How to price your services in a profitable and legitimate wayJul 12, 2022
This blog post was first published on 15 December 2020
If you’re an entrepreneur and you’re struggling with knowing how to price your services in a way that is profitable, we hear you. There is definitely a balance to be struck. Price your services too high and no one will buy and price them too low and still no one will buy… We know that the amount of advice in the online space on this topic can leave business owners feeling overwhelmed. Whether you’re just starting out in business or are reflecting on your current pricing, this blog is to support you to price your services in a way that is legitimate and profitable.
There’s something that really bugs us here at Lucy Legal, and if you’ve been in the online business space for a while, you may well have heard this piece of advice on how to price your services from one or more business coaches before….
It goes something to the effect of this…
“Decide how much money you’d like to earn per month and then simply divide it by the number of people you want to work with and there you go, that’s the figure you should price your services at, so if you want to earn 10k months and work with 2 clients then simply charge 5k for a coaching package….”
This doesn’t sit right with us at Lucy Legal. The problem with this method is that it lacks substance. There isn’t a legitimate justification behind the pricing and its emphasis is simply on the desires and goals of the business owner. It lacks consideration of the value of the service to the client. It’s simply based on the business owner’s income goal and their preference as to the number of clients they want to serve. Here at Lucy Legal we believe that business owners should consider their potential clients’ needs and how they can best serve them in a way that is also profitable, rather than be solely focussed on profit.
Here’s the good news- we’re here to walk you through 5 steps to help you price your services in a way that is legitimate and profitable, so you can make an impact and have a business that you are proud of and looks after you too.
If you don’t want to read the tips you can watch the video below where Lucy walks you through each one step by step. Every time we listen to the part at 1 minute in we laugh!! Check it out:
1.Consider the offer and the value you put into it
Look at what you offer in detail, whether it’s a 1:1 service, a group programme, a membership, an online course or a product and work out the value of that offer. Think about the support you provide and how that may help take your client or customer from A to B, the wider benefits to their business, as well as all of the implications of not having that support.
Take for example the 5-day course File in Five, whereby we guide people through how to apply for a trade mark step by step over in 5 days, so that by the end of the 5 days they can apply for a trade mark for their service or product and ultimately legally protect their business idea. We take our clients from A, where their business idea(s) do not have legal protection to B, where their business is legally protected.
Leaving your business without legal protection can huge implications. If someone already has the trade mark for the name you are using for your service, course or protect etc and you don’t, they could request that you cease and desist trading with that name (e.g. stop trading using it immediately). Not only may that mean that you would need to stop using that name for services or products you are launching, but you may also have to remove any previous mentions of that name in anything you have already released, such as podcasts or Youtube videos, for example, which may not be that easy to change in one click and may involve editing and re-uploading- all time and ultimately money on your part.
In addition, that name may play a big part in that brand’s identity and be very important to the business owner. The brand protection that File in Five offers is therefore pretty priceless and could save a business thousands of pounds. That said, in reality people aren’t necessarily going to pay upwards of £1,000 to get a trade mark.
It’s important to focus on the value of your offering and how you can best serve your potential customers and price your offering based on that, rather than on what you want to make from that service or product. Think about what people will get from your offering and how much it is worth to them and then reflect on whether people would actually buy that at that price. Reflect on whether that price aligns with your own beliefs and values and consider whether you would pay that price for that offering yourself.
2. Consider where your pricing sits along with other businesses/competitors
We know that this is a controversial one… Many business coaches advise against this and emphasise that you should stay in your lane and not look at other people’s pricing. Whilst it is important to focus on your business and what you can bring to the table, it is important to take into account how your service or product sits alongside others in the market. If your competitors are all offering the same or similar service or product for a significant amount less and there isn’t anything that differentiates your service from theirs to make it higher in value, that may cause some problems in selling that service in the market.
It’s important to craft your offer and consider your level of expertise in the market and what makes it special, so that you can confidently sell your service or product at that price with legitimate justification on your sales page and/or over a sales call.
3. Reflect and be honest with yourself- how does that pricing sit with you?
Take a moment to sit with it and consider how that pricing feels to you. Does it feel right and aligned to you? Take a mental and/or physical note of whether it feels high or low. If it seems a little low, consider whether this is the first time you have launched this type of offer. If it seems a bit low and it’s the first time you’ve launched it, you may want to launch it at that price, see how it sells and make a note to yourself to review the pricing in the next quarter.
If it feels a bit high, it may be a good idea to start a little lower and see how many people buy it at that price. Launch it at that price and give it a reasonable amount of time, so that you can make an informed judgment on whether the pricing is right- we’d suggest at least a month, probably a quarter. If it sells really well, that may be a good indication that it’s very good value for money.
4. Launch the service at that price legitimately
When you first launch a product or service you cannot say that you are holding a “flash sale”. Something cannot be on sale if it’s never been available for purchase before. It is the law that a product has to be available at it’s full price first before it is discounted. When you discount a product or service you have to be really clear on what the pricing was previously, what it will change to and when.
Instead use phrases such as “introductory offer” or “introductory pricing” and set a clear expiry date for any offers.
It’s also the law that you stick to those offer dates unless there are exceptional circumstances. There’s always that one client that emails the day after your launch or offer has finished and asks if they can get the lower rate. The law is quite clear that when you put out an offer you have to have an expiry date and stick to it, otherwise it would be unfair to those who have been induced to buy at the lower rate as they could have purchased later. Be sure to make the dates of the offer clear and confirm that when you say “doors are closed”, you mean it.
5. Schedule when you will revisit the price- don’t simply put them up
Once you’ve launched it, make sure you schedule when you will review the pricing. Consider whether it did well when you launched it, whether you enjoy selling it and whether you still believe in the product or service and whether it works for you as a business owner and reflects the time and work you put into it.
For example, if you sell a “Power Hour” and you end up spending more time than an hour due to the time spent preparing, during and after the session when giving feedback, you may want to consider selling it as a half-day consultation at a price that reflects all the time that goes into that instead.
We’d love to hear from you on about your experiences and opinions on this topic of pricing and if there is anything in particular you would like us to cover on the blog in relation to building a profitable and legit business. Feel free to drop us an email to [email protected]
Team Lucy Legal x
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