Are you afraid of raising your prices?
We discount out of fear.
How many times have you basically said, "Well, this is what my price should be....but just pay what you want because I really want to work with you." Or, "Here is what my price should be....but I'm going to give you a discount because I'm afraid you'll say no." Or, "Here is what my price should be....but who am I kidding to charge that?"
Then you give and you give and you give and hope they like it.
I see it time and time again–profit sacrificed for the sake of the design.
When we create we want it to be the best because it is a reflection of who we are. We don't consider what is best for this client's budget, we consider what is my best (the client's budget aside). Just one more peony here, just one more roll of film there, one more logo iteration, one more venue walk-through, just one more...just one....just one.
We discount our price, over-deliver, and then wonder "why do I feel overworked and underpaid?"
Do you feel alone in the struggle? You're not.
For many creatives, putting a price tag on anything we've created is difficult for several reasons:
- Each product/service is unique and not likely to be a standardized object that society has reached consensus on how much it is worth.
- There is always fear and risk involved.
- Our creations can feel so personal, like they are a part of who we are, that it can feel impossible to put a price on it.
- Our work can feel so easy or be so enjoyable for us to do that it feels almost wrong to charge someone for it.
There comes a time in every entrepreneurial journey when a shift begins to occur. An ‘ah-ha’ of sorts when you realize that making money is the only way to sustain your craft without feeling utterly burned out, drained, and ready to hang up the dream. The lack of profit, systems, and financial freedom will eventually be the chains that stifle your creative spirit and threaten your ability to continue.
When I met Amy Osaba she was at this pivotal moment. She had just met with a financial advisor and he gave her some pretty devastating news. She was realizing that winging her pricing and spending all of her profit to make the design better was about to put her out of business. I’ll let Amy share more….
If you’re in a place where you are just keeping your head above water, here are five tips you can implement to avoid emotionally pricing your work (which usually looks like offering discounts too quickly and/or over-delivering on the design). Doing so will allow you to maintain healthier profit margins on your work.
5 Tips To Avoid Emotional Pricing:
- Get really clear on what you do and don’t do for your clients.
- Practice, practice, practice sharing this with your clients.
- Have a set number of projects per year you are willing to discount or total discounts per year. Let’s face it, you aren’t going to quit emotional pricing cold turkey and never deal with this again. Setting parameters around it will help you avoid the trap but also give you some room to offer discounts when you really do want to.
- If clients ask for a discount, instead of just agreeing, negotiate by decreasing the service or product amount they are getting. Tie a discount with a trade-off in their package. If we agree to a discounted price, we should also decrease our cost (either time or material costs).
If asked to work for free, and it’s something you really want to do, at least ask for your material costs to be covered. You’ll be surprised how many people will say yes!
Yesterday: Feel like you have to say yes to every job?
Tomorrow: What does it look like to be thriving in your business?
Transcript of video:
When I first started the business, it was “Get a check in, pay some bills, oh woops we have an event coming up in a month, I gotta find the money, how am I going to pay for the flowers…” That’s really what it was. I didn’t even know that I needed to have a separate business account from personal.
So 80% costs was spending a lot of money on flowers. Let’s say it was a $5,000 event..I was spending about $3,500 maybe even $4,000 on flowers. But I didn’t even really realize that...because I was more worried and concerned about the client’s expectations than what my bottom line was.
Part of my story with Shanna is very emotional for me because I hadn’t finished college, I didn’t really have anything else I could fall back on, I was really in a desperate place...so that’s when Shanna came into my life.
I think back - well it was probably only 3 years ago - that I was in that really desperate place. I felt like I was burning the candle at both ends. I really wasn’t sleeping, I was trying to be a good mom, I was trying to be a good business owner, but I wasn’t doing either one well. I didn’t feel like I had any margin in my life, I didn’t feel like I had any freedom at all.
If there’s one thing that Shanna’s principles have taught me, it’s pricing. If you can get your pricing right, which - in my case, I wasn’t really charging enough! - If you can get your get your pricing right and you can learn what your costs are….and you know - cost includes flowers, but that’s not everything…