‘What should I charge?’
I get asked this a lot. There’s no hard and fast rules as to what you should charge. So here’s what I’m going to say. When you decide what prices you’re going to ask someone for in return for something you are giving them, whether it’s a one on one session or a group thing or a programme, or whatever it is that you are selling, you just need to be sure of number 1; what is the value that you’re offering them? Not in the form of how much time it will take you to deliver it, but what is the value that you are offering them from the perspective of how is their life going to change? What kind of result are they going to get? What pain are they in that they are going to get away from if they then pay the money to do this thing with you?
So number 1, you have to be really clear about what it’s worth to the customer that you’re selling to, to not be in pain anymore? For them to lose the weight they want to lose? For them to look and feel 20 years younger? What is that worth to them? Because what you mustn’t do is decide how much you’re going to charge someone based on the amount of time it’s going to take you to deliver that. Nobody wants to pay you for your time. That’s a complete waste – it’s a complete misunderstanding. People want to pay you to get from where they are now – which might be feeling unhappy / feeling stuck / feeling confused / feeling overwhelmed about their fitness, health or wellness challenge that they have – to feeling amazing / feeling healthy / moving better / feeling better / looking better. That is what the value you have to ascertain is. And this is why price is so fluid and price is so elastic because it’s actually really down to the person selling the product or service as to what they charge. Yes you can look at what your competitors in the market are doing but if I’m honest we’ve never done that and I don’t recommend you do it because all that will happen is you’ll either go ‘Okay well the average is £5 a class so I’m going to charge a bit less so people don’t think I’m too expensive’, or you’ll go ‘Okay well the average is £5 a class so I’m going to charge a bit more so that people think that I’m top end.’ And you’re completely limited by what your competitors – who by the way, might not be making decent money at all – you’re limited by what they’re charging, rather than what you should charge based on what is the value you are offering to the end user.
So again, think about something like trainers or handbags. You know, you can buy a handbag from Primark – it can be as little as £5. Can you still put your stuff in it? Yeah. Does it still go over your shoulder? Yeah, probably. Does it look nice? Yeah – probably looks fine. But then you can go to Prada and you can pay £4000 for a handbag. Can you still put your stuff in it? Yeah. Does it still go over your shoulder? Yeah. Does it look nice? Yeah. Yet one of these products is charging £5 and the other one is charging thousands of pounds. This is what I mean by price elasticity. It’s really down to you as the business owner to get a good understanding of what is the value in real terms – in results based terms – for somebody who does your session or your programme or your courses – because of the change they’re going to experience in their fitness, health and wellness. And again, this is why you can have people charging anything from £3 a class up to £100 a month to come to classes. This is why you can have people charging £30 an hour for PT, all the way up to 25 grand paid upfront for a 3 month personal training programme. You must not let yourself be defined by what the people around you are doing with pricing. That’s what I would say.
The second thing you need to take into account when setting pricing is how much do you actually want to make? How much do you want to take home with you? Let’s say you charge £100 for something and it costs you £20 in expenses to deliver it in your costs of running your business, that means you’re left with £80. Now, you have to work out, if you want to make £8000 a month and you’re only going to take home £80 a month from each individual that buys something from you. You’re going to need 100 of those individuals paying you that £100 a month to take home your £8000 a month. Now if you look at that and go ‘Oh bugger that – 100 people? 100 customers? 100 clients? No. I don’t like the idea of that’, therefore you have to raise your price because there’s no other way, other than raising your prices, to have the number of clients you need to come down, to still be making the same amount of money. That’s fine, but if you’re going to raise your price, you need to be very clear on why what you’re offering is now this much more than what you said before, in relation to point number 1, which is how much value are you offering people. You need to be very able to articulate how they’re going to feel better, feel different, get out of pain, get out of worry, stop feeling isolated and THAT is why you’re asking for the amount of money that you are asking.
So number 1, be clear on the value and don’t look at what you’re competitors are doing. And number 2, be really clear on what YOU want to make and how many clients or customers that means that you will need and if those numbers don’t look right to you, your going to have to put your price up for your client numbers to be able to come down…and that’s really your starting point for pricing. And actually I’m going to add one more. Number 3, when you say your price to people or when your price is out there on a sales page if you’re gong to sell online or whatever it might be (but normally it’s you saying ‘Oh it costs this much’ to someone), you need to be able to say it without feeling like you’re going to vomit. You need to be able to say it, but also be happy at the prospect of someone saying yes and you need to feel like it’s going to be worth it. If you say a number but in the back of you mind you’re thinking ‘Oh god, I’ve done all that just for an extra £20 a month’ or whatever, you’re going to feel resentful towards that person. Whether you realise it or not, you’re going to feel resentful because you’ve not charged appropriately. So the number should feel to you exciting and like you’d be happy to serve someone as well as you are able, if they pay you that much money. But also, feel not so big that you get really scared at the idea of saying it out loud because you can’t imagine anyone being willing to part with that amount of money because you wouldn’t yourself and blah blah blah. You need to be in between those two spots…and what you will find is that let’s say you choose £100 as a price for something, as soon as a few people – maybe 2 or 3 – have said yes to that price and bought it, you will be quite happy to raise your price again, because now that level that was scary for you at first, is now normal. And you’re perfectly able to raise the price again, as long as you are able to justify the value – of course you must always deliver more value than money you ask for – but you can keep incrementally raising your prices as your confidence grows and as you become more aware of how valuable what you offer is.
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