29 Apr The Best Way to Feel Confident When Telling A Customer The Price for Your Product or Service
Do you feel anxious when it’s time to tell a customer the price for your product or service? Do you think people judge you unfavorably if your price is above a certain amount? Do you believe that your prices is a reflection of your own self-worth?
For many people feeling confident about their pricing is a real challenge. They find themselves feeling fearful of being rejected; needing to be liked or accepted; or insecure in what they have to offer.
Your prices shouldn’t be a reflection of your self-image because this will bring turmoil and confusion to your business. When things are going well, it may be easier to state your price with conviction, but if you’re having a bad day you might be tempted to cut your price in half. How do you grow your business on this rollercoaster?
YOUR BUSINESS ISN’T ABOUT YOU!
Business is about free trade – profits – filling a need that someone else has. Pure and simple. Not about you and your fragile ego.
A True Client Story
A client of mine – I’ll call Morgan – was going through this very challenge. He was struggling to grow his business. His client base was growing through referrals from friends, so he considered the referrals as friends too. His challenge was that if a friend was buying from him, he felt he should give them a break on his price.
A few years ago, an adviser suggested that he set his prices based on a preset formula. A good idea, wouldn’t you agree?
When Morgan and I started working together, the first thing we did was look at his financial information. Unfortunately, he didn’t have a formal bookkeeping system set up. He just accumulated his numbers from different sources, summarized it and sent it over to his CPA at tax time. This told me that Morgan wasn’t using any real financial information to help him run his business.
So what did we find?
- Morgan was guessing at what it actually cost to manufacture his product.
- His pricing formula took into consideration only some of the costs he incurred so he wasn’t making as much money as he thought on each sale.
- He had no factual evidence to reassure him that his pricing formula included a high enough profit to cover all his additional costs and leave money in the bank to help him grow the business.
- Because he was manually calculating the price, he still felt like he could change it. There was nothing set in stone, so he was still fair game to be manipulated by his emotions.
- Morgan was the only employee of the business. He took no salary. He failed to include in his pricing calculation any value for the time he spent in the manufacturing process. Overall, he was putting no tangible value on his time and effort in the business.
Can you relate to any of this?
No wonder his business wasn’t growing at the rate he hoped it would. No wonder he never had much money in his bank account to pay himself a salary or grow the business!
- Together Morgan and I gathered ALL the costs he incurs to manufacture his product and put them into a spreadsheet. Some of these costs varied based on what the customer ordered so I created a way for him to enter these numbers separately. I incorporated a profit margin in the calculation which would not only cover his other costs but would ensure there was money to pay himself and some left over to grow the business. The calculation created the selling price. It was now out of Morgan’s control! He now knows that his prices are fair because it includes all his costs, including labor and no longer feels like he has to undercut himself. He loves delivering sales quotes to his customers.
- I helped Morgan set up an easy to use bookkeeping system and taught him some simple ways to keep an eye on his numbers. He now understands how to use his numbers to make important business decisions. This has given him more confidence in his business and he feels firmer on the path that will lead him to his goals.
With these easy changes, Morgan has been able to get out of the weeds and focus on growing his business. He sees how much time he wasted manually calculating his selling prices and worrying about the customer’s reaction. He now feels like he has a business whereas before it felt more like a hobby, something that was keeping him busy but not making him any money. He has the clarity and determination to build the company he dreamed of that will provide the financial security for his family. He is now the role model to his kids he always wanted to be.
“When I worked for someone else, it was easy for me to tell customers what the price was because it wasn’t set by me. I came across more confident and believed the price was set that way for a reason; that it reflected the value of the product. I now have the same feeling of confidence in my own business. I haven’t lost any clients with my pricing system – even though I’m charging them more than I did before. I finally realize how much money I could have made if I did this a long time ago.”
Real quote from “Morgan”
Are you ready to have the same level of self-assurance that Morgan has? Do you want to see how easy it is to use your numbers to help you set prices for your product or service based on facts – not the fiction created by your inner critic? Contact us email@example.com and we can show you how.
Business Rescue Coaching helps business owners stay focused and achieve their goals by creating a foundation for success with effective systems and processes to make business growth easier and less stressful.