Seattle Community

Business coaching services
Portland, Oregon
Greatly helpful
out of 10
52 votes

5 Keys to developing Clear and Correct Pricing for Your Services

Determining the correct price for your services is a huge issue for many solo business owners. Here is a look at the issues that get in the way and 5 solutions to these problems.
Written Aug 08, 2010, read 8357 times since then.


Pricing seems to be the hot issue this month. Many of my clients are asking  for help with how to decide how much to charge for their services. Many years ago I would have avoided this topic like the plague because of my own unresolved money issues.

My negative beliefs said that if I wasn't earning a six figure income in my business, I wasn't smart, wasn't successful and was a fraud!  Now I know better, but this way of thinking is actually common with solo business owners who begin their business from the expertise of their service but lack sound business skills, Self-doubt is the catalyst for making some very poor decisions.

Here are a few issues that can affect your ability to set clear, correct prices.

•  You look at what other business owners are charging for a similar service, and then end up comparing yourself to them and feel bad and confused. You try to copy what they are doing but it doesn't work because you don't know what their business plan is and how they arrived at their figures.

•  You are desperate to bring in cash in any amount, and are relieved when people pay you anything. Money stress will cause you to  feel poor and constricted, which turns into a downward spiral.  You become lost in your own feelings of failure which make it hard to make good money or business decisions.

•  You choose a 'stab in the dark' price based on what you feel ok with and what you think people will pay.  Since your self-doubt is high, you end up picking a low price thinking you are not good enough to charge more. The truth is, if you truly feel you are not good enough at what you do, why would anyone pay you anything?

Here are five solutions to these problems.

1. Focus on your niche market clients and listen to what they need and want. Begin to develop services and products that are exactly meeting their needs.  Doing this helps you to keep your focus on how you are offering value to them.  As this focus grows, there is no room for your own self-doubt and you will begin to value your expertise.

2. Be a business owner, not a practitioner. Many years ago when I was a counselor, I had a client tell me I must be rich because I was earning $60 an hour. He wasn't a business owner so he didn't get it that only a small percentage of that went into my personal pocket.

In order to offer your excellent service to your niche clients, you are also providing:  
• On-going support services and follow-up.
• Good organizational systems that help your business function.
• A team you manage, to help keep this all going.  
• New products as business develops.
• Marketing, technical development. research and office organizing.
This growth offers even more value to your clients.
Your prices need to reflect all of the above.  You are not charging for one hour of your time. You are running a business.

3. Develop excellent money management. Many solo business owners who are struggling financially, become money avoiders because looking at unpaid bills creates anxiety. It is human nature to want to move away from anything that causes stress.  However, this is an incorrect instinct. The stress will actually be much less once you take control of your money systems and know exactly what is going in, going out and owing. I think it was T. Harv Eker that said, “If you can't manage a small amount of money, the universe won't give you a large amount.”

4. Develop a business plan that reflects financial goals that show where the revenue will come from. Many solo business owners begin with no plan, no vision and no idea where they are going. I use  simple pie charts ( Money Map) to help people  to understand what their business needs to generate. Your prices begin to make more sense based on that picture.

The marketing/sales funnel will also help you to generate a plan based on providing valuable products and services for each level of the funnel. This gives people price and product choices and also allows you to build from a solid business model.

5. Be clear and confident.  Discounts and sliding scales are confusing and inconsistent. Most people won't make a decision based on that 20 percent money difference. People want help and expertise. Discounts work at Wal-Mart but not for service based businesses. They make you look desperate. For the same  reason it's not good to immediately offer to lower the price if someone seems hesitant, or offer a sliding scale that puts the pressure on your customer to decide where they fit. You want to give people a feeling of confidence and clarity.

It's better to offer bonuses that give more value to the sale and offer payment plans to make it work for people who want your programs but have cash flow challenges. In this way you offer support and options that help people get the help they need and at the same time allows you to run your business responsibly.

One you feel clear about your prices based on the above points, make sure you “check-in” that your prices feel correct. Most people have their techniques. For me, I can feel it in my solar plexus when something is not quite aligned. It's also good to share with your mentor or mastermind group.  If you have any self-doubt,  figure out where it is coming from and face it head on as  your clients will sense it  and it will affect your business.  Remember, prices change as your business grows, but if you follow these five points you will always stay on track.

Learn more about the author, Kaya Singer.

Comment on this article

  • Internet Guru 
Portland, Oregon 
Aaron Yeagle
    Posted by Aaron Yeagle, Portland, Oregon | Aug 08, 2010

    Loved this article, Kaya. I consistently bounce from one extreme to another high-balling, low-balling and everything in between.

    Someone once told me to avoid discounting to acquire a client. If a client can't afford the price you've quoted but you both still want to do business, think about what portion of your services you can subtract from the equation in order to reduce your service's cost. If you discount or worse discount aggressively the client subconsciously feels "ripped off" when, in fact, you are simply removing any margin you may have made.

    Pricing is always tough .. and tougher in our current economic climate. You've presented some clear advice to help.

  • Owner Parsons Marketing 
Ventura, California 
Danielle Parsons
    Posted by Danielle Parsons, Ventura, California | Aug 08, 2010

    I enjoyed your article. My service rate has been the same for the past 5 years. I don't discount because a business owner has the overhead you mentioned and when your rate is seen as a good value, you will attract clients.

    I also keep my products at the price the company recommends we market the products to the public.

  • Marketing Consultant 
Nanuet, New York 
Julie Weishaar
    Posted by Julie Weishaar, Nanuet, New York | Aug 08, 2010

    Kaya - once again you have hit one of the common and important spots in all of us. Pricing our services does indeed become quite a challenge. I have been guilty of under-pricing my services. I agree with your suggestion of not lowering your costs just because a potential client feels they are too high. I had a situation in the last few days where a repeat customer didn’t want to spend more than one billable hour of my time. She wanted help with an email blast and wanted to know if I could get the job done in only one hour. I suggested that I limit my time to the one hour and see where that takes us. What I did to assure that the quality of my work wasn't compromised was to task her with what I normally would have done in the way of researching the net to find specific information. This obviously saved me time and her money. The result was a very satisfied customer who only paid for one hour of my time and I didn't put in too much more than hour (OK I admit - I did put in a little extra time but that is because I am a perfectionist and want to only deliver my best, but I DID save myself plenty of time).

    Thanks for sharing your insights and reminding us once again, that we are not alone in some of the feelings we have as small business owners :)

  • Marketing Consultant 
Nanuet, New York 
Julie Weishaar
    Posted by Julie Weishaar, Nanuet, New York | Aug 08, 2010

    BTW Kaya - shhhhhhhhhhh don't tell anyone but I boosted your rating :)

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 08, 2010

    Aaron- Thanks for your comments. I agree- it is much better to add value than to subtract value. If someone wants and needs your services then you need to help them figure out a way to make it work but they certainly don't want "less" value. I appreciate you because you offer monthly payments which makes it possible!

    Danielle- thanks for your comments. That's great that your prices have stayed the same for five years. I do wonder if your profit margin has gone down at all as your expenses have likely gone up. Maybe not?

    Julie- Thanks for your candid sharing. If your story worked out and everyone was happy then that's whats important. Often though, people might say they are only willing to pay X amount but they still want the bells and whistles of XYZ. I know I have been there:) And- I assure you, you are not alone at all. The issue of pricing is big as it beings up many emotional issues. I always appreciate your comments and support. Thanks!

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 08, 2010

    Some of you might like to read a short article I wrote a few years ago called "What Makes it so Hard to Ask for Money and How to get Over It."

  • Academic Coach 
Sunnyvale, California 
Amy Martin Rodriguez
    Posted by Amy Martin Rodriguez, Sunnyvale, California | Aug 08, 2010

    I really liked this article. Definitely hit right on some of my pricing issues. And I love the ideas for handling money issues better. I'm just still not very clear on how to come up with good pricing. You imply that looking at the competition is not the way to go but to me that seems like at least a good place to start. Maybe it depends a little bit on the field?

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 09, 2010

    Amy- thanks for chiming in. Of course everyone looks to see what other people are charging and that's fine, but there is a difference between doing that as information or doing that thinking that they have it together and you will copy or be like them.

    I don't think it depends on the field. It is really about you getting clear what your business is, how you can stand out, what value you offer and then being able to create a price from that and then market that uniqueness. In every kind of business there is a huge price range for what could appear to be the same services.

    Web development is a good example. You could pay $800 or $5,000 and you would still get a website that looks good and works. If it was the same no one would hire the $5,000 guy, but they do so all the time, because once you look closer, the two options are not the same.

    Your business might have some unique challenges but the theory is still valid.

  • Virtual Assistant / Personal Assistant / Administrative Services 
Vancouver, British Columbia Canada 
Stephanie Lee
    Posted by Stephanie Lee, Vancouver, British Columbia Canada | Aug 09, 2010

    "You are not charging for one hour of your time. You are running a business."

    I'm taping that to my wall.

  • Marketing Consultant 
Nanuet, New York 
Julie Weishaar
    Posted by Julie Weishaar, Nanuet, New York | Aug 09, 2010

    "Often though, people might say they are only willing to pay X amount but they still want the bells and whistles of XYZ" - Kaya - this is very true. Everyone wants everything for nothing - but those people will not become our clients. I have a "pal" from SCORE who has been extremely helpful and supportive of me and helped me to understand that a client is paying for our expertise and years of experience. If someone is only interested in getting the lowest prices service then they are not the right client.

    I used to run a Builder's and Remodeler's association where we put on free seminars about remodeling for the county. One of the suggestions made was to get 3 estimates and choose the middle-priced one. The explanation behind it was that the highest price was probably overcharging, the lowest price was going to surprise you down the line with extra costs they didn't mention (like a floor on the bathroom being remodeled), so the middle estimate is probably your best bet. Although this is a rather simplistic way of looking at pricing, it does get the point across right?

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 09, 2010

    Stephanie- Thanks. I think I will add that to my list of quotes for my next book :)

    Julie- I agree with your points. However, I am not sure it is true about always picking the middle choice. For instance, I offer three coaching programs with three different prices. They are all excellent value. The only difference is the number of months they work with me, but most people pick the top one because they can see the greater value in that, and it is worth the extra money to have more months of support.

    The suggestion to pick the middle one was assuming that the highest one was overcharging. Maybe not. They might offer more value. Sometimes you get what you pay for :)

  • Computer/Process Engineer 
Portland, Oregon 
Stuart Sequeira
    Posted by Stuart Sequeira, Portland, Oregon | Aug 09, 2010

    I very much appreciate this article and the insight from others as well. As I switch from an employee to business owner, I have lots to learn and here was a gem of topic with excellent examples. Thank you all.

  • Software and Database Development 
Seattle, Washington 
Marie Haggberg
    Posted by Marie Haggberg, Seattle, Washington | Aug 09, 2010

    Another great article, thanks Kaya! In the technical/software realm, the need to keep up with current technology is a hidden cost item. This can encompass fees to attend classes, or time devoted to at least some hands-on work (probably the best way to learn). A company's pricing needs to reflect this, and the added value of bringing up-to-date skills to the client project.

  • Internet Guru 
Portland, Oregon 
Aaron Yeagle
    Posted by Aaron Yeagle, Portland, Oregon | Aug 09, 2010

    The other thing I have been advised about pricing is to remember that I am more than my service. When someone comes to me they are not only hiring me to design their website or optimize their website they are hiring my "expertise" - my 10 years of web experience and 20 years of marketing experience.

    So, Kaya is not "just" a coach; she's a coach with years and years of experience behind her ... and that's what you pay her for. Marie is not just a software developer, she has years of experience backing her techniques. Julie is not just a marketing consultant, but one with 10+ years of experience honing her craft.

    This should also be taken in consideration of pricing. If I priced myself as if I were a noob web designer, I'd be designing websites for $500 or less! (Mind you, when I first went solo, that's what I did. Sometimes I look at those designs again my toes curl.)

  • Alcohol and/or Food, Life Coach Support Women 
Portland, Oregon 
Teresa Rodden
    Posted by Teresa Rodden, Portland, Oregon | Aug 09, 2010

    Great article Kaya! It's easy to fall into the comparison arena and it's usually so off base. Styles, approaches, experience, training, services, focus and as you mentioned niche, play such a huge role. It's virtually impossible to set your pricing off a comparable and not have all supporting information.

    Ultimately, as you pointed out you must be confident in your pricing. If someone "like" you is charging 50.00 an hour and you feel you should be charging more or less, it can impact your service and client/customer experience.

    Thank you for your generous contribution to our Biznik community.

    You Rock!

    Teresa Rodden

  • Marketing Consultant 
Nanuet, New York 
Julie Weishaar
    Posted by Julie Weishaar, Nanuet, New York | Aug 09, 2010

    Kaya - Agreed. The suggestion to pick the middle price for a remodeling project is different than picking the middle price on services like your coaching services which differ in quantity (# months) and not quality.

    In the case of a remodeling project, we were talking about comparing apples to apples - ie a bathroom remodel with the same features/enhancements, etc. . The idea behind the theory was basically to advice homeowners not to automatically choose the lowest bid just because it is the lowest price and to check into things like years experience, model and make of fixtures, etc. before making an INFORMED decision.

    And I also definitely agree with you that "Sometimes - you get what you pay for" :)

    Aaron - I like your point about paying for your "expertise" - so true.

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 09, 2010

    Aaron- yes- all great points. You basically have to begin with knowing your own business and yes, when people hire a service business, the expertise is part of it. It is true, however that some people begin a new business but have heaps of experience in their craft, but their self-doubt confuses them and then end up under-charging.

    Julie- yes- big difference if you are comparing apples to apples. And I also agree that it isn't good to pick something because its the lowest price. As service based businesses it's our job to help our potential clients look at the other value we offer beyond price. At first the price is the main issue when I'm looking at something I want, but once I talk to them, it becomes all about relationship and value. I rarely decide based on price. I know you agree- I'm just saying...:)

    Teresa- Thanks so much for you wonderful comment too. I love Biznik and I love this community. You rock too!

  • Your Personal Growth Coach! 
Vancouver, British Columbia Canada 
Bonnie Copeland
    Posted by Bonnie Copeland, Vancouver, British Columbia Canada | Aug 10, 2010

    Kaya Thanks so much for this article. You've really made a number of things very clear and laid them out so as to allow for real focus on where I am struggling and how to start dealing with my personal issues.

    I want to add an extra thanks for your last point. I have been wavering on my stance about discounts as of late. Many in my circle are suggesting using this to find clients quickly. I am not a fan as I don't find the tire-kickers to be the type of client I really want to work with. I find it uncomfortable when people ask me about that possibility. Offering folks a bonus instead is perfect to solve my problem. Yay!

    Keep Well, Bonnie

  • Blogging Coach and Copywriter 
Seattle, Washington 
Judy Dunn
    Posted by Judy Dunn, Seattle, Washington | Aug 10, 2010

    You have obviously touched a nerve here, Kaya. I have been in business for 17+ years and I can say that pricing was the most difficult skill to master. You are right. It is so emotional. You are really making a statement about your own value.

    "Discounts work at Wal-Mart but not for service-based businesses." Like Aaron, we try to work with people's budgets, with the understanding that we may need to reconfigure and repackage our services to reflect the lower price paid.

    Also, not lowering or reducing your prices helps you to weed out the wrong clients and laser focus on the ones you were meant to be serving.

    On hourly rates, we just won't go there. What customers don't understand (or perhaps refuse to recognize) is that they are not paying for how long it takes you, using an hourly rate. They are paying, as you pointed out, Kaya, for your expertise. That's a totally different thing. I wince at the bill from my car mechanic, but then, can I fix my car myself? I can't. I am paying for that person's skills and expertise that allow him or her to solve my problem.

    Excellent advice.

  • Entrepreneur:  e commerce 
Dallas, Texas 
Greg Smithers
    Posted by Greg Smithers, Dallas, Texas | Aug 10, 2010

    A simple thank you!! Thinking "outside the box" is a good thing, especially solo entrepreneurs

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 10, 2010

    Bonnie- thanks for your comments and I am so glad I could help. The theory that you will find clients quickly when you lower the price is not true. However you can offer a free session and, that is marketing and is the first level of the funnel and the 4th pie peice in my 7-step circle. That is a valid and necessary way to connect with potential clients and it will help them to self-select. I go over that in detail in my In my Awaken Your Money Flow Seminar I promise you- when you offer discounts people will be confused and see you as desperate. So..your instinct was correct. Offer bonuses instead.

    Judy- Thanks so much for reinforceing my points. Yes-I have learned all the above from experience and now, like you I wince when I see the car mecahnic bill, but that's only about my own pocket book, not because i think they are over-charging.

    The way I work with people's budget's is by first taking the price out of the equation and helping the person get clear if they want and need the benefits and are commited to really working on their business. If they say yes- I will do whatever I can to create a payent plan to make it work. Btw, my mechanic also lets me pay over time :)

  • Alternative Sinus Treatment 
Bellevue, Washington 
Frank Aversano, ND
    Posted by Frank Aversano, ND, Bellevue, Washington | Aug 10, 2010

    Yet again Kaya, your advice on "niche marketing" rings a bell of truth.

  • Holistic Business Coach 
Portland, Oregon 
Taylor Ellwood
    Posted by Taylor Ellwood, Portland, Oregon | Aug 10, 2010

    I had to change my pricing model quite a bit, and one thing I've learned that works is to avoid doing the $/hour. I've found developing a project that has an overall price works better, because the person isn't counting how much it costs per minute to afford you and there's a defined end.

  • Math Tutor/Teacher/Mentor 
Portland, Oregon 
Christine Dreier
    Posted by Christine Dreier, Portland, Oregon | Aug 10, 2010

    Thanks for writing this excellent and extremely helpful article. What struck me most, even though I thought I had understood it, is No. 2 Be a business owner, not a practitioner. In my heart, I was still a practitioner. Up to now! As a business owner I provide the whole frame work for my services, from all the research that I have done over the years, setting up my studio, getting everything in place that my clients need but don't have to worry about. However, despite of what I need and deserve to earn, despite the value I offer, what I can charge has to do with the specific market one is in as well. Much to be considered.

  • Certified Electronic Transcriber - Legal Transcripts - Digital Dictation & Insurance Transcription  
Tacoma, Washington 
Holly Rydel Walstead
    Posted by Holly Rydel Walstead, Tacoma, Washington | Aug 11, 2010

    Great Article, Kayla!

    Thanks so much for sharing your insight.

    This is something I have really struggled with, especially as I compete with many much larger corporations that outsource all of their work for a lesser product. Not to mention dubious hidden fees that really raise the overall costs. I'm certain my services are a better value in the long run, but sometimes the reaction to pricing really leaves me doubting.

    I finally made a commitment to advertising straightforward pricing and the reaction has been really positive.

    I am keeping this article in my archives for reference when I have my doubts.

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 11, 2010

    Christine - I am so glad you made that shift!! Regarding your last statement that is has to do with the 'specific market' you are in. There is also a way to work with that, and still be in integrity. You offer a variety of services and price points. Possibly there will be some people who feel unable to pay for your highest program, however they will have the option of choosing a lower priced program that may not be as extensive but still valuable.

    Remember my statement from my last article on Niche Marketing, "To grow a stronger business and make more money it’s not about marketing to a million different kinds of people. It is about marketing to one narrow strong group and offering a million different ways they can work with you."

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 11, 2010

    Taylor- I always appreciate your comments and throwing out the "work by the hour" mentality is so important.

    Holly-Wonderful to meet you here. I am so glad my article spoke to you. I agree with you that it is all about you emphasizing your value and quality. That is your asset. If your clients are professionals- they will learn to appreciate it and respect you for your confidence and clarity of your pricing.

  • Accounting Consultant & Virtual CFO for Creative Service Firms 
Portland, Oregon 
Kelly Totten
    Posted by Kelly Totten, Portland, Oregon | Aug 11, 2010

    Excellent article, Kaya.

  • Video Production  
Renton, Washington 
Michael Schuett
    Posted by Michael Schuett, Renton, Washington | Aug 11, 2010


    Thank you for an important article for me and my business in particular. #5 really hit home. And you are absolutely right. People want skill and or expertise and they don't mind paying for it if they think that's what they are going to receive.

    Michael Schuett

  • Disconnecting Oughta-Pilots; Creating Lives 
Beaverton, Oregon 
DeBorah Beatty
    Posted by DeBorah Beatty, Beaverton, Oregon | Aug 12, 2010

    Great article, Kaya. I have recently found that once I let go of the hourly fee habit, it was much easier to set a price that both parties can live with. Now that I charge monthly, it's much easier to wrap my own head around what I do and why. Funny, huh?

    I use the KISE system that I got from my friend Stephan Stavrakis to arrive at my pricing. That's taking all that I have invested to get the level of Knowledge, Information, Skills and Experience I have currently and dividing it by the length of time it will take to teach someone else to know what I do and divide it by 12.

    The great thing is that this brings me right back to within a few dollars of what I was charging per hour, but with a whole different frame of reference and a much different viewpoint of value for the client.

  • Professional Organizer & Productivity Consultant 
Lake Stevens, Washington 
Monika Kristofferson
    Posted by Monika Kristofferson, Lake Stevens, Washington | Aug 12, 2010

    This was very timely and helpful for me-thank you!

  • Virtual Administrative Professional 
Ottawa, Ontario Canada 
Louise Leduc
    Posted by Louise Leduc, Ottawa, Ontario Canada | Aug 12, 2010

    Great article Kaya. You hit that one right on the entrepreneur's nose.

  • Certified business consultant,coach and excutive trainer 
Winter Park, Florida 
Saralyn  Collins
    Posted by Saralyn Collins, Winter Park, Florida | Aug 12, 2010

    Kaya, I certainly agree this is a real conundrum for most entrepreneurs - especially those who generally offer services as opposed to products. After over 25 years of guiding in new biz start-ups and growth I want to offer a few thoughts. Some of these have been refered to in the various posts as well as in your document.

    1. Focus on what "problems" you can solve for your target. You did refer to this in #1 and I think it is crucial. You have to know exactly what you can resolve for them to make their business or their life better in some way. Resolution or results - that is all anyone is ever interested in. So become their "resultant"! Remember, if there is no "pain" associated with the problem you identify, then there is no reason for them to spend money on your solution! Help them "feel the pain" so they can't wait for you to come in and solve it for them.

    2. Market like an "expert" and practice like a "GP". In other words, no one is going to pay you as a general practioner. Everyone thinks their issues are unique and only a true specialist can solve them. So market as that specialist. AFTER they become your client and you have provided results for them, then you can become their GP and work on a variety of issues. Besides, we all know "specialists" can charge more than a GP.

    3. When pricing services, remember this: They are not paying you just for how long it will take you to complete the assignment. That has nothing to do with it! They are paying you for all those years of training, skill building and knowledge gathering so you can perform this service quicker and with more expertise. All those years have to be factord in as well.

    4. My final thought is this: If the value you create is great enough, then the price you charge will become less significant! Of course, people will complain and try to talk you down. That is the American way! But hang tough, know the value you bring , and be prepared to walk away when the prospect just doesn't get it!

  • Transformation Specialist 
Portland, Oregon 
Maryann Candito
    Posted by Maryann Candito, Portland, Oregon | Aug 12, 2010


    Excellent article, I know I have battled with this issue and, with your help, am more at peace with my pricing. I feel when we discount our services there is more of that chance that we could end up resenting the client over time, especially if they end up buying a new car or spend money lavishly, that tells me that they don't value what I do. Value is the key here, you are right and when we gain confidence in what we do and offer quite a bit of value there's no need to discount.

    Thanks for all your help Kaya, you are best!

  • portrait , wedding, commercial Photographer 
Oak Harbor, Washington 
John Pendleton
    Posted by John Pendleton, Oak Harbor, Washington | Aug 12, 2010

    Great article. I'd rather be known for great quality rather than great prices.

  • SMB Strategy Consultant 
Boxford, Massachusetts 
Frank Hover
    Posted by Frank Hover, Boxford, Massachusetts | Aug 12, 2010


    Thanks for a much needed article. Given the reality that upwards of 85% of businesses with leadership positions going into a recession...lose that position, it's clearly a key business issue.

    To add to your compelling list of's the framwork for a Pricing Playbook we've developed...and a couple of conclusions and references.

    Pricing Playbook for SMBs

    • Don't Panic! Don’t automatically reduce Prices to compete… as you'll very seldom get them back again! • Secure your customer base (eliminate churn) Understand the 4 keys: Gallup research shows that customer engagement (loyalty) is based on the strength of four basic emotional needs: confidence in the company/brand, belief that the company has integrity, pride in association with the company/brand, and passion for the brand

    • Define your value • Add value • Diversify/Focus • Bundle/Unbundle - • Introduce new products • Be confident in the definition of your sandbox – are you focused? • Control costs and reduce inefficiencies • Reduce or Push out the Pain • Offer deferred or installment payment plans • Respect your customers - don't insult or underestimate they intelligence and value • Consider a substitution strategy • Create substantial barriers to change (switching costs = fixed costs incurred by the buyer when changing supplier), ie., - re-training/learning curve impacts - contract negotiations - unproven support and service - process re-engineering - cost of failure/switching back

    Conclusion –

    • Effective pricing is far more than pricing per se • It involves all aspects of our businesses, target markets, product development and packaging, our level of customer relationships, innovation and confidence, understanding your value and that of the competition. • SMBs have a substantial set of tools enabling us to respond to almost anything the economy throws at us. • Use them, experiment, learn what combinations are best for you and your business...and share the knowledge.

    Suggested Reading:

    Competitive Advantage - Creating and sustaining superior performance by Michael Porter

    The Strategy and Tactics of Pricing - A guide to Growing More Profitably by Thomas Nagle and John Hogan

  • Health Kinesiologist, Reconnective Healing, Energy Healer 
Seattle, Washington 
Sue Mariconda
    Posted by Sue Mariconda, Seattle, Washington | Aug 12, 2010

    Very helpful article, thanks!

    When setting prices, my mentor told me to remember that there are people who live on fixed incomes, one step above poverty, but who own large-screen TVs (or something similarly materialistic) - it's something that's of value to them, and they will sacrifice and do what it takes to get it. So if you are offering a product/service that is of great value to someone, they will find a way to pay whatever it is that you are asking for it, even if you think they "can't afford it."

    That being said, the price-setting stuff is hard. She worked with me to set an ideal price for me to charge. But I had a hard time with it and felt embarrassed to say what I was charging. So I ended up dropping the price by 20%. Am I undercharging now? Probably. But I felt more comfortable asking for it, and decided that if I'm uncomfortable with asking for a certain price, it will come across in my client interactions and would not be a good thing.

    I'm working full-time at what I call my "day job" and part-time at my own "heart job." For my day job, I earn what is considered a very generous hourly rate. And for my heart job, I was advised to ask a price that was nearly double the hourly rate of the other job, for something that feels easier and is more fun and yet I have far less experience. Somehow it felt wrong, and that's why I struggled with the pricing. But this article has been helpful in reframing this - thanks, Kaya!

  • marketing communications 
chicago, Illinois 
rickey gold
    Posted by rickey gold, chicago, Illinois | Aug 12, 2010

    Had to laugh when I read the line about being "relieved when people pay you anything." I see this all the time with new solopreneurs who price their work way under going rates. Actually, I probably felt the same way when I started out...WOW. Someone's really going to pay me for a service!

    This is a terrific article, Kaya! I especially liked two points: - You are not charging for one hour of your time. You are running a business. - It's better to offer bonuses that give more value to the sale than discount....

    These topics come up regularly at my creatives group. I'm sharing your article with them. We can all learn something here.

  • Marketing Professional 
Edmonds, Washington 
    Posted by SANDRA DEAN-MAHOSKEY, Edmonds, Washington | Aug 12, 2010

    BTW, Danielle, if you have kept your cost the same over the last 5 years then you have been discounting your cost! You should also keep your prices up with the cost of living, inflation and the market. :)

    I have always been very careful about offering a discount in the beginning, especially if people ask for it. A lot of times these clients would end up being difficult to work with, demanding, and the requests for discounts or special services usually continued through the process. Not worth it IMO!

  • Reiki Master, Natural Healing, Cancer Support, Cancer Coach, Pet Cancer 
Portland, Oregon 
Rosemary Levesque
    Posted by Rosemary Levesque, Portland, Oregon | Aug 12, 2010

    Kaya, I am forever learning from you and your message is again timely. Thinking of myself as a practitioner was holding me back. Aligning myself with a better niche market has provided clarity for me and for my clients... I can feel it already.

    Funny that your article should be about pricing. I recently decided to put a number to one service I provide (that used to be free). It's too soon to tell how it will be perceived in the field, but I can see so many advantages for my clients and my business already.

    What really struck me in your article today was the talk about providing bonuses, added value, instead of discounts. I saw many places on my website and in my business that the bonus plan can fit into; from Reiki classes to sessions and even just rewording something as a bonus that I was already offering. Imagine that!

    I'm sticking close to you, my friend. Thanks for all you do.

  • Advertising, Marketing Communications & Promotions 
Renton, Washington 
Steven Matsumoto
    Posted by Steven Matsumoto, Renton, Washington | Aug 12, 2010


    This is a great article! When I first left the corporate world and ventured into the adventure of self-employment I was struggling to determine what my experience and knowledge was worth. In doing my due diligence I found this website which I found extremely helpful:

    Only being able to speak for myself of course I sometimes feel that we as independant consultants under value our skill sets. They are second nature to us, and we often give away information clients are willing to pay for if we just asked for the sale. I cannot tell you how many independants I've asked how they determine their rate that couldn't answer the question without hesitation.

    Explaining how you set your fees should be as second nature as your elevator pitch. Bravo on a great article.

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 12, 2010

    Wow! How gratifying to come on-line this morning and see all these great comments. Thank you all so much.

    Michael- Thanks for your point. Absolutely I always want to hire an expert and expert help. That is way more important than price. If I have a cash flow issue, I will look at what I need to do to make it work. It helps if the business owner helps in that regard.

    DeBorah- You got me thinking about all I have invested for the past 30 years and if I divide it by 12 it is mind-boggling :) I like the theory, and it is a helpful tool to have a more expansive view of your expertise.

    Saralyn- Thanks for the great summary and points. When you focus on your client it shifts everything immediately. I agree that you need to know their problem or pain as you say. I tend to then focus on the benefits, as this is what people want. If someone is clearly wanting the benefit then it is only a matter of bringing them into your pipeline in some form by offering help that fits their level of present need. Rather than walking away- I will suggest they get my newsletter which is free or join my membership site which is very, very low cost. They both offer high value. This is the importance of offering a variety of services at different price points. I have had people get my newsletter for three years and then decide to do a coaching program or seminar.

    Maryann-Thanks for your comments. It is funny how people can rationalize spending money on "stuff" that gives entertainment but it is a much bigger deal to buy services that will help them. Much more emotion attached to that. Often people will say, "I can't afford it," when what they really mean is I am afraid of investing this much money and it won't work ( and other fears).

    John- I agree. Most of us here are not wanting to be mirroring Wal-Mart. Quality is way more important.

    Frank- Thanks for sharing your system and resources. Excellent additional points.

    Sue- I so appreciate your open sharing of your process. I can very much relate to your being embarrassed to charge too much. I felt like that once myself and I had to look straight in the mirror at my insecurity and self-doubt. Not fun, but so absolutely important as this will hold you back more than anything. Part of being an entrepreneur is operating in your comfort zone and then gradually stretching and moving out of that space in order to grow. It is hard but so important. I am glad my article helped you to reframe. I suspect you are more of an expert then you are giving yourself credit for...

    Rickey- Thanks so much for your comments and I always appreciate hearing from you. Yes- those two sentences will go in my next book:)

  • Blogging/Social Networking Consultant 
Pennellville, New York 
Carolee Sperry
    Posted by Carolee Sperry, Pennellville, New York | Aug 12, 2010

    Wow, such great advice from everyone!

    I will keep this article handy in case I run across anyone that needs it!

  • Sales and Marketing Coaching 
Arden, North Carolina 
Marian Hobson
    Posted by Marian Hobson, Arden, North Carolina | Aug 13, 2010

    Once again the Biznik community amazes me:).

    Great article and comments.

    Although I have said it in a different way I particularly like your points about "you are running a business" I think particularly for those of us who are in service businesses that are so customer focused when it comes time to negotiate money it's almost as if we have to put a different hat on.

    I remind my clients, and myself, that we are truly doing a disservice to the customer if we bend on price. The customers will value your services more when you value yourself enough to hold firm.

    Thanks again Kaya for a great article>

  • Drupal Development 
Norfolk, Virginia 
Josh Fischer
    Posted by Josh Fischer, Norfolk, Virginia | Aug 13, 2010

    Just got started in the Biznik community 2 weeks ago and this article was a great introduction to the value that this community is going to bring.

    Your information really hit home for me this week while my business partner and I worked out the details of how to find the perfect price point for one of our new services.

    Thanks! Josh

  • Seattle Wardrobe Stylist 
Seattle, Washington 
Tannya  Bernadette
    Posted by Tannya Bernadette, Seattle, Washington | Aug 15, 2010


    I just want to let you know I mentioned this article in my blog: which takes you on my journey as an entrepreneur.

    Thanks for the advice!

    Tannya Bernadette

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 15, 2010

    Carolee- Thanks for your support.

    Marian- yes- it is a huge challenge for service based businesses. With retail it is a bit more cut and dry as you look at cost of goods and add your percentage. With services the "cost of goods" is more invisible and it can look like trading an hour of time. Excellent customer service is a big part of our product and without all the back end systems and expertise we wouldn't be able to offer it.

    Josh- welcome to BizNik and glad my article was helpful.

    Tannya- your blog link didn't work. I would love to read it. Thanks so much!

  • Accounting 
Bellevue, Washington 
Kirsten Clark
    Posted by Kirsten Clark, Bellevue, Washington | Aug 15, 2010

    This is great information. It's easy to wander away from what your plan is for your business and get side tracked by other offerings. Your business plan should include a detailed description of what your services are and the value it brings to the clients you want to work with. It's good to review this from time to time. A lot of business owners who prepare a business plan will file it away and forget about it.

  • Health Kinesiologist, Reconnective Healing, Energy Healer 
Seattle, Washington 
Sue Mariconda
    Posted by Sue Mariconda, Seattle, Washington | Aug 15, 2010

    There was a typo in Tannya's link above. The correct link is:

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 15, 2010

    Tannya- I enjoyed your blog and thanks again for mentioning my article. Just a thought - since you are using this blog for your business, it would be far better to use your own domain name rather than blogspot. Maybe you already know this....

  • Marketing Strategist and Business Consultant 
San Francisco, California 
Amy Harcourt
    Posted by Amy Harcourt, San Francisco, California | Aug 16, 2010

    Thanks Kaya. You make so many good points. The one that resonates the most is to approach client relationships with confidence. It's all about creating one-to-one partnerships, especially with our clients. Thanks again!

  • Business Coach For Therapists 
Amstelveen, Noord Holland Netherlands 
Monika Denes
    Posted by Monika Denes, Amstelveen, Noord Holland Netherlands | Aug 16, 2010

    Wonderful article, Kaya. It seems like you know me too well and watch over my shoulder. Being an expert and being embarrased to charge - they somehow live alongside in my practice. It's the feeling that I earn my income through other people's misery. Looking at the relief I offer makes it much easier. You have a really good point about being clear. Now I need to really clear my head and heart and set the new prices.

    Thank you very much for your great posts! Greetings from Monika in Holland

  • Business coaching services 
Portland, Oregon 
Kaya Singer
    Posted by Kaya Singer, Portland, Oregon | Aug 16, 2010

    Amy- Thanks for your comments. I think no matter what I buy, I want to feel confident- if it's an appliance I want to feel confident in the service I might get from the company. It always come down to the "people" behind the product. In a service based business it is more direct and if I feel a lack of confidence, it makes me want to hold back on the purchase.

    Monika- You suffer from what I call, "Mother Theresa syndrome," Thinking that if people are suffering you shouldn't charge them money. There are lots of ways people feel misery and yes- you are selling the benefits- whether it is techie support, refrigerator repair or therapy, people have a problem and need help. Your expertise and business is offering that help. Good luck with your new focus.

  • Business Coach For Therapists 
Amstelveen, Noord Holland Netherlands 
Monika Denes
    Posted by Monika Denes, Amstelveen, Noord Holland Netherlands | Aug 16, 2010

    'Mother Theresa here' you made me laugh! That will help accept that charging is NOT adding insult to injury - or fee to pain. Just offering relief and being business like about it. Strange, seeing that clearly after being in practice for 17 years...

    Thank you, Kaya!

  • Tutor  / Proofreader/Editor 
Guelph, Ontario Canada 
Ronald Johnson
    Posted by Ronald Johnson, Guelph, Ontario Canada | Aug 16, 2010

    Often my clients (the parents as well as the students) have thought I must be rich because even though I state the fees as monthly fees, they always look at them as hourly. They don't, of course, include the hours I work on preparing their material, marking their work, finding challenging / interesting tasks, reading the newest learning information, writing monthly reports, etc.! I don't offer to lower my price (although I did the first couple of years) because I learned two things: 1. Often those who claim to need a lower price are not the most needy. (Strangely they often showed me their very expensive purchases later!) 2. My time and efforts are valuable and the business would not have lasted 14 years if I didn't look toward financial stability. I do, however, offer many benefits and services to add value to my client's experience. Very rarely - even in cases in which the client seems adamant to get a lower price (and there are lots of tutors in my area) - do I ever lose a client by sticking to my price. I ensure them that the quality of service they will receive is worth the cost.
    Thank you for your article. It was quite interesting and reminded me of a few essential business practices.

  • Business Coach For Therapists 
Amstelveen, Noord Holland Netherlands 
Monika Denes
    Posted by Monika Denes, Amstelveen, Noord Holland Netherlands | Aug 17, 2010

    Hi Ronald, what do lawyers do? Everyone realizes they need x amount of time to work on a case - and they charge for every minute. Perhaps we can learn something from them? I'd like to copy that - I'm in the same situation - my clients do not realise how much time I need to just devote to their case and they do not realise that there is a maximum of treatments I can do a week in order to keep up the quality. And how true what you write about the ones who 'need a reduction'! I used to work in a clinic with a beautitian, they saved on their health (me) and spent it at the beautitian! I'm about to put my prices up, I do offer the value.

    It's great to be able to exchange experiences this way. Thank you all! Monika

  • Events Photographer specializing in Arts, Culture & Entertainment 
Redmond, Washington 
Alan Alabastro
    Posted by Alan Alabastro, Redmond, Washington | Aug 19, 2010

    Reading your article came at the right time for me. As a small business owner, I'm struggling with setting a clear rate for my services. I'm going to heed your advice and not lower my rate everytime I feel like I'm going to lose a customer. Instead I'll offer the value and service that comes with that rate.

  • Seattle Wardrobe Stylist 
Seattle, Washington 
Tannya  Bernadette
    Posted by Tannya Bernadette, Seattle, Washington | Aug 20, 2010

    Sorry about that!!!

    Here it is again:

    Take care,

    Tannya Bernadette

  • award-winning photographer | videographer for business | sustainable industries | positive change 
Seattle, Washington 
Jed Share
    Posted by Jed Share, Seattle, Washington | Aug 21, 2010

    Excellent article Kaya, thank you.

  • Office Consultant & Organizing Coach 
Marysville, Washington 
Nancy LaMont
    Posted by Nancy LaMont, Marysville, Washington | Sep 17, 2010

    Great information Kaya and well written too. I think what you said in your fifth point really makes sense about discounted services. I may have to rethink some of my own practices, instead of discounts for referrals give bonuses. I like that thought. Thanks!

  • Large Format Printing 
West Sussex, Chichester United Kingdom 
Monty Fuller
    Posted by Monty Fuller, West Sussex, Chichester United Kingdom | Jan 05, 2012

    The internet has made it easier nowadays to set a price for your goods and services. If you are selling a commodity, it is easy to compare prices online. However, if you are selling a product or service that is truly unique, it might be harder to settle upon the perfect number. Sometimes it takes some market research and survey to see the signs of what customers are willing to pay. Monty - Signs