You can’t take pricing advice from anyone—not even me. This may seem like a counterintuitive thing to read in an article about pricing, but let me explain: Everyone has a different business and a different financial situation. A single mom in Idaho is going to have very different financial needs than a teen in his first year of business in New York. That’s why the only way to price for success is to define what success looks like for you.
Ask yourself the following questions:
- How much money do you need to make to sustain your bare minimum?
- How much do you need to make to feel comfortable?
- What does comfortable look like for you?
- How much would you need to make to feel accomplished?
- What number defines ‘successful’ in your head and why?
- How much money do you hope to save each month?
- At what age, if any, do you want to retire?
The best way to answer these important life questions? Write out a budget.
Making a budget can feel extremely intimidating to some people, particularly to creative business owners with more than one stream of income. The best way to not feel overwhelmed is to create this budget within a test month sample. For those with “high” and “low” seasons, create a monthly budget for each one. If Excel spreadsheets are not your thing, there are TONS of resources online, both paid and free, that you can use as a template. I would suggest The Budget Guide by Start Planner, Dave Ramsey worksheets, and Power Sheets by Cultivate What Matters®.
There is also no shame in hiring a financial advisor! Some of the richest people I know are smart enough to realize that money isn’t their strong suit, and that outsourcing their finances to someone who is great with numbers is a win-win. Finally, remember that budgets are a group effort—if you have a partner or family, all parties need to be involved.
Once you create a budget, then the fun begins: you can start pricing for your version of “success”. How many clients do you need each year to reach your desired income at your current rate? Does that number seem way too high? Do you see yourself cutting sleep, time with your loved ones, or self-care in order to reach it? If so, you should consider raising your prices. The temptation in our business is to always take on more, more, more, but that is not the best way to attain success. It is, however, the best way to attain burnout.
Don’t be afraid to ask for what you’re worth
Now I know that there can be nothing scarier than charging more. Asking for more money can create a slew of self-doubt-driven questions: What if no one books me? What if past clients leave? What if I’m not worth this new number? I’m not telling you to immediately start charging thousands of dollars more—do some market research if you’re uneasy. See what competitors charge in your area, and ask past clients what they think is reasonable. Then, test out the new price on a few potential clients. And remember that any pricing change you make can always be undone if necessary.
To sum things up, just follow these three steps to price for success:
- Make a budget
- Do some market research
- Create pricing based on your needs—and stick to it
How this approach worked for me
I want to leave you with a personal story to motivate you to jump into budget-informed pricing. I am a wedding photographer in the D.C. area. I sat down to create a budget for myself that would allow my husband and I to pay off our home by 35 years old, have two kids, pay for their college educations, and retire by 60. In order to do this, I need to make 100K per year from photography, on top of my husband’s salary. At my old rate, this meant that I would need to book about 34 weddings a year. Considering that there are only 53 weekends in a year, this was entirely too much for me.
I took an honest look at my life and decided that I would only shoot 20 weddings a year, so I could spend more time with my loved ones and avoid burnout. After doing some market research, I found that I could raise my pricing to achieve this goal. Did I lose some business? Yes. Did some clients tell me I was too expensive? Yes. But now, when I book one wedding at my new rate, I earn as much money as I did from two weddings at my old rate. That gives me a free Saturday to spend with my husband, who works 7 a.m. to 8 p.m. every weekday. And for me, that’s success.