Charge Your Worth: How To Charge More For Your Services

Do you have a hard time figuring out how to charge for your services or products?  Well, if you’re like most entrepreneurs and small business owners, chances are you’re not charging enough.  So if you’re in business for yourself, here are four tips to help you increase your prices and charge what you’re worth for your services.

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 1. Calculate How Much Business Revenue You Actually Need

Most people start businesses so they can be in control of their income and lifestyle goals—but that dream can quickly fall to the wayside if there are no clear business revenue goals in place.

The first step in charging more for your services is to get clear about how much gross business revenue you actually need.   I hear a lot of women say they want to have a million-dollar business.  And while I do believe you should aim high, instead of just picking numbers from the sky, make sure your goals are in direct relation to the type of lifestyle you want to live.

Maybe you only need $75,000 in gross business revenue to allow for the life you want. So then why aim for a million-dollar business if that’s not really what you want or need?  To calculate your own business revenue goals, simply reverse-engineer your goals for the year by figuring out how much net income you need to support your ideal lifestyle and fund your financial goals. Then add in any personal and business taxes and business expenses. This becomes your business revenue goal for the year.

 For example, my business revenue goal for this year is $250,000. This will be enough to cover my business expenses, taxes, support the lifestyle I want and fund my financial goals this year. Once you’re clear on your business revenue number, you can begin to review how much you’re charging and increase your fees, if necessary, to reach this goal.

 2. Do the Math

Once you know how much business revenue you need, figure out how many clients or customers you can handle. Let’s use my business as an example.   Since I’m a service-based business, I know my team can handle only 100 financial planning clients per year to ensure we’re providing the level of service I want and still maintain my ideal lifestyle.   Therefore, my minimum fee is $2,500 ($250,000/100 clients = $2,500).

Photo Credit: yum9me

Photo Credit: yum9me

You can also do the calculation another way.   For example, let’s assume you sell purses and you need to sell them at $100 to be profitable.   You figured out that you need $75,000 in gross business revenue to support the lifestyle you want.   If you do the math, you’ll see that in order to reach this goal you need to sell 750 purses.  Now, you can create a marketing plan to reach that target.

If you do the math and don’t feel comfortable charging the amount you need, then ask yourself how you can add more value to your services to become comfortable charging more.  If you still don’t feel comfortable charging more, then what do you need to implement to sell more units.

However you decide to slice it, make sure the math adds up.

 3. Practice, Practice, Practice

Once you have your fee or price set, practice saying it aloud.   Pretend you’re on the phone or in a meeting with a client and state the fee you’ve determined for your product or services.   I recommend role playing and stating a fee that is three to five times higher your actual fee so you get comfortable quoting higher numbers.

For example, if your service fee is   $500, then practice charging $1,500 during your role-plays until you get comfortable with that number.   Then when you actually charge $500 in real life, it’ll be no big deal.

Sometimes our fears around charging a higher amount can take over and make us feel that charging more is so difficult, or that we’re not worth the higher price.   Remember, it’s just a number.   If you believe in your product or service and the value you’re bringing to your clients, then you should be able to stand behind whatever price you feel matches that value.

 4. Have Confidence and Stop Doubting Yourself

At the end of the day, as long as you truly believe in your products or services and the value you are bringing to people’s lives, you should feel confident charging the appropriate amount for it.

As women, we sometimes doubt our value and self-worth, and that is often reflected into our business fees or prices.   But nobody wants to work with someone who doubts herself,  so stop it!   You don’t need to compare yourself to others.   Just believe in yourself and your work.   Once you do, your customers will, too.   You are worth it, so start charging for that worth!

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headshotStandingBrittney Castro is a CERTIFIED FINANCIAL PLANNER™, Founder & CEO of Financially Wise Women, a Los Angeles based financial planning firm for women.  She specializes in working with busy professional and entrepreneurial women who are passionate about life and want to gain clarity around their money.  Brittney’s mission is to help women plan and create the life of their dreams, free from anxiety about money.   She has been featured in the Wall Street Journal, New York Times, Financial Planning Magazine, Investment News, and Registered Rep Magazine.  Visit her at www.financiallywisewomen.com and follow her on Twitter @brittneycastro.

 

Comments

  1. I don’t agree at all with what you said.

    You sould base your prices on how useful your services are (ie how much your clients will get in return).

    What if you wanted a lifestyle were you only needed $40,000 a year? Would you lower your prices? or what if you needed $500,000 a year? Would you put your prices up that much.

    Your clients couldn’t care less about the money you need or want. That’s so unprofessional. Sorry to be this harsh.

    • Hey Emily:

      I read it the same way at first, but then I saw the last part of the paragraph where it says that if you’re not comfortable charging what you need, add more value to justify the price. I fully agree that price should be based on how useful your services are and I think Brittney was speaking to that.

      I work with a lot of entrepreneurs on this very topic, and one of the questions I always get is, “How do you avoid the pricing wars?” I teach our clients how to charge what they’re worth too, but in the end, they still get trapped in pricing wars due to today’s shopping mentality. So I teach them the following verbage:

      When someone asks you to charge less, here’s what you can say:

      “Mr. Prospect, I appreciate your concern. If you would like to find the cheapest solution possible, I would encourage you to do so. However, I know how important getting this problem solved is to you, and sometimes it’s worth investing in the right solution because it will work the way you expect it to. We’re not the cheapest provider in town, but we promise to knock your socks off with…”

      Thanks for the post Brittney.

      • Malaika Paul says:

        Pricing was clearly a hot topic at last night’s event full of women entrepreneurs in Culver City.
        Based on my experience, you have to consider both Fact (what the customer is willing to pay based on proven market research) and Story (what you need to support your lifestyle goals) inside and out.
        Brittany’s tips on how to begin setting your prices is a great place to start.

        In my first business I sold luxury women shoes, A few ladies came in trying to haggle me on my prices and I didn’t budge. Because I knew the market and the benefits of my product.
        I found you have to do a happy dance when you don’t make the sale but know in the end you will be ok. And over time I found a happy medium in order to meet my lifestyle goals.

  2. Emily, obviously, you adjust your client base/services to make the income you need. The author is not suggesting you give your clients sh*tty value so you can live your dream life.

    Most of us don’t charge enough for our services and are utterly undervalued when it comes to our expertise. Thanks for the tips, Brittney, especially the one about speaking aloud a more expensive price. I’ll pass this tip along to my readers. :)

    • Malaika Paul says:

      Connie I agree. I loved that tip about practicing out loud. There’s something about hearing it out loud that makes it live in my subconscious.

  3. Awesome advice!
    It is a challenge for most to ‘love asking people for money’, but I find that it is the one most helpful tip to shift a painful sales process into one that makes you thrive.
    Thank you Britney and Laura!
    Llyane

  4. I don’t see that Emily needs any advice, she’s not worried about needing to add value Eddy, nor does she need to adjust her target clients or services Connie. Emily is positing a completely different approach.

    The divide your required income by sales units calc is fraught with problems. However much you try to add value, if you aspire to too high an income or doing too few sales units, you are going to be far too costly in the market place and only the very well established can justify over the odds rates. Too low an income and you will attract all the loser clients. Too many sales units on median income and you’ll be over worked.

    There is plenty of economic theory about the market place finding its own level. The error clients & sales people alike make is in not understanding the whole package that is or should be on offer for a price. Some price high but don’t deliver. Some price low and deliver too much. The trick is to find the balance of price, delivery and communicating the value to fair minded clients.

    However, as Emily says, one of the most equitable & clearest pricing models is based on return on investment. If your client saves or makes $10,000 and is happy to invest $5,000 for you to do the work, even if it only takes you an hour, then that’s the deal.

    Where the ROI system gets murky, which it does all too often, is when the return is not guaranteed or harder to measure. Then you see bigger multipliers on the ROI, so for the $10,000 saving that is a riskier return, you may only get $1,000 for the work. There is often an element of cash flow as well. If the return is spread over a longer period then the multiple is higher, so $10,000 over 3 years may see $2,000 for a sure thing to $500 for a riskier outcome.

  5. Hello, when I started new I was less confident and so wanted to charge reasonable for people to come back to me. Slowly I was told that my services were being enjoyed by the ones who tried so I added few more things and raised the price…..some people questioned me about it and I gladly gave them reasons…..from this post though I will think how much I want to earn as so far my money as secondary income has less value in my house !

  6. I absolutely LOVED this article! Amazing job Brittney! I was always wondering how people come up with their prices. My question is though, is it ok to have your prices on your website? Or would you rather have a price package to send when requested? Would love to hear other’s opinions as well!

    Thank you!

  7. I love the simplicity in this article! I’m not what you call a “numbers” girl, but I love helping and serving my clients. This is great advice for how to offer great value and to make sure my business, myself and the quality of my work is covered!