Let’s talk about pricing.
Specifically how you price your goods and services.
Today’s episode is not about formulas, margins or return on investment, but it is about how you’re valuing yourself in your pricing model.
A couple of weeks ago, I was chatting with a friend who is a photographer. She asked my opinion on giving friends and family discounts. Of course I was intrigued why she wanted my opinion, so I asked her what was going on in her world.
Basically a couple who is mainly friends with her husband recently had a baby and as the queen of newborn photos, they asked her to do it. She agreed and gave them the friends and family rate and took more photos than her normal clients. Upon sharing the proofs the couple inquired if there were more photos to look at and she explained that this was already above and beyond her normal package. Clearly this experience left a bad taste in her mouth.
So let’s explore what really happened.
1) This was not her primary relationship. As a secondary friendship, she didn’t have the level of trust or connection to know how easy or challenging it was to work with them.
2) She got into their story. By assuming that she should give them a discount because they were a friend of her husband, she gave away her power as a business owner. The shoulds were alive and well dictating what proper protocol was.
3) Assumptions blurred the boundaries. Why did she take more shots with this client than any other? It seems like it already felt like a forced activity, so why not pile on some more work. She also assumed that more pictures would result in happier clients. But then point 4 happened.
4) She felt taken advantage of. After overserving and overextending herself the couple seemed unsatisfied with her product and she didn’t feel appreciated.
So what can we learn from this situation, so you can create healthy parameters and boundaries around your pricing with friends and family or anyone you would consider giving a discount to?
1) Your Business Intention – what is your business about for you? How do you want to be feeling as a business owner and as your interact with your clients?
2) Your Business Goals – where do you want to be each quarter? Set targets for yourself and if you want to give discounts plan for a certain amount per quarter.
3) Know your bottom line – what are your expenses all in with your product and service? Keep in mind your taxes, overhead and additional staffing and resources. This will help you determine your profit line.
4) Know your comfort zone of profit – for each service, what percentage do you want to be netting for each transaction? You want to get paid right?! Make sure you take care of yourself and your team before you start slashing prices.
5) Stay in your lane – if you feel yourself getting into people’s story about what they can afford and are willing to pay, you’ve lost all of your power as a business owner. Confidently state our price and service offering and let it go. As a business owner, you don’t need to convince people of your worth. If they try to negotiate make sure it’s what you want and not what you “should do”. We train people how to treat us and people will push where they see weakness and wiggle room.
6) Be okay saying no. If you don’t want to work with someone or if you don’t think they’d be a good fit, recommend them to someone else. Chances are when you say yes to something your gut says is a bad fit, you’ll spend more time and energy and will get paid way less. In my experience it is never worth it to work with someone who feels like work.
7) Offer your discount at the end of the transaction. If you had an awesome time working with the client and want to treat them, that’s an awesome way to create a loyal following. They’ll be super pumped to get a gift and will see it as a reward rather than an entitlement. If it’s at the front of the transaction, it may be cheapening your value and perceived worth. What would be different for you if you were paying 800 v 400?
