it, because there had been so much money lost while the line had been down on the overnight shift. And he put his invoice in for $25,000. And the executive team were like, You can’t do that you walked in, he turned the screw a quarter of return. And then you left. They said it took me less than 10 minutes.
And he said, Uh huh. But who else could do that? It was costing you hundreds of 1000s of dollars to be down. And I was the one that knew exactly what to do, how much was it really worth because it’s a lot more than 25,000. So I’m quite happy to change that invoice. And that obviously they agreed and he just had that invoice in for 25,000.
But I share that story. Because it’s so powerful in helping you to understand that people are buying your knowledge and your experience, they’re not buying your labour, they’re not buying you on an hourly rate. So just think about this, your clients are super busy, and they will be much happier to get their problem solved in as little time as possible, then they don’t, they might say they want to pay you by the hour or you know, they might want extra time with you.
But that’s not actually what they really mean. Because really what they mean is they want a really quick outcome. There’s a great Bob Newhart comedy skit about charging for outcomes versus pricing. If you’ve seen it, you’ll know exactly what I’m talking about. Because it is super funny. I’ll link it in the comments and definitely have a look at all explain exactly why we charge for outcomes, not pricing. Very, very funny. Take a look.
Alright, so the third area you need to consider in your pricing is that if you’re not achieving your income goals, you’re probably not pricing high enough. So think about your yearly income goal. If your goal is to have a million-dollar-a-year business, you’ll need to bring in just under 84,000 a month, I think it’s $83,333 a month.
Now, if you’re selling membership for $67 a month, you’ll need to have 1244 clients. Now think about that you might think are $67 a month that’ll attract a lot of people. But to get that many clients, that is a lot of outreach, a lot of sales calls, a lot of audience building a lot of promotion to attract 12 144 people. If your program is priced at two and a half $1,000 a month, you’ll only need 34 clients to achieve that same number. So 34 versus 12 144.
Now, what I’m not saying is don’t have a $67 a month program, if that suits you. Nothing wrong with that at all. What I am saying is that you need to take more into consideration things like Do you have an upsell for your lower-priced offer or a higher-priced offering? Do you have a large audience if you’re just starting out or if you haven’t nurtured your email list or your social media platforms and you don’t post, then signing up to 144 clients is going to be very difficult. So think about the revenue goal that you want and reverse engineer it. Don’t just create a program make up any price that feels good and hope to reach your income goals. It won’t happen like that, reverse engineer your pricing and then tweak your offer to match.
So going back to the example I just mentioned with 34 clients in a two and a half $1,000 per month program. If you already have an offer at $1,000 a month. What would you need to include to be able to raise your prices by $1,500 a month to achieve that two and a half $1,000 a month per client? It’s not just about putting your prices up. It’s how do you need to tweak your offer to be able to offer the value at that new price point.
And the fourth thing that you need to consider in your pricing is discounting. Now, I am not a fan of discounting at all, by discounting, you’re not only devaluing yourself, but you’re training the market to wait for your discount offer. If someone can’t afford your program, it’s not necessarily because they can’t afford it, it’s because they can’t see the value in your offer. Now, it’s not your responsibility to decide if they can afford your program or not.
So let me ask you a question. Have you ever bought something that you couldn’t afford? I’m sure we all have the shoes, the bag, the program, whatever it is, now think about how you would have felt, if you’d wanted to buy that thing, whatever it was, and the salesperson wouldn’t sell it to you. All right. So just think about this.
Don’t ever think that someone can’t afford your product? The only reason that they can’t afford it is because they can’t see the value in it right now. So knowing that, how do you set your prices?
Now, the first thing you need to understand is that pricing is completely made up. You know, one person can sell a program for $100. And another person can sell that exact same program for $10,000. Now, would you or could you ever sell a paper clip for $1,500, your first reaction is probably to laugh, because, you know, you can pick up a packet of 150 paperclips at your local office works or Home Depot for just like you know, just under $3.
Yet Tiffany and Co sell a single one single 18 karat gold paper clip for $1,500. So it’s not the price, it’s whether someone wants it and whether they see value in it. As a rule of thumb, your pricing is based on the outcome you help your clients achieve. So this is the mindset shift that you need to make what is the outcome that you’re providing? Are you saving your clients time? Are you saving them money? Or both? Are you helping them to manage health conditioning and increase their quality of life?
Well, how much would that be worth to someone if they could run around with their kids or their grandchildren? So it’s actually the outcome that you help them to provide? So with your price, think about not just the outcome, but looping back to what we talked about right at the beginning? How confident are you in that pricing? If you’re not confident? Then start to think about what is it that you need to feel more confident into shifting that feeling so that it was a lot easier to sell your program.
So thanks so much for listening. And if you found this content valuable today, which I hope that you did, I would love to help you grow your expert business even faster. Join my free Facebook group coaches thought leaders and changemakers on Facebook, where inside you’ll get access to weekly free training as we dive into every aspect of your business, so you can be the unapologetic leader in your industry and build your elegant empire.
Samantha Outro (13:15):
Thanks for joining me for this episode of the Influence By Design podcast. If you want more head over to influencebydesignpodcast.com for the show notes and links to today’s gifts and sponsors. And if you’re looking to connect with other experts who are growing and scaling their business to join us in the coaches, thought leaders and changemakers community on Facebook, the links are waiting for you over at influencebydesignpodcast.com