3 Essential Price Setting Tips for Beginners

In this episode of Live with The Pricing Lady, we take a look at

price setting tips for beginners.

Oftentimes people get stopped before they even get started because they

simply don't know where to begin when it comes to setting prices.

In this episode I'll share with you three things you should start with

when you sit down to set yours.

Sit back, relax and enjoy the episode.

When it comes to where to start with pricing, the reason that I find

this so important is because where you begin will determine not just

the journey, but where you end up.

It's important for you to be able to begin in the right place from

the beginning so that you can work more effectively and efficiently.

That's not to say that if you start in the wrong place, there's no hope.

Of course, there's plenty of hope and there's plenty of opportunity,

this is based on, let me say my experience and what I see startups and

small business owners getting wrong.

And then struggling more than they need to.

Reflect as we go through this conversation about where your efforts and energy

goes when it comes to pricing and what little changes you can make

in order to be doing it to better.

When we think about sitting down to start with pricing, the very first

thing, and you probably are seeing this coming, if you follow me regularly,

is to start with the customer.

And this is one of the things, as I said, that people overlook

when they're doing their pricing.

They think they need to focus on the competition and the costs, which you

do need to include, but if you just focus on that, then very quickly

you can go in the wrong direction.

Because who you're targeting in large part will depend on where

in the range of prices you fall.

Yeah.

Where your offer will end up being.

If you're targeting a group that is extremely price sensitive and they're

looking for the best deal always and the cheapest offer, then that is

going to, in large part, dictate what you do or can do with your pricing.

As opposed if you're targeting people who have a lot of money or

who have a lot of disposable income.

If you focus on the customer, then you can start, driving what you're

doing with your pricing strategy in the right direction from the start.

Whereas if you start with, for example, the competition, you know, people always

come to me and they're like, how can everybody charge so little or so much and

I can't figure out where to price myself?

Well, you can figure out where you can be in that range in part by

understanding who you're targeting.

It helps you to narrow that down.

The reason to do this is really to avoid heading in the wrong direction and using

false assumptions or assumptions that you haven't fully tested because you

haven't fully understood which market is the best one to focus on first.

When it comes to setting your prices, if you try to set prices based

on targeting everyone, then you position yourself as a generalist.

In the marketplace, generalists will command less than average prices.

Now, that could be your strategy if that's where you want to be, but I would

guess for many, no, I'm not guessing, I know for many small businesses,

they actually have more strength by playing in a niche area and being

the expert in delivering something for those people or in that context.

Now the second thing you want to take a look at when you are sitting down to

set your prices is your business goals.

If one person has starting their business because it's a fun side

activity for them to do, they're going to have very different business

objectives than someone who is trying to earn an income to live off of.

Now, you may think that it's wrong for some people to do that, and right, the

only way to do it is to have a fully fledgling business with big lofty goals.

But the reality is, is every business is different, and they're trying

to achieve something different.

If you compare yourself, let's say you are trying to live off of the income

your business generates, and you compare your prices to someone who's just doing

it as a side gig, you may find Their prices, in your opinion, are too low.

And then if you position yourself against them, you're setting yourself

up to have a business where it's going to be really hard for you

to get the profit engine running.

Your business objectives, whether you want to go for profit, or you want to go

for market share, or you want to focus on this segment or that segment, or, you

know, all of these different business oriented goals are very important to what

you're going to do with your pricing.

If your goal is to have the most market share, you're going to have to do

something very different with your pricing strategy than someone who is just trying

to earn a decent living and wants to go spend a lot of time with their family.

Not that those two things are at odds, but your strategies might be different.

The third thing that you want to take a look at when you're sitting

down to set prices is your mindset.

The last year I did a poll, I'll probably do it again this year

because it was such a great one.

I did a poll about what is the thing that influences your prices the most.

The options were the costs, the competition, the customer or yourself.

In my experience is you.

You have more influence over your prices than anybody else in that equation.

The quality of your mindset when you sit down to set prices, if you think,

I can't do this, I don't know how to do this, I'm not good at math.

Or if subconsciously you're thinking, who in the heck would pay me that?

I couldn't possibly do that.

That's going to have a significant impact on what you do with your prices.

The idea here is that you need to question some of the thoughts that

are running through your head.

Even the ones that ignore most of the time or even joke about.

Yeah, sometimes the ones we joke about are the ones that are actually

doing the most damage along the way.

You need to think about those and, and make sure that you address those before

you go too deep into your pricing so that it doesn't have such a big influence.

If you believe you can't, you won't.

If you think you're unworthy, Then you'll behave in a way that reflects that.

That's why it's so important to also consider your mindset.

Those are the three things that I wanted to offer to you as

things to start with when you're sitting down to set your prices.

Most people will start with costs and competition, which are external factors.

Of course they are important in your overall pricing strategy

and how you set your prices.

But I am a big believer and my experience has shown that if you start with the

customer and your business objectives, you can actually come up with prices

and then you can use things like costs in the competition as checks.

As checks in the first place for costs, can I do this profitably?

And what will it take?

How much volume do I need?

And for the competition, where am I positioned in the market?

And that, does that make sense relative to what else is out there?

If you start with a customer and your business objectives first, and then

use those other things as a check, you actually get to better prices for your

business, you end up usually being much better positioned in the marketplace.

Turn that equation around from cost and competition first to the customer and

your business objectives and make sure that along the way you're stopping and

asking yourself, okay, are the things I'm saying in my head or the self

doubts that I have, are they realistic?

Are they helping or hurting me?

And what can I do to set them aside so that I can come up with prices

that are right for my business?

Those are the three tips that I wanted to share with you before you go.

Let's talk about what this really means.

What it means is you've got to get clear on who you are targeting.

Now the tendency is that you'll want to reach everybody.

But what I can advise you in most cases, if you can focus on

one customer target group first.

It's going to make it so much easier for you in your business.

Because that will help you focus what you do and when it comes to your

pricing, as I gave the example earlier, It will help you understand where in

the range of prices that are out there.

You need to be positioned.

Second of all, we talked about how important your business

goals are to understanding how to position yourself in the market.

What you're trying to achieve (i.e. business goals) can be enabled

by what you do with your pricing.

But only if you pay attention to that at the time you're setting those prices.

And last of all, we talked about the importance of your mindset.

So what can you do to help yourself, so that you're sitting down to

set prices with a clear mind?

Well, some tactics you can use as you can journal about what you're feeling.

When you sit down to do that and then, you know, set those feelings aside,

if they're ones that might influence you in a, in not the right way.

You can do a meditation.

So leave behind the fears and the uncertainty.

You feel about pricing for a time, do that with a meditation

or a mindfulness exercise.

There are a lot of different tactics you could do, but sitting down to do pricing

with a mind that is sort of free from some of the negative thinking that you might

have around pricing in your business is going to be really important to helping

you or keeping you from getting stuck when you're first setting those prices.

Before you go, there are two more things I'd like to share with you.

First of all, in 2024, I have a masterclass series.

This is a series of six 90 minute courses where we're going to talk and go

deeper into some very specific topics.

The first one in 2024 is on March 5th and we're going to be taking

a look at understanding prophet.

I encourage you to join me.

We'll pop a link in the show notes for you.

In this.

90 minute course, we're going to use my pricing toolkit and the calculators

in there to help you better understand profitability in your business.

And I'll show you how to use those tools to help you make better pricing decisions.

The second thing I wanted to share with you and also invite you to

join me for is my newest course called the customer compass.

The customer compass is all about understanding your customers by

doing customer insight interviews.

So if you're clear on who you're targeting, but you don't

yet know a lot about them.

And you want to dig deeper.

This is a course for you.

I'll show you over about 10 days, how to do customer insight interviews.

We'll get you taking action and practicing so that when you do the

interviews in front of customers, you have worked out the kinks already.

If you'd like more information about either the masterclass or the

customer compass, then you want to head over to thepricinglady.Com,

click on the events page, and you'll find all the details there.

We'll pop a link in the show notes for you.

I wish you a great day.

Thank you for joining me.

And as always my friend.

Enjoy pricing.