April 23, 2009 5:05 PM
How to Feel Good About What You Charge 
Figuring out how much to charge causes a lot of stress among Accidental Entrepreneurs. And that's too bad, because when you aren't comfortable with what you charge, you avoid talking about it. And that means you aren't having very many conversations with prospective clients.
The notion that there is a right way to set prices is responsible for much of the stress. If you believe a given method is right, but the price it generates feels wrong, what do you do?
You can charge the right price that feels wrong, with the result that you avoid quoting the price or, when you do quote it, you feel awkward and sound defensive. And if the right price feels too high to you, you're likely to quote a lower price and then kick yourself for it.
The Right Price Feels Right
What's obvious is that the right price feels right to you. (How it feels to the other person is none of your business. Your job is to make the offer, not to carry on both sides of the conversation.)
Given that few Accidental Entrepreneurs are comforted by this, there must be something else going on. Something that makes getting to the "right feeling" so difficult.
Why Pricing Is So Uncomfortable
There's a reason why pricing is uncomfortable (scary, maddening, tedious): Too often we set prices without knowing what function the price is supposed to serve.
You might think the obvious function of a price is to bring money into your bank account when you sell something. But that's not reality.
Prices have more than one function. Here are some examples, each a legitimate function of pricing.
To bring in revenue.
To qualify clients. (Clients who want to pay a lot more or a lot less will go elsewhere. "Qualify," in this sense, means "determine if they are a match, financially."
To establish a brand. (Some expensive cosmetics are no more effective than inexpensive ones. But they would actually sell less if they lowered the price.)
To enhance prestige.
To free up time (higher fees x fewer clients = more time)
To fund development of new offerings.
To gain experience and credibility.
To become known in a new field.
To increase or decrease sales volume.
Some of these functions are contradictions. If you need to set a high price in order to be credible but you need to charge a lower price because you are new to the field, what should you do?
How to Resolve Pricing Contradictions
When two functions of pricing conflict, it's because you haven't decided which functions are important and which are not.
If you're starting out in a field, getting experience may be more important than generating revenue. In this situation, setting lower prices can be a smart move.
If you sell fine handcrafts, your prices need to not only cover your costs but also carry the message that your work is unique. In some markets, it's easier to sell the more expensive products or services. Not everyone is hunting for a bargain.
When you think about what you and your business really need, most pricing contradictions vanish.
The Right Price Does What You Want It to Do
When you are clear about the function of your price, you can feel good about what you charge, whether it's more, or less, or just the same as other people in your line of work.
After a year and a half as a coach, I was teetering between 7 and 10 clients. I sensed a block around working with more. I wanted to challenge that block, and I invited a few clients to work with me for three months. I chose talented, successful people who would not bother with coaching unless we could make it worthwhile.
Here's what "giving away" my work did:
It expanded my client list so I could get accustomed to working with more folks.
It challenged my self-talk that I had nothing to offer this kind of client.
It educated valuable referral sources.
I got to experience the value of coaching to clients who did not have "issues."
At the end of the three months, several of them hired me at my regular rates.
When I launched the first Authentic Promotion course, I offered a "beta" to 45 coaches. The price was something like $79 for a course that eventually sold out at $240 and $300. The 29 spaces sold out in 48 hours. I made over $2,000, which was a lot of money for me at that time (still is). It wasn't what experienced teleclss leaders were charging, but I was ecstatic. That income underwrote the costs of developing the course.
You Can Feel Good About What You Charge
If you are confused about how to set prices, stop and think about what prices can and can't do for you. When you are clear about the function, you can set prices that feel right and trust that they are right.
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Hi Molly,
I think this is a great topic for discussion. Most therapists that I know really struggle with setting their price. We have to remember that our practices are our businesses, and act accordingly. There are too many wonderful therapists that suffer burn out, because they've never learned to prioritize their own needs. Thank you for a thought-provoking article.
Linda Posted by: Linda Menesez, LCSW
at April 23, 2009 8:45 PM This is a really fabulous article. So many in my industry struggle with this. It's great to know there are people in other industries struggling with the same things, and it's fantastic to get some outside-the-industry advice. Thank you! :) Posted by: Anne Raker
at April 23, 2009 9:39 PM Thanks Molly,
This was excellent timing once again, exactly what I needed to read today :)
Marie Posted by: Marie
at April 23, 2009 11:19 PM Wow Molly,
You keep amazing me!
To me this is so spot on. I already figured out for myself that 'getting experience' is my 'main function' right know, but I've been reading so much about the dangers of setting a 'sliding price scale' that I was afraid of charging too little.
Because of your article I now know that I won't be offering a 'sliding scale' but a 'rising scale'.
Starting of with offering my services at a lower price (main function: getting experience) and raising my price in time (main function: earning a decent living), having gained experience, being better qualified and thus having increased the 'value' of my services.
This feels like something I can implement in figures in my business plan, while staying true to myself.
Thanks Molly!
Marianne Posted by: Marianne
at April 24, 2009 1:35 AM Practice saying your prices in the mirror. Be kind to repeat or multiple buyers but stay within a reasonable price range. Find ways to work with the client so they can buy your work. Posted by: Sharon Pitts
at April 24, 2009 4:52 AM Linda: You are right. Burn out is a very real risk when we charge too little. When I start worrying that I'm charging too much (defined as harming someone who can't afford the fee), The Work of Byron Katie provides a road back to sanity.
Here's where I go:
"They will suffer because I charge too much."
Is it true? Yes.
Can I absolutely know that it is true? No.
How do I react when I believe that thought? What happens?
I feel guilt about making money more important than people. My chest feels tight, and my breath is shallow. I feel anxious (how can I survive if I lower my fees?) and resentful ("they" want more than I can give). I imagine myself as a hero/angel or a long suffering saint. I see images of people taking advantage of me alternating with images of me being praised for my generosity.
Who would I be without the thought? More present. Able to look at the question of fees realistically. What do I need to earn in order to offer good service? I could enjoy prospering without feeling it hurt others.
Turnarounds
Original thought: "They will suffer because I charge too much."
TA1: They will NOT suffer because I charge too much.
This could be true. How can I know? And it is possible they would suffer if they hired me. In that case, charging too much protects them from harm.
TA2: I will suffer because I charge too much.
Yes. I suffer when I charge myself with rescuing the world. I suffer when I charge myself with reading other people's minds and pretending to know what's best for them. I suffer because I charge myself with being self employed without sufficient revenue to succeed.
TA3: I will suffer because they charge too much.
This could be true. They "charge too much" when I assume they need more than I can give. They charge too much when I am in their business and presume to know how they feel and what is best for them. They charge too much when they come for a session and I'm exhausted or burned out.
Some underlying beliefs that look juicy to me:
Charging $xx.00 means money is more important to me than people.
They want more than I can give.
They need my help.
I should be a hero.
I want to be a saint.
They can take advantage of me.
I can take advantage of them.
People should be generous. Posted by: Molly Gordon
at April 24, 2009 9:40 AM Anne: I suspect pricing issues arise in virtually every industry. And those of us who work in human service/human potential fields may find the matter especially challenging. Glad this shed some light on it.
Marie: :) Thank you!
Marianne: I absolutely love "rising scale." I've written opposing sliding scales, and in some contexts I think they are inappropriate. In your situation -- brilliant!
Sharon: Some good techniques for practicing once you've settled on the price. Posted by: Molly Gordon
at April 24, 2009 10:03 AM Hey Molly, just read the stuckness article.
NO, I can't see myself in it... too stuck... NOT!
You're singing my song baby. Thank God I love harmony as much as dissonance :-)...
Think I'll let the minor keys go play with themselves - unisono...
XOXO Eliana Posted by: Eliana Gilad - Galilee, Holyland
at May 7, 2009 11:09 PM I was just reading your useful comments about what to do when feeling stuck and I thought there was another point to include.
There is real wisdom in lying fallow. Nature has to do it and so, I suppose, do humans. We are after all, mammals, too.
This is not my wisdom, but useful lessons I recently took in from a teacher of mine: when we 'tell ourselves' we are stuck it can be useful to, first, sharpen our self-observation skills. Like your recent post observed, we may be feeling stuck when we obviously aren't.
And...we may be experiencing the need to step away from a project and let it lie fallow, if only overnight, (but often more fruitfully for longer) until it ripens within us and is ready to move forward again.
Thanks for the chance to comment... Hattie Wolfe Posted by: Hattie Wolfe
at May 10, 2009 7:42 AM
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