From Hourly Rates to Bundled Value: The Power of Packaged Pricing

Hello and welcome to Live with the Pricing Lady.

I am Janene, your hostess, and I am so excited to be here with you today.

Now we are getting back into the swing of things after our summer break.

And today I want to talk about a topic that has come up a lot recently.

Actually, I've gotten this question quite a bit.

Now in the past few weeks, I've given like three or four workshops

and I've delivered two webinars.

So there's been a lot of Q and A sessions and a lot of people have been

asking me about time based pricing and or about going to packages.

So let's have a conversation about moving from time based pricing to offering

packages in your service based business.

Now, this is a great topic for any business who offers services of any kind.

So even if you're a product based business, but eventually, or even right

now, if you're offering services, this is good for you, but it is especially

important for those of you who are doing coaching, consulting, and freelancing.

So why it is important for you to shift at some point in time

away from time based pricing.

Now I have another podcast episode where I talk about the fact that Time

is just the wrapper your services are delivered in and that is so very true.

That has to do with the value that you bring.

Time based pricing isn't actually linked to the value.

They (your clients) don't get value just from the time that you spend on things.

They get value from your experience and your know how, your ability to help them.

And so one of the reasons that you don't want to use time based

pricing is it's not actually linked to the value that you deliver.

And that's where I'd like to start this conversation because you

know me, I am all about the value.

Funnily enough, in the last cohort of my course, the fair price formula, one

of the ladies said, Janene, you should call yourself a value evangelist.

And it's very true.

Value is important, especially if you're a purpose driven business.

If you're a business that brings added value compared to the other guy

(or gal), if you want to be able to differentiate yourself and what you

offer, then you have to look at the value.

It is so important.

And if you're going to say, I bring more value than others, then you're going to

want to know how to charge for that value.

A lot of times when we're talking about pricing, we're

talking about capturing value.

And that's just a fancy schmancy way to say, get better prices, but value capture

is actually you being able to say, yeah, my product or my service delivers this

much more and my price refracts that.

So that is the first reason why you want to move away from time based prices.

The second reason is that time based prices actually make you a commodity.

So then, you know, people can just compare one hour to the other, even

though they don't really understand what they're going to get out of that hour.

So by Commoditizing yourself into an hour or a day rate, then you make

it easier for customers to compare something, but they may actually

not be comparing similar services.

So then maybe you appear to be more expensive, but they don't understand

that they actually get so much more.

They just know that you call yourself a coach just like the other guy or gal,

or they know that you just deliver, let's say, plumbing services, just like

someone else delivers plumbing services.

But we all know that there are different levels and different types

of service providers out there.

So if you move away from time based pricing, you actually take yourself

out of this commoditized space.

And the third reason and maybe even the most important reason over the long term.

But what is the third reason here that you want to move away from time

based pricing is time based pricing doesn't actually grow with you.

So what do I mean by that?

Well, when you start out and you're early in your business, you may not have all

the wisdom and the tools, you may not have created systems, you may still be finding

your way a little bit, and so things are going to take you a little bit longer.

If you're paid by the hour then they're going to pay more.

Simply because it takes you longer to do things.

But, as time goes by, and you develop those systems and tools, and you develop

the shortcuts and hacks and the ways of working that help them get results faster,

because you work more efficiently and more effectively, then you're going to be

charging them less to get better results.

And that's what I mean by it doesn't grow with you.

So these are three reasons why it's important for you Even if you're not

ready right now to think about okay There's gonna be a point in time where

I'm gonna want to make this shift from time based prices to packages.

So why packages?

Why do you want to consider doing this?

So we looked at the reasons not to do time based, but let's talk about packages.

One of the things that packages do for you is it forces you to

get clear on what you're offering.

Yeah.

It forces you to create standard offers, it means that you have to be clear about

what you're going to be offering and what the main group of people that you

are going to be working with, so your target customer group, really want.

And having that clarity is a beautiful thing in a business.

When you have that clarity, not only do you know what to offer them and how

to offer it, how to deliver it, you would know how to price it as well.

So that clarity, it really forces you to sit down and get really clear about that.

It also forces you to test out some things as well, but that's kind of a side note.

So the second thing that it does is it helps you to streamline how you have

those first conversations with customers.

So right now, if you're doing time based pricing only, then that

conversation is usually focused around, well, how much time is it going

to take for us to get things done?

And what is that going to cost me?

So again, you're focused on these two things that are really commoditizing

your offer, which is time and costs.

And what you want to shift towards is you want to shift

towards value and investment.

Yeah.

So, okay, I got off topic here.

Let me go back.

So streamlining.

What happens with a lot of people is when they don't have customized

offers or when they don't have some standard offers, they spend a lot

of time creating customized offers.

So I've had some clients who have said, you know, it took them two,

three, five, even 10 hours to prepare that first offer for that customer.

And that can be like 10 hours over a week or two, right?

So it could be that the customer doesn't actually get that first

offer until, you know, seven, 10 days or more down the road.

What you actually want to be able to do is get them an offer in their hands

as quickly as possible so that you can start the conversation from there.

And when you have some standard offers and you don't need a lot of them, we'll

come to that in a moment, you don't need a lot of them, but when you have two or

three standard offers, then you can sit down and you say, okay, This is typically

what clients, you know, what, how I work with clients, let's talk about which of

these might suit you best and that they say, Oh, well, I really like this middle

one, but then, you know, to talk about that more and find out more about what

interests them in that offer, right?

Or if they say, well, actually we like, you know, offer number three, but we

want With this and that, then you can say, Oh, well, that's really great.

Now that would be a customized offer.

Shall we talk more about that?

(package offers) helps you to steer the conversation, but it also helps

them to start understanding the value and the investment they're going to

be needing to make based on what they choose as an offer, whether it be one

of the standard ones or whether they decide to go with something customized.

It actually helps you to navigate those conversations much better.

The last reason I'd like to focus on for creating packages is it makes it easier

for your clients and your customers.

Yeah.

So we all know that we are overloaded every day with making so many decisions.

And a lot of times when I talk to my clients and we talk about, okay, how

they're having these conversations with customers, they kind of go to the

customer and say, well, what do you want?

And that leads to like confusion because a lot of times customers

don't necessarily know what they want.

They know what they don't want.

They may have an idea of the few things that they want, but they're

looking for you to help as the expert, to help give them more guidance

about what they need and what's going to help solve their problem.

So, It makes it easier for them to make a decision.

I always tell people it's like a child.

If you go to a child and you say, what do you want for lunch?

They could ask for just about anything that they can name, right?

And you may not have that in the fridge or you might be too tired to prepare it.

But if you say to them, would you like?

a sandwich or would you like a soup, right?

Then you narrow down and you make the decision process simpler for them.

When you have standard packages, as long as you don't have 27 of them, but

you show them all at one time, then by giving them or showing them these

options, you actually help, but make it easier for them to make decisions.

So that is what I wanted to share with you today.

I want you to start thinking about, in your business, is the time right

to start making this shift from time based prices to packages?

Now you understand time based pricing, it makes you, it's not tied to the value.

It puts you in the position of being more of a commodity and it doesn't

grow with you as you become more effective and efficient in how you work.

And packages have the advantage of forcing you to be more clear on your

customers and what they want and what you're going to bring them.

It helps you to streamline how you're going to have those

conversations, and it makes it easier for them to make the decision.

I hope you enjoyed this episode.

Let me remind you before we close this out that the next cohort of the

fair price formula My price setting course is starting on September 29th,

and I would love for you to join me.

So head on over to thepricinglady.com/setmyprices.

Have a look and get registered today.

I wish you all the best.

Have a wonderful day.

And until next time, my friend enjoy pricing.