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What’s your time worth?
It’s a hard question to answer, isn’t it?
Both because it feels so personal—and because deciding what to charge for your services is critical to your business success.
Two things can help you get your pricing right:
First, it’s important to remember that what you charge isn’t really about you—your experience, your credentials, your efforts, your time. It’s about the value your clients place on seeing their problems solved or goals met.
Next, take a fresh look at the things you pay for and why. Pay close attention both to the psychology at play in your own buying decisions and to some of the creative pricing innovations going on that might work in your business.
When you do that—when you look at things through “customer” eyes and challenge every assumption—you’ll start to see some surprising opportunities.
Here are three ideas you can start using right now, plus a low-risk way to raise prices without losing any of your current customers:
#1: Charge more for the hours your clients value most.
Why: Scarcity is a clear signal that your prices are too low. That’s why Uber charges more during rush hour, for example, and why more and more businesses are introducing “surge pricing.”
- If your clients all want certain time slots—say the hours immediately after school or in the evening or weekends—consider charging more for those times. It’s simple supply and demand.
- At the same time, if you have trouble filling other time slots, charge less for those. Offering some low-cost time slots can also be a great alternative to a sliding scale. It gives you a simple way to accommodate clients who can’t afford your usual rates without having to get into the messy, uncomfortable business of verifying income.
- Also, if some of your clients are asking for shorter, quicker chunks of your time, try giving them what they want but at a higher rate. It will likely still seem like a bargain to them because it saves them time and money—and it will mean more revenue for you.
#2: Offer discounts for prepaid, bulk purchases.
Why: You’ll get more predictable revenue, more loyal clients, less time spent invoicing and chasing down payments, and fewer no-shows. And your clients will be attracted by the lower “per unit” cost—even if they end up spending more over time.
- Try offering, say, 5 hours of your time (or 5 classes or 5 sessions) for the price of 4 to anyone willing to pay up front.
- Experiment with different options until you get a clear winner.
- But maybe skip the predefined “packages.” The families we talk to like the idea of package deals but want the flexibility to choose how they use your time—so let them decide. (Someone buying 5 hours of college admissions consulting, for example, might want to use more time on generating a list of schools and less on the college essay, or vice versa.) Also, a predefined package suggests a limit. When it’s delivered, it’s over. Selling a simple “package” of your hours at a discount invites repeat purchases.
#3: Charge your usual rate for travel time.
Why: If you offer a service in your clients’ homes—like music lessons or lactation consulting—traveling to them is a big part of the value you’re offering. Don’t undersell it by charging only a nominal fee for your mileage or not charging at all.
- Charge your hourly rate, whether you’re spending it in traffic or in your client’s home.
- Let your clients decide whose time is more valuable—yours or theirs. You’ll find that your wealthier clients often will make their buying decision based on the value they place on their time, not yours. If you save them an hour or more by offering in-home visits, your hourly rate will still seem like a bargain to them. And more price-conscious clients will be more willing to spend their time in traffic instead of paying you to come to them.
A low-risk way to raise prices:
- At first, raise your prices for new clients only. That allows you to test how much you can charge without losing any of your current clients.
- Raise prices gradually. Maybe start with certain time slots or certain services and keep upping your prices until you get pushback.
- You might find that higher prices attract more business. That can be a sweet surprise, and it happens more often than you might guess. It’s just human nature to think that paying more for something means higher quality.
- If you decide to permanently hold your prices for your existing customers, let them know so they’ll feel like they’re getting a bargain. They will be! And that will make them feel special and appreciated…and more likely to stick with you over the long term—which can pay off in other ways.
— Jim Scott, co-founder and dad
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