Pricing Your Offers Like the Boss You Are

One of the more intimidating tasks as a business owner is pricing your offers, especially if you’re a new business owner without an established baseline. You want to strike equilibrium between what's doable for your ideal client and what's going to bankroll your life. If you price higher than the industry standard your offerings will have to be far more competitive than the industry standard to meet your sales goals. Of course, if you price too low you will have to hustle harder and you possibly won’t be taken seriously as a professional. So how the heck do you find that sweet spot??

It’s important to not lose sight of the fact that you're here to make money on your terms. Working is about paying the bills, being an entrepreneur is about working to pay the bills in a way that suits your lifestyle while providing value to those you serve. You cannot provide optimal value to others if you are not prioritizing value in your own life first. With that in mind, determine how much you need to make each month to cover your personal expenses and lifestyle, and be realistic (e.g. you enjoy traveling a few times a year versus you’d like to live in Bora Bora for half the year. The fancypants stuff will come later if you’re not already a fancypants. If you are a fancypants then you probably don’t need my advice on any money matters. Let’s move on...). We’re going to call this amount your profit goal.

Now determine what it costs to run your business. Add up your ongoing monthly expenses such as software subscriptions, memberships, office rent, payroll, etc., then add a minimum of 10% as a cushion. If you’re just starting out you’ve probably invested some money and haven’t seen any return on it yet. You may or may not want to include that amount as a monthly expense depending on how quickly you need to recoup the cost. Some entrepreneurs are comfortable with hitting the break-even point on startup costs whenever it rolls around, but if you need to break even within a certain amount of time you’ll have to roll that into your pricing. For example, if you’ve spent $12,000 and you need to earn it back within two years you’ll include $500 in your monthly expenses ($12,000/24 months = $500/mo).

So now that you have your monthly expenses + profit goal add them together. This is your monthly target revenue.

This is where it might start to get a little sticky depending on your business model. If you are a service provider billing by the hour, pricing your services is relatively straightforward. Simply determine how many billable hours you’re willing/able to work (Again, be realistic. You probably aren’t going to charge $1,000 per hour and work only one hour a week. Then again, I don’t know what kind of services you’re offering. You do you.) and divide your target revenue by that number. Voila! You have your hourly rate.

If your offerings are a little more evergreen or project-based, (think, self-paced programs or coaching packages) you’ll need to evaluate your time investment from creation through servicing your programs to back into your package fee the same way you would an hourly rate.

Of course, there are nuanced factors to consider when pricing your offers. You should always do your homework and determine industry averages. You never want to undersell yourself, undercut your competition, or price yourself completely out of the arena. And remember, you can always adjust your pricing along the way.

My objective is not to tell you exactly how to price your services, it is to give you a baseline to work from and to help you understand what needs to be taken into account when determining your rates and fees. Many of us are not comfortable talking about money, so stating your dollar value to the world can feel uncomfortable and vulnerable. I want you to be equipped with the tools to feel empowered and confident in charging what you need to charge to be an entrepreneur who thrives not only in her business, but in her personal life as well.

- Candi

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