EPISODE 149: HOW TO KNOW HOW MUCH TO CHARGE FOR YOUR PRODUCT OR SERVICE

How To Know How Much To Charge For Your Product Or Service

A question that I hear often from my clients is “How much should I charge for my service?” or “How much should I charge for my course or for my membership?”

And this is one of those business decisions that I feel is tied so deeply to first, your brand positioning and second, your mindset around money and pricing.

In this episode, I share 3 questions you need to ask yourself as you think about your pricing. You'll also hear my thoughts on why I think asking feedback on pricing from your friends and family is a bad idea.

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"The first thing I want you to do is to stop asking people how much you should charge or if your price is too high or too low. Stop asking your family or friends if your service is too expensive or how much would they feel comfortable paying for your service or item."

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A question that I hear often from my clients is “How much should I charge for my service?” or “How much should I charge for my course or for my membership?”

“Should I charge roughly around the same as my competitors? Should I charge less so that it might appear more enticing to my potential customers? Is there a formula when it comes to how much I should charge?”

And this is one of those business decisions that I feel is tied so deeply to first, your brand positioning and second, your mindset around money and pricing.

When it comes to deciding your pricing and how much to charge, the first thing I want you to do is to stop asking people how much you should charge or if your price is too high or too low. Stop asking your family or friends if your service is too expensive or how much would they feel comfortable paying for your service or item.

Maybe you’re charging $100 for a product and they’re like, oh that’s too expensive or oh that’s too cheap, you should charge more. You get different answers from different people.

What I want you to remember is this: every person has their own limiting belief around money and how much things should cost based on their lifestyle, their mindset and their surroundings.

If you were to ask me how much you should charge for a service, I might pick a number based on my own experience and how much budget I have. I may or may not even be your ideal paying customer.

If you ask someone who struggles to make a living every month, $1000 a month for a service will sound like a lot of money, and it is a lot of money for this person. But ask the same question to someone who runs a 6-figure business or has a high-paying job and that $1000 a month cost is an acceptable amount or a low-end amount.

Someone who has an abundance mindset around money will tell you to charge more, whereas someone with limiting beliefs around money might tell you “hey that’s too expensive, you should charge less than your competitors XYZ.”

Same thing, if you ask someone from a richer country or city, they’re likely going to give you a higher amount as compared to someone from a poorer place. It’s just their background and lifestyle influencing how much they normally pay for things and how much they see other people in their lives pay for things.

I made this mistake early on. I would ask my friends and family and other entrepreneurs for their opinions on how much I should price my service or my digital products.

And I would listen to them and I would make the change to my pricing based on what they’re telling me. I wasn’t aware I was allowing their beliefs around how much money can one person make from that product or service affect my business.

And when I realised that, I stopped asking people how much I should charge. Yes, I still look at what my competitors are charging for a similar service or product, so that I know what I’m facing. But I’m not trying to copy what they’re charging.

So this is how I work out how much I wanna charge for my agency services or the products that we have at Hack Your Online Business.

Number one, I always ask this question: What is the impact of this product or service? Is there a quantifiable amount of money that my clients will earn or save, or a quantifiable amount of time that they’ll save?

For example, with my marketing agency Chrys Media, we work with pretty high-ticket clients and we know that even if we were to help them get one more sale, we can absolutely justify our agency cost.

At the same time, they’re getting good work and fast communication and working with a trusted agency.

This is why I don’t care if my competitors or some freelancer on Upwork charges less than what we charge, because I know how much money and time I can help my clients earn and save.

If I’m charging more, I wouldn’t worry about pricing myself out just because my service or product costs more. For example, if I build websites, I know that there are a lot of web designers out there who charge a wide range of prices.

I want to focus less on how much I charge in comparison to the rest, and instead I want to focus more on what is the value that I’m bringing to the table for my client that these guys aren’t?

Is it my fast response rate? Is it my professionalism? Is it my 3 months hacking protection that comes with my website created for you? What will be the biggest pain point after I deliver my product or service, and can I include the solution to that pain point as part of my offer?

So with my agency, one of the services we offer is creating Messenger bots. We charge a lot for it, but our service also comes with a free team training on how the client’s team can take over the simple bot changes after we deliver our work, so they don’t have to keep us on an expensive retainer.

And to that point, make sure that you’re communicating that to your potential clients - why you’re charging what you’re charging and what returns they can expect.

Number two, I look at what I want to earn and the brand positioning that I want to have, and that gives me an idea of how much I should charge. If I want to go for a high-end brand positioning, then my pricing needs to reflect that. If I want to go for a mass consumer type positioning, then my pricing will be lower so that my sales quantity is higher.

The third thing I look at is how much experience do I have at this, and/or if this is a new launch. So typically, I like to start at a lower price when I’m creating something new or when I first start a new business, and then my prices go up as I gain in experience or reputation.

I see this cost discounting as somewhat necessary if you have zero experience or zero audience and you’re starting out from scratch.

It’s hard to sell a high-end service package or membership or a $1000 online course if you’re totally brand new and no one knows who you are, and you can benefit from selling at a lower price first, get the experience, get the testimonials, then keep raising your price as you go along.

So that’s my advice for you when it comes to pricing your product or service.

Thanks For Listening, My Friend!

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