Things you may or may not want to hear about pricing…
As co-leader of the Philadelphia TuesdaysTogether chapter of the Rising Tide Society, I have had the great honor of meeting and educating with many of the city’s most enthusiastic and determined creative entrepreneurs. At a recent meeting, there was a lot of frank conversation about the topic of pricing from creative services. Everybody wants to be making more money, yet everyone is afraid to charge more money from their clients.
For years, even I have been nervous about raising prices and hearing crickets. Then I realized a few of the biggest secrets to pricing that no one is telling you.
1. IT’S NOT ME, IT’S YOU. BUT IF I DON’T VALUE WHAT I DO, WHY SHOULD YOU?
Every time that you give a discount, what you are really saying is “you’re right, my prices are inflated and my services aren’t worth what I charge.” Does that sound harsh? #sorrynotsorry
When I think about the things that I value and where I spend my money, my life is based on experience more than tangible goods. I value fine dining and I love to travel and will splurge on direct flights or even the occasional first class ticket. And the most important thing about my wedding was having photography that I valued like fine art. And I paid for it, through the nose. I did not follow a budgeting checklist from the knot or wedding wire. I followed my heart and my priorities. But when it comes to buying clothes, I couldn’t care less about the designer on the label. I don’t personally value fashion on that level and my spending habits show it.
It doesn’t matter what your own person budget for the services that offer would be, you are not necessarily your own client. If someone comes to you and is unable or unwilling to justify in their budget or mindset the value that you associate with your pricing, they are also not your client. Cheapening your brand, giving out discounts, and being bullied will never help you get to where you want to be
2. YOU SHOULDN’T CARE ABOUT OTHER PEOPLE’S PRICING.
There is a bit difference between doing market research and knowing your local market (both of which you should be doing) and copying someone else’s pricing structure or basing your pricing on the theory of (artistic) relativity.
You may have read my post about “What’s In My Camera Bag,” so you know how I feel about looking around you for answers. Put on your blinders. Look only at yourself and your business. Know your expenses. Know your COGs. Write a budget. Then, and only then, you’ll be able to adequately charge what you need to cover your expenses and pay yourself appropriately.
3. SOMEONE ELSE WILL ALWAYS BE CHEAPER, SO YOU HAVE TO BE BETTER.
In every industry and along every level of your professional career, someone will try to undercut you. And, dollar for dollar, they may be able to provide an “equivalent” product for less. That doesn’t mean that you should charge less.
You need to find a way to differentiate yourself through your client experience. Win with heightened communication skills and customer service. Create high impact, luxurious marketing materials. Brand yourself to a more luxurious client. Create a culture of exclusivity around your brand. Make sure that the products that you offer do justify your price points. Invest in education, so that you can remain at the forefront of your field. Never stop hustling.
4. YOUR CLIENTS MAY HAVE NO IDEA ABOUT THE PRICING OF YOUR SERVICES & PRODUCTS.
We’ve all experienced sticker shock. The first time I walked into a Starbucks and my favorite drink was more than five dollars was a shock for me (and it’s been a few years). I’ve overcome my shock and continue to drink Sugar-free Vanilla Soy Caramel Macchiatos (whenever I’m not on my Whole30), but I definitely was sour for a few days.
Working in the wedding industry, I encounter so many clients in sticker shock. Industry publications for brides are working off of averages that don’t just include professionals, but also include friend-tographers, backyard potluck weddings, and grocery store bouquets.
When I say to educate your clients, I don’t mean patronize them. They don’t care how much your equipment, conferences, or taxes cost you. They probably don’t care very much about how much or how little behind the scenes time you will invest in their service or product. They care about the quality. They care about the way you will make them feel. They care about how jealous their friends will be. Speak to the things that they care about and it is much easier to massage the sticker shock out of them.
5. THERE IS MONEY TO BE MADE ON THE LOW END MARKET.
Walmart is an incredibly wealthy company. You may or may not respect their business practices, but if you are looking for an example of making money off of the masses, Walmart is a shining star.
Forgive me for using a photography example, but I think this is a real gem. I recently had a conversation with an industry friend about the ongoing fight around pricing for creatives and we discussed a little known and often ignored fact. 80% of brides are spending less than $1700 dollars on their wedding photography. About 15% will spend less than $3000. This leaves only around 5% of brides to spend $3k or more on their wedding.
I know, geographically, this number may vary. For example, in wealthy urban centers, the market skews slightly higher than this. But the scary thing is that this means that just as many geographic locations are twisted in the other direction, with even few people spending $3k+.
If you want to make money, don’t disregard the potential value of opening yourself up to a lower market, IF you are able to sustain a level of profitability that makes this a viable option. I’ve seen custom stationers design a pre-made line for sale on Etsy that have boosted their sales while requiring minimal time investments. I’ve know makers who have created a template product line for similar sale through online media, and the growing awareness of their brand actually benefited their custom work, as well.
What are some of the unspoken words that you have learned about pricing? Leave me a comment below!
For a deeper dive into pricing, expanding your business, or drawing on additional revenue streams, don’t hesitate to reach out to me for private business consultation.