Are you charging your worth?
In a competitive world, it is sometimes difficult not to give in to discounting. but it’s better to know your worth and charge accordingly.
A question for the ages
There’s no doubt, price setting or being paid what you are worth is a major challenge for growing small to medium businesses, and is particularly true for cosmetic clinics where discounting is becoming the expectation.
More often than not – in an effort to secure a sale or service – there can be a tendency to undercharge or discount a product or service. Unfortunately once this is done, many businesses find they are operating on a razor-thin margin or, in many cases, at a loss.
In the words of author and business guru Morris Rosenthal: ‘Any business can buy incremental unit sales at a negative profit margin, but it’s simpler to stand on the corner handing out $20 bills until you go broke.’
Industry, service and product dependent, charging what you believe you are worth can be a complex beast indeed. This said, there are ways to confidently communicate your worth to a prospective client and in doing so, create a mutually beneficial outcome.
Here are some tips to help get you on the right pricing path or at the very least, thinking about pricing from another perspective.
Your brand. Your value
The first pricing hurdle. So many businesses fall at this hurdle as they see their brand as no more than a logo. Your brand is you and it is how your client will perceive you, your services and ultimately, your pricing. Creating your identity so you become recognisable, professional and differentiated from your competitors, gives you increasing market kudos and the ability to more confidently set and present your pricing. Work your brand!
Know the numbers
Every industry is different and it follows that pricing structures are also very different. First things first – don’t create or set your worth by simply following your competitors pricing structure. There are, of course, base numbers you should understand. For example if you are selling a product, you need to consider your fixed costs – material, packaging and distribution etc. It’s the margin above this where you establish your worth. For example, with a service, your pricing may be set subject to experience or credentialing in your industry. This may well attract clients that are less concerned about pricing and more concerned about securing a great aesthetic outcome.
Know your audience
Yep, it sounds obvious, but many businesses don’t know their target audience. Attracting vague interest from a peripheral, cold audience will put pressure on your pricing as they don’t really ‘value or need’ your services. Researching and knowing exactly who you are targeting, and understanding the services they really want, will make the pricing question less sensitive as their focus will be on securing a genuine solution.
Marketing the right way
In a word – differentiate. Aside from your marketing efforts being visually professional – website, brochures, images, video etc., it is creating a niche for your services (regardless of your industry) that will help you structure your pricing.
Technical ability, exclusive product offering, specialist area of focus – these are examples of niche areas that will not only create demand and ensure your pricing worth, but establish a future path for price increases.
We are not simply talking about paid advertising. Indeed, if you are following our other tips, paid advertising may have an adverse impact on establishing your pricing worth. It’s not the masses you want to reach, but the right audience that has a specific need for your services. Targeted social media, events, networking – all these very specific industry activities will increase your awareness to the right audience and set their perception of you as an industry professional that prices accordingly.
Selling your services
No, we are not suggesting wearing a sandwich board and hitting the streets. Like promotion and marketing, the more specific you can be and the greater the engagement you can achieve, the more likely you are to be able to secure your worth. As part of this, prepare your solution. What problems do potential clients have? How can I solve these problems? This proactive, solutions based approach helps you develop more meaningful relationships with clients that will help set your pricing.
Of course to be able to secure your level of worth, you need to be able to o er a level of service that meets this level. Asking $200 an hour for a service that is worth $50, is not being realistic! In addition, the better the journey you take your client on, the more likely they will be accepting of the final pricing. Also, you want them to secure your services again and promote your services to other potential clients. Listening and understanding client needs & wants through feedback – not dictating what is needed, will develop confidence and create relationships that are based on problem solving, not price.
For those with sta , it’s critical your price messaging is consistent. Training your sta to be consistent when asked pricing questions will help them as they are bound by what has been agreed, but also presents your clinic as being consistent and professional – not desperate in your pricing approach.
In the words of business coach and best-selling author Josh Kaufman: ‘Be very clear what people will give up if you charge a lower price – people understand that trade-offs exist in every business. As long as you’re able to communicate the benefits they’ll receive, customers will gladly pay the higher price.’
We thought of calling this heading ‘honesty’ as this is also essentially what it is. You typically get one chance with a prospective client and when it comes to pricing, if you hide, omit or in any way show pricing deceit, the relationship will be over before it begins. Clients (like you), will want to hear firm, open and all-inclusive pricing – even if they believe it is high, rather than a shadowy, ‘what are you hiding’ approach.
In simple terms, it is better to view pricing changes as a negotiation, not as a surrender. Securing your worth can be a many-headed beast but it does not have to be an evil one. Whilst discounting can be done strategically to benefit a business, it should not be at the detriment of you being able to charge your worth. We hope following some of our practical tips will help you secure what you are worth, or at the very least, a level that you are comfortable with. AMP