When it comes to pricing your products and services in your online business, things can get tricky pretty fast. How do you price your offers in a way that doesn’t turn your ideal client away but also position you as an expert? When we work with our clients, there are usually 3 methods for pricing that we try out as three separate activities and then find somewhere in the middle. We recommend you take about 10 minutes per activity and then have a look at all the numbers to find somewhere that feels aligned.
Which brings us to a quick note before jumping in: Pricing and money is energy. Remember that nothing is set in stone, and you can always change your pricing. If you price one of your offers a certain way, and then when you go to deliver it to a client or customer, you feel drained and resentful… Your pricing is too low, babe.
If you feel like your prices are too high, just ask yourself:
What do I need to charge for US as a BUSINESS to show up and do justice to the results we are promising our clients?
Okay, let’s jump in:
Pricing Method 1: Time Input
For us, this is actually the least effective but it’s a good way to ease into exploring pricing. Start by estimating the amount of time it would take for you and/or your team to deliver your products and services. Make sure to include any administrative time, communication back and forth, etc. If there are any variable expenses required to deliver your product or service, include those costs as well. Then, consider what your hourly rate would be based on your expertise, experience and the competition.
Price = Hours Output x Hourly Rate + Variable Expenses
Pricing Method 2: Work Backwards From Your Income Goals
For this method, start with your income goal. Do you want $15,000 months, $500,000 years, etc.? Start there, and then work backwards based on your capacity. How many clients can you work with or run through each offer in your offer suite? Then, start to play around with the numbers and combinations of your offers to define pricing for each offer. For example:
- Personal Income Goal: $100,000 per year
- Business Revenue Goal: 2x Personal Goal = $200,000 per year
- Capacity: 10 x 1:1 Clients per year, 8 participants in group program twice per year
- Set $12K for 1:1 Clients = $120,000
- $200,000 – $120,000 = $80,000 / 16 group program participants
- 1:1 Package is $12,000 and Group Program run twice per year is $5,000.
Try it! And let us know what you come up with in the comments!
Pricing Method 3: Value-Based Pricing
Fortunately, this seems to be the direction that many in the online space are moving towards and we couldn’t be more thrilled. Ultimately, value-based pricing is asking the question: What is it WORTH to my clients to have the results I’m promising?
How does what you’re offering make their lives better and what would someone pay to have that problem solved in their life or business? To answer this, we strongly recommend market research. Talk to your ideal client and ask them. It could give you some real perspective on what to price your offers at.
Also knowing what the Return On Investment (ROI) is if there’s a monetary impact for your client is helpful when it comes to sales and determining pricing. If you know working with you is going to help them bring in $100,000 in the next 6 months, asking them to pay $15,000 is a no brainer.
Ultimately, as we mentioned at the beginning of this article, pricing usually comes down to a combination of all 3 methods. Just remember that however you price your offers, make sure you’re POSITIONING yourself in the market like the expert you are.
If you want a third-party opinion on your offers, how they’re structured and what you’re pricing, our Client Experience Audits are a great way to get personalized feedback on how you’re positioning yourself and areas for improvement for long-term success.