How to Price the Value of Your Services
Has this thought ever entered your head? “I wish I could charge more for my services, but now is just not the right time.”
We are willing to bet that many of you are familiar with this feeling. We call this mindset “business dysmorphia.” Often, we see this feeling manifest in those who could and should raise the cost of their services but hesitate to do so, either due to a fear of losing business or because of an intractable sense of responsibility to their clients.
Both reasons are highly personal and situational. But they can also result from an inflated sense of guilt and shame over determining the value of your business. So, how can a business owner accurately determine whether they are asking a fair price for services? Here are a few factors to consider.
Keep an Eye on the Market
Internal factors are rarely useful indicators for determining the value of your services. For better or for worse, the market is what determines the worth of your services and the value that your business creates.
Consider checking in with colleagues and even competitors in your industry to gain a better understanding of how much you should be charging your clients. Through this process, you may even discover opportunities for more value-adds to your business. Or perhaps you have been consistently undercharging for your services. In a crowded market, your clients may be willing to pay above market price for higher quality and expertise.
Determine the Value of Your Labor
Have you considered the possibility that are you undervaluing yourself and your business? Compared to how your clients and the rest of the world views your services, you may be overdue for a raise. For many business owners, value is primarily defined by the quality of the work you produce for your clients. But labor in and of itself is also a form of value, particularly when you go above and beyond for clients by working long, arduous hours.
Do you feel as though you have been overworking yourself or your team without proper compensation? Now may be the time to determine a new hourly rate. Factor in your expenses, estimate your hours, and conclude with a figure that you feel is fair. Do not be afraid to shoot for the moon, but be sure to balance the number with a realistic sense of how the market values your services. You may not be able to reach the exact figure of your dreams, but by taking this initiative, you may at least help your business tackle rising inflation and increased costs. Generally, business owners do not always get what they deserve. But they do get what they demand more often than they might think.
Engage in Open Communication With Your Clients
Determining the value of your business on your own is not necessarily always a straightforward process. Yet most business owners would agree that far and away, the most difficult part of accurately pricing their value is formally initiating the discussion with their clients.
If you have an ongoing relationship with your clients, you have already earned their trust and respect and therefore willingness to hear your pitch. During these conversations, be sure to show your work and be prepared to justify a price increase based on the prior value you have provided for them.
If possible, offer your clients something bigger and better than before. Make the pitch engaging and allow your clients to share in the excitement of the growth and improvement of your business, which will no doubt result in continued growth and improvement for their own business as well.
Get In Contact With a Third Party
Still not sure how to start the process of re-evaluating your pricing? You may find help in the form of an objective third-party perspective. At Sebastian Lane Consulting, our CEO Jesse can help you review the pricing of your products and/or services.
We can review your services against industry standards and identify key differentiators for you to incorporate into a conversation with existing customers. Additional support can include performing role plays to help you manage objections and prepare well-articulated responses to likely concerns and questions. With the correct guidance, analyzing your company needs income-wise, combined with the amount of value your company is providing, should make the correct pricing of your services a welcome adjustment.
Get in touch with our office today for more information.
If you are interested in outsourced sales management services for your firm, we here at Sebastian Lane can help point you in the right direction. Feel free to reach out for further information, resources, and recommendations. Call Sebastian Lane Consulting at 443-534-6783 or email us at jesse@sebastianlaneconsulting.com.
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