EPISODE 005 | APPLE PODCASTS | SPOTIFY

A few weeks ago, I wrote a 20-page free guide, covering the nine most important steps that will help you confidently price all your offerings - the guide is available to download below.

Today, I want to bring those steps to life through this Podcast episode, focussing on the crucial topic of pricing - a concept that, when thoroughly understood will transform your business. Some of the steps are common sense, but others might surprise you.

These nine steps were game changers for me. I believe they'll make a massive difference for you too. And it's not just about numbers.

Effective pricing isn't simply a matter of maths, mark ups and margins. It's about aligning your prices with the value you provide, meeting your customers' expectations, and ensuring your business thrives - all while promoting a healthy work-life balance. I feel so strongly that a successful business is a combination of doing good, being highly profitable and helping you to live a healthy life/work balance, and I hope these nine steps will help you within your own business.

My mission as I am talking to you, is to empower entrepreneurs like you to build viable and sustainable ventures. So let's jump in, shall we?

ONE

Our first step is understanding the difference between price and value. When you buy something, you're exchanging money for a product or service. That's the price.

But value? That's a different story. Value is what makes your offering stand out and drives your customers to choose you over your competitors. It's tied to emotions. It's about the whole package you offer: the intrinsic benefits, unique customer experience, exceptional service, memorable branding, and compelling narrative that comes with your product.

Remember, it’s so important that we set our prices based on value, not just a markup - that's the key to successful pricing and higher profit margins.

To explain this further, I would love to share a couple of practical steps to help you work out the value of your offerings:

1. DEFINE – look at the unique combination of features, benefits, and experiences that you provide to your customers. What is it about your product or service that sets you apart from your competitors? Is it the superior quality of your product? Exceptional customer service? Unique design? Innovative technology? By defining this, you can begin to set the foundation for your value-based pricing strategy.

2. CUSTOMERS’ PERCEPTION – within your business, it’s so important that you really know and understand your customers. What are they looking for in a product or service like yours? What problems are they trying to solve? These can be both significant problems, as well as light-hearted, more lifestyle-based problems, such as entertainment, decoration, fashion etc. What benefits do they value the most? And then it’s moving onto understanding what they are willing to pay for these benefits. Remembering not to constrain the price of your offerings based on your own budget. Over the years, most of my clients had very very different budgets to my own, I was solving problems for them that were a million miles away from my day-to-day, but I had the skills and know-how to help them, and I understood what they needed.

And then, once you understand both your value and your customers’ needs, you can align your offerings with your customers' perceived value, and effectively communicate and justify your prices, in a genuine, completely authentic, and confident way. Please, please always remember, you have skills and strengths, that are directly solving your customers’ needs, desires, and problems, you and your time are hugely valuable, and you are more than worthy to have a highly profitable business.

two

The second step, and this is a pitfall you want to avoid: comparing your prices with others. It's so natural to want to check what your competitors are doing, but please don't get stuck in the trap of aligning your prices with the industry standard. You don't know their full story. They might be barely making ends meet.

Don't price your offerings as commodities. What I mean when I say a commodity, is in direct contrast to your brand and offerings which are entirely unique, a commodity is a basic product that is interchangeable with other goods of the same type, businesses that offer commodities must base their pricing strategy on being the most competitive, the cheapest, this is dangerous territory for small businesses, and it’s so important that we don’t follow this strategy – unless you have large investment behind you and you have a long term sustainable plan with very low profit margins (if any) and you are distributing vast volumes, it is a very, very tricky model to sustain.

The majority of us, having smaller scale businesses, have something very, very different that we can use to our advantage. We are actually in incredible positions, because we are more adaptable than larger corporations. You can offer incredible value through every touch point within your brand and offerings. You have no need at all to be competitive, you can be your own person, manage your own brand, decided your exact target customers, and pour your heart and soul into your own products and services, so just please make sure your prices reflect all of that!

three

Moving on neatly from there, to step three, let's talk about the dangers of pricing too low. Sure, it might attract bargain hunters and you might feel having more customers is a great focus, but these customers can be fickle. They have less affinity with your brand as they have been tempted purely by price and their loyalty is negligible. I've personally found that when I increased my prices, I attracted customers who valued my offerings and were far more loyal and more likely to be brand enthusiasts.

Your mission, is to convey your unique value and attract the customers you truly want to work with, and avoid bargain hunters!

FOUR

Step four, a crucial aspect of entrepreneurship is understanding your profit. It's not just about money coming in from sales, it's what's left after you've paid all your expenses. And remember, profit isn't a dream - it's a necessity. So, calculate your costs, work out your sales volume, and set clear profit targets.

All too often we want to focus on our customers and ensure our products and services are the very best they can be. This is the reason we have either started or are looking to launch our business. It’s where our passion lies, it’s what makes us excited for what we are doing. But, it is essential we have a full grasp of all our costs, we must know how much each one of our offerings is costing us and what our profit margins are.

To calculate your costs – and this is something I cover more extensively in the free 20-page guide - itemise and account for all your associated costs, every element that gets your offering into the hands of your customers. If you don’t have a full understanding of your costs, let this be your cue to set a day aside, as soon as you have come to the end of this episode, allocate a full day in your calendar. During that day, list all the costs associated with producing and/or delivering your offerings. This includes direct costs, for example all your raw materials, labour and delivery, and then all your indirect costs including all your overhead expenses including salaries, rent, utilities, plus business costs such as marketing. And don’t forget to include taxes.

five

Step five, let’s go back to your uniqueness. Your pricing strategy should be as unique as your business. I would love you to focus on your unique offerings, your desired profitability, and what sets your business apart, and make sure you communicate your values clearly.

A sobering reality is that 60% of businesses are just getting by and 20% are actively losing money. This means a staggering 80% are somehow missing the mark. Let's pause for a moment, let that sink in, and truly appreciate the significance of forging your unique path. This can help you land in the successful 20% of businesses that are thriving, and that is entirely possible for you.

SIX

Step six, one of the best things about running a small business over a larger one, is your ability to be nimble and adaptable. While larger companies will have to go through many different departments to change their prices, which will take time, you can act quickly. Don't think of your prices as set in stone. This was a huge revelation to me, and helped me to feel so much more in control, to know that if I got something wrong, I could alter it and it wouldn’t have a detrimental impact. If you are anything like me, it’s so important to know that there is flexibility and that things can be changed, this is exactly how you must look at your pricing. You test and trial, you can make changes as needed - just make sure to do it in a clear, positive, and authentic way.

SEVEN

Step seven, have you ever considered adding a premium offer to your strategy? It's an opportunity for your customers to invest more for a service or product that truly meets their needs and desires. Think about it. A premium offer can increase your profitability and customer loyalty.

In the 20-page guide I include the example with the airline Easyjet and their Speedy Boarding offering. While some passengers balk a little at the idea of paying extra to be at the head of the queue, for others, this service is a luxury they are happy to pay for. The ability to settle in swiftly and enjoy a stress-free start to their journey holds immense value. For the airline, the question of who boards first doesn’t make a difference to them. The profit generated by this premium service far outstrips the small cost of additional management and signage.

Another example, imagine you run a home cleaning company. Your standard package includes general cleaning: vacuuming, dusting, mopping, and cleaning surfaces. A premium offer could include:

A home assessment: Before any cleaning begins, a home consultant could come over to assess and ask about specific needs and any preferences the homeowner may have.

Eco-Friendly Deep Clean: Use exclusively organic, eco-friendly, and hypoallergenic cleaning products for those who are sensitive and environmentally conscious. This is especially appealing to families with allergies or homes with pets.

Monthly Organisation Session: Once a month, a professional organiser comes over to help declutter a chosen area of the house. This could range from a wardrobe makeover, kitchen organization, or perhaps the garage.

Aromatherapy Finish: Post-cleaning, the team finishes with a calming aromatherapy session. They diffuse essential oils, giving the house not just a clean, but also a calm ambiance.

Remember, acquiring a new customer is far harder work than delivering exceptional value and service to an existing one. Therefore, providing a premium option not only enhances your service but also fosters customer loyalty, proving beneficial for both of you.

Every business, regardless of its sector or size, possesses the potential to introduce a premium offer. While it may require some brainstorming and an ample dash of creativity, the effort is worthwhile.

eight

We are at the second last step, number eight, and it’s such an important topic, I just want to check you’re still with me and I have your full attention, let’s look at discounts and whether to include them as part of your pricing strategy. Offering free samples can be a smart marketing move, but constantly offering discounts can dilute the perceived value of your brand. So, as experience has taught me, resist the urge to discount your prices and stand firm in your pricing.

Now of course there will be times when someone asks you directly for a discount? It’s worth remembering that a request for a discount isn't a rejection - it's almost always a sign of interest! Knowing this has helped me hugely to remain steadfast, but also happily, kindly, and confidently so. The more comfortable we feel, the more likely we are to remain firm, in a very polite way. It’s completely normal to feel a little disheartened and/or exasperated when asked to provide your offerings at a discount or for free; it's always best to take a deep breath and reply in a friendly and positive way. Always trust your intuition on whether it could be a good business decision, particularly when you encounter overly persuasive people!

For me, I strongly believe that discounting any of your offerings at any time, opens doors to an expectation that this will happen on a frequent basis.  People will wait for a discounted time to buy and sales during the rest of the sales period reduce.  Avoiding discounts presents both your brand and your offerings as having value that both your customers and you can believe in, people can invest in them without worrying that tomorrow they will be half price.

NINE

And lastly, the final step, number nine, is possibly the most important one: your mindset and self-worth. It’s very, very important to spend time fully understanding your value, you need to live it, breathe it and genuinely believe it. So often this is where we falter, we don’t quite feel we are good enough, we don’t feel we can justify placing prices high enough against our offerings to justify us having a viable business. Please, please don’t see and treat your business like a hobby, instead, be proud and manage it as a highly viable and profitable venture.

Having a profitable business will put you in a position where you can help others. Beyond basic necessities, making money also allows you to improve your quality of life and that of those around you. And with profitability comes the capacity to contribute positively to society.

Many entrepreneurs use a portion of their profits to support causes they care about, whether that's through direct donations, setting up scholarships, funding research, or investing in community projects. Thus, making money can enable you to become a philanthropist in your own way, creating a positive ripple effect in your community and beyond.

And, the more profit your business makes, the more you can invest back into it. This reinvestment can lead to creating new jobs, offering more products or services, expanding your business, and stimulating economic growth. As such, and regardless of your size, your profitability can have a broader impact on your local and national economy.

Think of it working in a cycle, once you have embraced your confidence to price your offerings based on your unique value and with a firm focus on profit, when you are making that profit, your confidence will increase and shine through, this in turn will help you to promote your offerings more effectively.

If you need a little help to get you started and into a positive headspace, do the following, with pen and paper, take time to list all the elements that have gone into creating your product or service, also include all your skills and strengths, your experience, and your knowledge – take time to absorb, understand and truly believe and understand the value you provide.

I hope these nine steps have been as valuable to you as they have been to me. Don’t forget that you can download the free PDF, which accompanies this episode and expands on some of the points further. I will include a direct link in the show notes so you can access and download it.

And if you have any questions at all, or you would love to share your experience, you can contact me directly via Instagram.

Warmest,
Philippa x