Do you remember your teenage years? The big, bad world was opening up to you for the first time. It was exciting and scary. And you were just... a complete idiot.
I don't know about you, but I remember making my share of mistakes back then. And yeah, yeah- there were good times. The highs were high...
...But man- those lows! My memories from the age of 12 to 14 are basically a looping reel of mortifying moments.
That angst we all went through - it could be paralyzing. But we grew up, got some more life experience under our belts, and ended up a lot less terrified of making mistakes. (Hallelujah!)
But there are still certain things that send us right back to that place of self-consciousness and anxiety and... maybe even panic.
For entrepreneurs- that landmine is often PRICING. (Cue horror movie scream-)
Do you dread PRICING like you dreaded asking your date to prom??
You're not alone. There's a reason pricing has the power to make grown adults more nervous than a long-tailed cat in a room full of rocking chairs.
Why? Because the price you charge for your product or service is intimately entangled with your success and your sense of value.
Many entrepreneurs find themselves short on cash flow in the beginning. The thought of pricing potential customers out is scary. But then after offering a lower price to get more customers, the experience of slaving away in order to make rent isn't exactly comfortable either.
Plus, entrepreneurs often have some serious imposter syndrome to overcome. Many have never done anything like this before. And at the end of the day, when you're venturing out at something for the first time, it can be hard to declare, all loud-and-proud, "I'm worth $X, dammit!"
But unlike your awkward adolescence, there's a CURE for your pricing angst...
There are 5 easy steps to picking a price point that will keep your nerves in check and your business growing steadily:
STEP 1: Get Clear On Your Complete Offer and its Total Value
Your complete offer includes more than just your product or service. Before setting a price, you’ve got to be crystal clear about the total value you’re offering your customers.
So ask yourself some key questions, like:
What key benefits does your product or service provide?
Which specific customer problems does your product/service solve?
What concrete results can you promise your customers?
And wherever possible, map specific dollar amounts to each of these components!
STEP 2: Consider Your Competitors & Your Positioning Style
Now. Comparing your pricing to your competitors’ can be useful…within reason.
Obviously, I don’t want you to blindly copy your competitors. Because after all, you have a totally unique offering that can’t be directly compared to your competition.
But examining competitive pricing in your product’s market space can help you get into the right ballpark. Then YOU DECIDE where you want to position yourself within the mix.
There are five major Pricing Strategies I want you to consider as you think about how you want to position yourself relative to your competitors:
STEP 3: Set Your Revenue Goals
How much money do you want to make from this product or service in the next year?
STEP 4: Set Your Sales Number Goals
How many units of your product will you be able to sell in the next year?
Take into consideration your current audience size, your past track record selling to your audience, and your ability to attract a larger audience and sell through digital marketing in the next year.
STEP 5: Know Your Expenses
What will it take to get you there? Remember that your take-home profit is the amount of your revenue remaining after you pay your expenses.
So what are your costs associated with the production of your product (or delivery of your service) and overall operations?
Consider digital media costs, too. For example, if you’re just starting out and have a small audience, you might expect to invest some $$ in advertising. If you’re not sure how to sell effectively to your audience online, you might also consider investing in an educational course that will get you started.
After going through STEPS 3-5, play with the numbers:
Your Price Point = Revenue ÷ Number of Units Sold
Or re-phrase that as…
Your Price Point = (Profit + Expenses) ÷ Number of Units Sold
A Couple Helpful Hints
There are two key secrets to keep in mind as you work through this process:
- Take a Gut Check. Arriving at your “perfect” price point is part science, part art. Go through the 5 steps above, and do the analytical exercises. But don’t forget to step back at the end of it all and make sure that deep down, you feel comfortable and confident in the price point you choose.
- Experiment. Please, please, please don’t spend too much time agonizing over your pricing decision! Once you feel like you’re in the right ballpark, try not to obsess over an exact $ amount. Successful entrepreneurs know the wisdom in going to market with something solid yet imperfect. Then let the response from your consumers guide your adjustments. Iterate!
So no anxiety here- ok, friend? :) You got this!
Ready To Try It Yourself?
I’ve developed an comprehensive online course to guide you through setting your own digital marketing strategy - The Profitable Digital Marketing Plan.
Once you complete this course, you'll have in your hands a working strategy for making digital decisions to amp up your sales and grow your business. And you can do it in as little as 2 weeks!
Who's this course for? This course will super-charge your biz growth trajectory even if:
- You're on a pretty tight budget.
- You don't really know what digital marketing is all about- or how to make it profitable.
- Digital marketing is too complex, and you don't have time to figure it all out on your own.
- You're stressed out by how to drive sales online.
- You don't feel very tech-savvy. (Like, at all).