Like most small business owners who are selling a valuable service, I have gone through the painful process of  thinking if my prices were too high people wouldn’t buy from me and I would starve.

Based on that fear, I charged too little at first. Too high was a subjective emotional thing and not based on anything to do with a business plan! I have learned so much the hard way, and hope I can help you to avoid the same mistakes.

It’s funny because my very first business 35 years ago, was making and selling hand-made pottery. I had no problem figuring out the correct price based on costs involved and how much I needed to have as a profit. It was easy. If people liked my work they would want it. If the large pieces were beyond their budget they bought a smaller one. I had a variety of choices and my work sold itself.

I have written before about the difference between selling a product and a service. So many more fears and self-doubts come up when you are selling your own service. That fear is immobilizing and can propel you to charge way less than you need to have a sustainable business.

The irony is that you will starve then for sure, because the only way to bring money into your business is by having prices based on value and your business plan. It needs to be the same process whether it is a pottery mug or a coaching program. If you are offering a service like acupuncture, massage or health services you will relate. If your service is designing websites or gardens you will also relate.

A business plan for a small service based business is not that difficult. It’s simply asking yourself what bottom line you want, where it will come from and how many  programs or sessions you need to sell each month to make your goal. But that process, in itself can be challenging.

When I ask my new clients that question, they usually don’t know. They are too busy just trying to get by and, “make more money.” It is scary for people to even put a figure to what they want to gross per year. I tell people to just guess. Inevitably it is too low of a figure and a reflection of their fear and self-doubt.

People have all kinds of mis-led reasons they give for under-charging. Here are a few I hear regularly.

•  I have only been in practice a short time.
•  People can’t pay any more than this.
•  I’d rather get paid something than nothing.
•  I don’t want people to see me as being expensive.
•  I am uncomfortable charging more until I am more experienced.

No one actually cares how long you have been in practice. They only care about their problem and the help they need. If you focus on your short time in practice then it sounds like you are saying you aren’t that good yet. If you aren’t that good, why would someone want to pay you any amount of money for help. People who need help are shopping for value.

Some people do make decisions on price and it usually backfires. I did that when I had my first website built. I shopped around and assumed that the person who was giving me a good deal would be as skilled as the guy who was charging a higher price. I learned the hard way that you get what you pay for. Now I only go for quality. I am still conscious of my own pocket book but I will always hire the person who is offering me the highest value.

I encourage you to:

• Give more value to your clients.
• Determine your prices based on your business needs.
• Pay yourself first.
• Acknowledge your expertise.
• Focus on growing your confidence.

Read some of my related blog posts:  Be willing to receive large amounts of money. Running a business is all about giving and receiving!
5 Keys to Correct Pricing.

Please share your thoughts on this topic. I would love to hear from you.

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