Does your pricing reflect the value that you bring to a business as a service provider?
Today we are going to talk about how to price your services as an operator or a service provider. This question comes up often because we are always second guessing ourselves. I want to give you some guidance and help you ask the question, “Is what I’m doing today fulfilling to me?”
Pricing as a Service Provider
I haven’t always gotten this right in my business journey. When I first started out I seriously undercharged for the value I was providing.
At that time I didn’t have the perspective, but since then I have learned to take into consideration the amount of time I’ve spent investing in myself and also coaching and teaching others… and I’m going to share how all of that factors into pricing your services.
“Pricing is really a mindset exercise… what you value your services at is what you will charge.”
Don’t undervalue yourself because you are new to the space or you have a new offer. You have a lot of experiences behind you, and I encourage you not to discount them.
Don’t charge X amount because you have seen someone charging that same amount. They come with a different set of experiences, just like you.
“Pricing is personal. No one can tell you what is right or wrong.”
Everyone is different. What works for one Director of Operations (DOO) is going to be different from the next. Each DOO may create similar offers, but all will price differently because all of our needs are different.
Practical Steps to Pricing
Here are some practical steps that you can use to review your pricing, or take into consideration if you are just getting started.
Know how much you need to take home.
This is the most important step. You need to know how much you need to make, and be sure to take into consideration the amount you are spending on expenses, such as:
Collectively you need to figure how much you need to cover these expenses, and add in your salary. This will differ based on your circumstances. Do the work to figure this out so that your number is rooted in what you actually need.
Once you figure this number, you will have your “good goal.”
However, you are ambitious and won’t likely be satisfied with your good goal for long. So we have a framework from my friend Megan Hale of Dream Money, who talks about the Good, Better, Best concept.
Start with your good goal in mind, which gives you enough to pay yourself and cover the cost of goods sold so that you can build a profit.
Break it down.
Once you have your good goal in mind, break it down from an annual to a monthly, weekly, and eventually an hourly rate.
I don’t encourage you to charge hourly, but I do think it is a very good idea to have that good hourly number in mind so that you can gauge a project as it is presented to you.
Consider how many hours you expect to work.
Each of us has multiple roles we play. Although it is common to work about 40 hours/week it may not work with your situation. You need to make sure you are working with people who will value you at the rate and hour expectation that works for you.
Pricing for the Right Audience
The above steps allow you to build out an offer and market to an audience that fits an avatar that will value your work.
In my training I talk about “offer before avatar.” Instead of starting with who you would like to work with, I encourage you to look at your skills, passions and what you want to do and create an upleveled offer around that. Offer something that lights you up and that you are excited to perform.
Ask yourself “Who is it that would love this, and who do I want to work with?”
“It is important to understand what [your] hourly wage would look like so that you are targeting the appropriate market.”
A previous mentor of mine challenged me to increase my package by 10% every time I went into a sales conversation, and I sold 7 in a row without anyone telling me “no” or even questioning it. This all comes down to mindset!
“Your market will tolerate your price as long as you are justifying it: you’re clear, you have a process for delivery and your reputation is solid.”
I want you to consider increasing your existing price by 10% for your next sales call.
Lastly, make sure to avoid comparison. Often you are encouraged to do market research, but I believe it is one of the most detrimental things you can do when looking at how to price your services. Avoid comparison or matching your competition… create your own competition.
Pricing is one of the key areas that we cover in the DOO certification program. If you are ready to increase your pricing and get support in your career growth, then I want to invite you to Test Drive the DOO on Tuesday, November 7th. I will be sharing who is right for the DOO profession, what you do, what kind of businesses are leveraging a DOO, and what is included in the certification.
Weekly Ops Activity
Figure out how much you need to take home in your business.
This week we also have a bonus challenge: Increase your existing price by 10% for your next sales call. Let us know how it goes in the Facebook group!
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