How To Set Compelling & Profitable Prices
A common challenge that lots of heart-centered business owners have is how to set their prices in a way that will both generate the income they’d love from their business whilst at the same time offer good value to their customers.
And so today I’m going to share a formula that I use when setting prices – one that helps guide me towards setting attractive prices because it considers pricing from number of important perspectives.
So let me share these 5 factors, The 5 Cs of Compassionate Pricing:
- Compassion – be compassionate towards yourself and others at the level you set. So for yourself this means setting your prices high enough that you will make the required profit to enable you to pay yourself your desired salary. To set your prices at a point lower than this is not being compassionate towards yourself. Nor is offering unsustainable prices compassionate for those you’d like to serve, as you’re not helping them if you’ve gone out of business! A compassionate price for your customers is one that they perceive as being good value to them – where the benefits to them outweigh the cost of making the purchase.
- Cost – it sounds obvious yet making sure you more than cover all costs for each product/service is a step missed by many people. This involves making sure the price for each sale covers the direct costs associated with it (e.g. materials, postage, venue, banking transaction costs, commissions) PLUS contributes enough to cover your general operating costs (e.g. marketing, utilities, insurance, technology), your salary and any taxes you’re liable for.
- Clients – assuming your ideal clients are those who have the cash to pay for your products or services, then as well as being compassionate (as above) it’s good to make your price compelling by offering a fantastic solution, that is competitively priced relative to the market. In other words, matching your pricing to your ideal clients expectations.
- Credible – many people perceive higher priced products/services as being of better quality than cheaper alternatives in the market place (unless the brand is already generally perceived as being high quality). So set your prices high enough that they are perceived as being of good quality (making sure of course that what you deliver is). It’s easier to reduce your prices than to increase them so make sure you set your price high enough from the start (unless you’re offering a discount for a pilot or trial period). Offering at a higher price also gives you more scope to offer special offers, incentives to others to refer business to you and means you can donate more to a cause close to your heart.
- Consistency – this involves ensuring your prices are consistent with what your competitors are offering (unless you’ve got good reason not to be and this doesn’t put potential clients off buying from you); are consistent across your products/service range; and being consistent in the way you apply them e.g. not randomly discounting your products or discounting them in one place but not another.
If you consider each of these 5 factors you’ll come up prices that will be more attractive to your ideal clients and generate the income you desire – assuming of course that there is sufficient demand for what you offer and you make enough sales!
This was the topic of this month’s free community training call that are available to everyone on my email list – if you’d like the chance to connect or ask questions about marketing your business, click HERE to find out more.
I’d love to hear your ideas and thoughts – please do share your comments below.
Alisoun Mackenzie is The Compassionate Business Mentor, Author, and Speaker who inspires business owners and social entrepreneurs to turn their passions into profits and make a difference in the world.
She is also the author of two Amazon Best Selling books Heartatude, The 9 Principles of Heart-Centered Success and
Alisoun is also the founder of The Heartabiz Hub a business network and training academy and has written the following free ebooks:
- The 9 Secrets to Signing Up Clients Without Selling (click here)
- 101 Ways To Attract Great Clients, With Heart, Integrity & Social Impact (click here)
- 52 Ways to Raise Funds for Charities and Social Causes Through Your Business (click here)
You can connect with Alisoun here:
- Alisoun’s website – www.alisoun.com
- Alisoun Mackenzie Facebook Fanpage (for tips on authentic living and business mastery) – click HERE
- The Heartabiz Hub Facebook Fanpage (for details about our courses and events) – click HERE
- Give To Profit Facebook Fanpage (tips on supporting charities and social causes) – click HERE
Fiona
Fabulous blog!