As 2018 comes to a close, most of the people I work with are making time to assess the year and plan/forecast for 2019.
The essential question is: How much money will I (or we) make in 2019?
If you’re like many of my clients, this larger number translates into an hourly rate or “service hours.” 2019’s income, then, is based on a certain amount of hours billed over the course of the year. In this case, setting a fixed price point is especially crucial.
For some people, this comes as second nature. They know how much they’re worth, ask for it, and they get it. For others (many others) it’s a bit more complicated than that. Some people feel anxious about asking for too much, or they know that the person asking for their services can’t afford them, but they still want to help. Some people honestly aren’t sure how to set a fixed price point, or what to base it on.
So, what does one do in this all-too-common situation?
Know your number.
Nothing makes pricing conversations easier than setting a fixed rate for products or service hours and sticking to it. Sure, occasionally you’ll meet someone you want to offer a discount. Of course, you can and you probably will! However, the days of assessing a customer and deciding a price point based on an assessment of their “situation” will be over.
(If you offer services at an hourly or packaged rate, and you’re not sure how to “fix your cost,” consider this highly regarded technique:
Add up your direct and indirect costs, mercilessly. Find out how much you spend developing your product or service. Then, figure out how much this service needs to cover (a percentage of rent, salaries, etc). Add all of these costs together and divide them by the number of hours you can work in a week. If you plan on working 40 hours, multiply 40 by 52, giving you annual 2,080 work hours. Subtract non-work hours (vacations, anticipated sick days, etc.) from 2,080 to see the actual amount of hours you will work. Then, find the billable hours. Divide your expenses by billable hours—that’s your hourly rate. Stick to it.)
Prepare Ahead of Any Meeting.
The next time you’re headed to a meeting, whether or not it’s sales meeting, be prepared. Always keep in mind how you and your client mutually benefit from the relationship. If you there is any possibility that you will discuss your services and price points, ensure that you know your talking points and that you are prepared to ask any questions that may arise. It is best to prepare with a partner or coach, if possible.
More than anything, make sure that you know exactly how much the delivery will cost and exactly how it will benefit your client.
Take care of yourself.
The most important point: by sticking to this price point, you are taking care of yourself. By now you know how much you want to make in 2019, how many hours you need to work, and what you need to make. The number you have discovered is the amount you need to take care of you and anyone depending on you. It’s an important number, don’t hesitate in sticking to it.
If and when you’re sitting at a table, negotiating a price, remember that your number is a fact that you are communicating with someone who would like to work with you. You’re no different than a barista, communicating the price of a cup of coffee.
Stick to your price point.
If this is a new practice for you, it might feel uncomfortable at first. As with anything new and uncomfortable, it may take a few rounds to get used to it. Keep at it. With weekly practice, you should be at ease with your price point in 60-90 days.
If you read this and think “I really want to do this, but…” schedule a one-on-one coaching session with me and we’ll take a deeper dive into where the hesitation may be coming from, how to get past it, and perhaps even how to communicate with a new or existing client about your prices in the near future. Get in touch with me and we’ll set up a time.
If you have a few minutes and you’d like to find out how well you perform in high-stakes situations heading into 2019, take this Mastery Under Pressure Quiz. It only takes 5-10 minutes.
I’d love to hear from you in the comments below. Do you stick to the same price point with every client? What has or has not worked for you in the past, in terms of setting prices?
- Posted by Kelley O'Mara
- On 7th December 2018
- 0 Comments