By Kristin Laffrey, business coach for women leading impact in fertility, birth, postpartum, motherhood, parenting and matrescence.
Pricing is one of the most critical factors in building a profitable and sustainable business. However, I see so many women make the mistake of undercharging for their services, which can lead to a cycle of lower perceived value, burnout, and stagnant growth.
In this blog post, we’ll explore the importance of pricing, the common mistakes people make when pricing, and how to create an effective pricing strategy that aligns with your business goals.
Importance of Pricing
Pricing is essential because it affects the profitability and sustainability of your business. No matter how many offers you sell and how much you market those services, if your pricing strategy is not effective, your business will not be profitable. Therefore, setting the right prices for your services is crucial to ensure your business can sustain and grow.
The Cycle of Lowering Prices
I see so many women fall into the cycle of reducing their prices to attract clients, but then not getting clients and feeling the need to reduce their prices further. This cycle can lead to a lower perceived value of your services, a reduction in profits, and even burnout. Instead of lowering prices, it’s essential to find ways to add value and differentiate your services from competitors. It’s also important to align your mindset to see the value of your services and hold confidence in your pricing. This will ensure you are able to confident speak to those prices and will allow you to sell with much more ease and comfort.
Mistakes People Make When Pricing
One of the most common mistakes people make when pricing is looking at their competitors' pricing without considering the needs of their own business. Firstly, it’s important to acknowledge that you don’t know if their business is profitable and secondly their goals, values or desire for lifestyle may be different to yours and therefore taking their pricing strategy will not support you in running the business you desire in a way that works for you. Additionally, not considering costs, value proposition, and the buyer decision-making process can lead to undercharging for your services which can have such an impact on the profitability and sustainability of your business.
Three Reasons Why Lower Prices Are Not Sustainable
Lowering your prices may seem like a quick fix to attract more clients, but it’s not a sustainable strategy in the long run. Here are three reasons why:
Reduced Perceived Value: When you lower your prices, you may inadvertently reduce the perceived value of your services, leading potential clients to think that you offer lower quality services.
Burnout: Lower prices may mean that you need to take on more clients to reach your financial goals, which can lead to burnout, impacting the quality of your services.
No Money to Reinvest: Lower prices may mean that you don’t have the money to reinvest in your business, limiting its growth potential.
Key Considerations When Setting Your Pricing
When setting your pricing, the key consideration should be what you want your income and profit to look like. It’s also essential to consider the lifestyle you want to have and how much time and effort you’re willing to invest in your business. Be realistic about your goals, and create a pricing strategy that aligns with them.
Creating an effective pricing strategy is crucial for the profitability and sustainability of your business. Avoid the cycle of lowering your prices, and instead focus on adding value, differentiating yourself from competitors, and considering the buyer decision-making process. Remember to set prices that align with your business goals and ensure profitability and sustainability for years to come so that you can serve in a greater capacity and build a business that is truly profitable and sustainable for the long-term vision of the impact you are here to create.
For a deep dive into pricing, this YouTube video below has you covered: