Is your ego getting in the way of your pricing strategy?

Ever felt trapped by your own pricing models, or found yourself second-guessing the value you provide to your clients? It might be your ego talking!

In today's episode, we're diving into profitable pricing and I'm spilling the tea.

I've seen too many talented entrepreneurs get stuck in a cycle of undercharging and over-delivering, so we're cracking open the playbook on how to beat 'pricing paralysis' and price for profit every, single, time!

Whether you're transitioning from hourly rates to value-based pricing,  you need to define your pricing structure and simply understand how to communicate your pricing changes to your clients, I've got you covered.

So, as we head into a brand new year, get ready to transform your pricing model! Join us for an episode packed with insights that will empower you to make strategic decisions that honour the value you deliver. Here's to making your business a magnet for money and success.

And as promised, here's how to get access to my Profitable Pricing Formula for only $27, but be quick, the price returns to normal at the end of January 2024.

Transcript

Speaker 1 0:01

You're listening to the Secrets of Successful Business podcast, your go-to source for business tips, tricks and proven strategies that will help you create a streamlined and profitable business. We chat to the best minds in business about their journey. It's my business and I'll do it my way, how they started, rather than going harder to get more focus on growing more with what you have, what they learned along the way. How long are you going to give this?

Speaker 2 0:29

What compromises are you going to make? Just because you can do it doesn't mean that you should do it.

Speaker 1 0:33

It's really important to remember that it's a long game and, of course, we'll ask them for their secret source for creating a successful business. If you're not feeling you're not doing it right, you should be struggling at times. That is part of the journey. Join us as we take a sneak peek behind the curtain, talk solutions for those business pain points, working smarter, not harder, mindset and the challenges of bidding it all in with the demands of today's busy life style. If you're a business owner, side hustler or just starting your business journey, this podcast is for you. Now here's your host, business coach and content creator, justine McLean from Fawcay Creative.

Speaker 2 1:13

Hello and thanks for joining me on the podcast today. In case we haven't met, I'm Justine, a small business owner on a mission to uncover and share the secrets of creating and running a profitable, sustainable and successful business. I've been in business for over 20 years now and I get to use all that I've learned along the way to help other women in business reduce the overwhelm, gain visibility around their numbers, charge what they're worth and make more money. It's about designing a life you love that fits into your definition of success. So if I can help you create the profitable business you deserve, please reach out Now without further ado, let's dive into today's episode.

Speaker 2 1:58

Hello, everyone, I am recording this podcast at the start of a brand new year and, as I mentioned in my first episode of the year, 24 Things to Take Into 2024,. I love the start of a new year because it's the chance to turn the page, start afresh and make those changes in your business and your life that you might not be inclined to make at any other time of the year. And, apart from making a list of goals for the year, one of the must do things on my new year list is to look at my prices, to really take a deep dive into my business, what it costs me to run my business and then adjust my prices accordingly. Now I do this exercise at least twice a year and more. If there's a reason to conduct a review, like the economy takes a nose dive, for example, or the cost of doing business is clearly starting to skyrocket we experienced that last year, right. But for many business owners certainly the ones that I've worked with in the past pricing is just one of those things that often sits on the top of their never to do list. It's just something that's not very comfortable. It doesn't feel like it's an easy task and it's fascinated me over the years working in business because for me, when you don't look at your prices, you're essentially leaving money on the table.

Speaker 2 3:27

So for the last 18 months or so, I've been chatting to my clients and really trying to dig into the why behind this pricing paralysis, and it's been really interesting because certainly it wasn't what I expected. I think the most common answer I get is something along the lines of I just don't have the time. There are so many other things to do in my business, or sometimes, yeah, I just don't know where to start. But in my experience, when we dig a little deeper, the pricing gets put on that never to do list or completely forgotten because of ego. And I'm not talking about a pumped up, over inflated ego here. I'm talking about the opposite a real lack of self worth that I'm not good enough, attitude in post syndrome, whatever you want to call it. It's that sort of ego.

Speaker 2 4:19

So in today's podcast, I wanted to ask you a very simple question Is your ego getting in the way of your pricing strategy? Now, if you are nodding your head with the resounding yes and you know that you are absolutely letting your ego impact your pricing, I want you to know two things. Number one, you're not alone because, honestly, 100% of the business owners I've worked with over many years have all been in exactly the same position. And number two, if you're not reviewing your prices because of your ego, if you are choosing to put your head in the sand and set and forget your prices because of your money mindset or for some other reason, then you are leaving money on the table. You are letting someone else take that money. Keep that money that is meant for you. So let's start by addressing the elephant in the room your ego. Now I'll be honest here.

Speaker 2 5:23

Early last year I started writing my first online program, business Money Magnet. Business Money Magnet is all about business money. Basically, it gives you all of those foundations, good habits, strategies and money tips that you need to supercharge your profits and become that money magnet that you want to become, and that's no matter how big or small your business is. And there's some really practical parts to that program and so naturally that's what I was drawn to, that's what I was building into the program at the very start. But one of the things that I really underestimated and I didn't realize this until after the first launch was, I guess, the module around mindset. I had something in there about mindset, money mindset, but after the first cohort went through I knew that this was an area I really needed to beef up, because so many of the people that we had welcomed into the program really had a poor relationship with money. They had terrible money mindset and it was such a big issue. I never really imagined just how big that issue was and whether it was a lack of self-worth, some money story that they had been told when they were young or that could have been even their accountant had said to them when they first started their business maybe a healthy dose of comparisonitis or that imposter syndrome, that poor mindset around money just seemed to be the biggest thing impacting people in the program, especially when it came to their pricing.

Speaker 2 6:55

And so the beginning I was a bit perplexed. I wasn't really sure what to do about it because, for me, I come at the money side of things from a very practical approach, even though, for disclosure, I've had some mindset issues myself, and I'll talk about that in a minute. But I knew I needed to do something, I needed to call in the experts. So the first thing I did was reach out to a few friends. I had a psychologist, a live coach and a Reiki master that I spoke to, and I immediately started to beef up the mindset portion of the program. And as we went through the new elements in the program, one of the things that became really apparent was that, no matter how much work each and every person in the program included did on our mindset around money, the one thing that was clear is that there was always going to be that underlying fear, and so, in essence, we needed to just feel the fear and do it anyway.

Speaker 2 7:49

And so if thinking about the money side of your business, in particular, the pricing really gives you the X. Then I'd encourage you to sit down and, as a first resort, start journaling about it. Make a list of all of those reasons You're afraid of money, or afraid of increasing your prices, of charging more, earning more, of having a higher turnover, whatever it is about money that terrifies. You start to write it down and then, as you write down each one of those things, I want you to challenge yourself and ask yourself why you feel that way, and initially you're going to get an answer. It might be difficult to find that answer, but you will get an answer, but it's going to be that sort of surface answer, and so, as you get that answer, I want you to ask yourself why that's the case again. It's this exercise of continuing to ask yourself why, until you get to the bottom of why you really feel the way you feel about money or your self worth.

Speaker 2 8:52

For me, my fear around money was definitely a story of self worth, and it's definitely something that came from my childhood, because every time I looked at my prices, my first thought was wow, that is too expensive, because I wouldn't pay that price. It wasn't because my clients weren't prepared to pay for me, it's because I wouldn't pay that price. And as I really dug deep and looked back over my childhood, where we had no money and my mum would continuously remind us that everything was way too expensive, I should always say something like, oh, it's just not worth it, or who would pay for that? Who would pay that much for that thing? I had unconsciously transferred that mindset to myself and, as a result, my services, what I was offering. I thought that, because I felt that way, everyone else would feel that way. So there was no one who was going to be prepared to pay for me and what I was offering because I was too expensive and obviously I wasn't worth it.

Speaker 2 9:54

But as I challenged myself and continued to ask myself why, what I realized was, yeah, I'm absolutely worth it. I've got 30 years of small business experience, I have ongoing education in the financial space and I've also got this ability to share the business money, those really complicated aspects of business, in a way that people who just don't do numbers understand, a way that is unique to me, which meant that what I was selling was valuable and I was definitely worth what I was charging, and then some. And so, as I continued to do that exercise, one of the things that I needed to realize was that I was always most likely going to be a little bit uncomfortable about charging my new prices, but I just had to get comfortable in the uncomfortableness of that feeling and do it anyway. Feel the fear and do it anyway. And now, all these years later, many years later, when I set my prices, I actually now don't give it a second thought. So I start the year, I have a look at my business, I have a look at what it costs me to run my business, I set my goals, I know what it is I want to charge, and then I set my prices accordingly and I don't give it a second thought. My prices are what they are and I no longer get confused between this idea of value and worth. And so when I think about what I need to charge so that I can work the hours that I want to work and earn the money that I need to earn to help me achieve my financial goals, it becomes a no-brainer for me. That's just the number. People will either pay it or they won't, and it's as simple as that. But believe me, 30 years in business. It takes a lot of years and a lot of experience and a lot of work to start to feel that way.

A Guide to Pricing Your Business

Speaker 2 11:47

So, when it comes to your ego, or if that's somewhere that you feel is really lacking, I want you to sit down and, first of all, try uncovering what might have happened in the past that is having an impact on the way you think and feel about money now. And, in addition to asking yourself why you feel this way, I also would encourage you to ask yourself why it is that you're holding onto that story and, really, if that story is true or not, and if you are finding it hard to see the forest for the trees here, try talking to a friend, explain where your reluctance is around money, explain what your fear is and ask them whether or not that story is true, because more often than not, that story is not true at all. It's just something that you continue to tell yourself, and the more you tell yourself, the more you see it and the more you believe it. So the idea is here that you will eventually get to a stage where you understand that it's okay to let go of that money story that you've been holding onto and it's okay to let go of it for good, because being in business is all about not only embracing the hard stuff, but it's also knowing that the service, the transformation that you are offering your audience is valuable and that you're worth it, that you are worth charging what you choose to charge. Now, of course, changing the way you think about money isn't as easy as I've just made it sound. As I said, it takes a lot of work. It took me many years to finally tackle that money mindset beast. But as we head into the new year, maybe just give it a go, see if it makes a difference in your business, because in my experience it absolutely will. And rather than leaving it at that, I thought you're here anyway. Why not share a few really practical pricing tips with you that I know are going to help you set up some fantastic pricing for the new year?

Speaker 2 13:50

When you conduct your review, the first thing to do is to sit down, have a look at all of your prices and look at your numbers in general and then understand what it costs you to run your business. That's a really important piece of the puzzle, because most of us will pay for what we need to pay for to keep our business going, but unless you're one of those people who sit down and regularly look at your profit and loss statement I would encourage that, by the way we forget what it costs us to run our business. So it's worth starting with a look at the costs and having a genuine look at what it costs you to run your business, seeing where you might be able to save and then, knowing that number, writing that number down. So this is the number it costs me to run my business for this next year. And then the next step is I want you to think about what success is going to look for you in this next season of business. So, whether that's a full year, whether that's half a year, whatever it is and in thinking about what that success looks like for you, set yourself a financial goal. So it could be what you want to pay yourself, for example, it could be a turnover number. So think about that and write that down.

Speaker 2 14:57

And then the next step is to understand how many billable hours you're going to be spending in your business each week, because it's one thing to understand what it costs us to run our business and to know what the goals are that we want to reach for and achieve for this next financial year. But many of us spend a lot of time working in our business. We often think about it 24, 7, 3, 6, 5,. Right, it's something we can't turn off, but when you think about how many billable hours you spend in your business so there's the number of hours where you're actually getting paid to work within your business there could be a big discrepancy between how much you're working in your business and what you're actually getting paid for. So it's really important to understand that number, because that number is the magic number when it comes to working out your pricing.

Speaker 2 15:49

The last piece of the pricing formula is to decide what sort of profit you would like to make in your business this year. Now, profit is what's left after all the bills are paid, after you've paid yourself your taxes, you've put some money away for savings and so on. It's basically that unencumbered money that you can do whatever you want with. You've heard that saying turnover is vanity and profit is sanity, and we all want to be aiming for profit in our business. Very few business owners set out to deliberately make a profit and there is no right or wrong profit number. It could be a 2% profit, it could be a 20% profit, it could be a 50% profit. It's totally up to you, but it's a decision you should make before you set your prices.

Speaker 2 16:38

And so, with all of the above in mind, your business costs, your success goal for the year ahead, the billable hours that you are going to be working in your business each week and that profit number all written down. The rest is really just simple maths. So it's taking those business costs, dividing them by the billable hours that you are going to be getting paid for in your business. So, for example, you might work 30 hours, only 12 of those are going to be billable. That is going to give you a basic hourly rate and that's the jumping off point for all your prices. Now in your business costs you should include a number for wages your own wages, particularly your superannuation, your own superannuation in there as well. If you want to put in some money for tax savings, for example, a tax cost or other savings put them all into the business costs, divide by the billable hours and then you'll have this hourly rate and that is going to be the jumping off point for all of your prices. Then, on top of that, you'll add that pricing percentage number that you came up with and voila, that is the number that becomes the basis for all of your pricing decisions going forward.

Value-Based Pricing and Adjusting Services

Speaker 2 17:54

Now I want to talk to you for one minute about value-based pricing because, honestly, 100% of the time when I share this pricing formula, someone asks me about using hourly rates to set your prices. And why do you want to be exchanging time for money? But this is the thing I want you to remember when you are working out this hourly rate calculation it's actually got little to do with the final prices that you decide on. It's simply the place to start. It's your jumping off point.

Speaker 2 18:27

So, for example, let's say I did the calculation in my business and I discovered that my hourly rate jumping off point is $125 an hour. Now I could charge $125 an hour for all of my services and I'd be in front, I'd make my profit, I'd pay myself wages, I'd cover the cost of doing business. But what I do is I look at it as the starting point for my prices because I run a program that is a set rate. I do business coaching. That is a standalone service or a package, a 30 month or a six month package. I run other mini courses, it would be very hard for me to work out apart from, let's say, the one-to-one business coaching an hourly rate for my services per se, or to charge an hourly rate for my services per se. I could do it, but I choose not to.

Speaker 2 19:15

And it certainly doesn't mean that if someone rocks up and wants a one hour of my time, I'm going to charge them $125. For some business owners, for example, who run a super low-cost, lean business, it certainly wouldn't make sense to price that way. And that's why you really need to consider that value-based pricing idea, because your prices shouldn't just reflect that hourly rate as a jumping off point. It should reflect the value you provide, not just the hours that you put in. And so what do I mean by value? That is the sum of all of your skills and your expertise, your years of experience and that unique x-factor that only you can bring to the table. And also, if you've been in business for 10 years or 15 years doing the same thing over and over again, you'll have more knowledge and you can work fast or deliver a transformation in a faster period of time. It doesn't mean that you charge less for it. In fact, you probably charge more. So forget. This hourly rate you're coming up with is something to simply trade for your time. Again, look at it as that jumping off point.

Speaker 2 20:22

Once you've set your prices, you can then absolutely check them against the wider market to make sure that you're not, you know, charging yourself out of the market. But in some ways I find this a little bit of a furfie and, I guess, a way to open up that conversation again around comparison and imposter syndrome, and we don't want to do that. So while, yes, you can absolutely check what you're charging versus someone else who's offering a similar service, I want you to also remember that you are the unique portion of your business and so, for that reason, really, your business will be like unlike anyone else's. That's super important. And the other thing is that your prices need to keep up with not only the market but with what it costs you to run your business, your growing skills, and so that then might mean that you are charging a little bit more than someone else who is offering Exactly the same or similar services to you. But don't get caught in that comparison.

Speaker 2 21:26

Once you've got your prices, have a look at your whole Ascension model, all of the things that you offer. Make sure that your new pricing is going to work across the market. There are some things that you might choose to increase. There are some things that you might not choose to increase. You might look at some of your services and think I could cut that back a bit so that my service is delivered in a faster time and is a more viable alternative for my clients, for example, but it's then about communicating the values. If there are increased rates that you are offering existing clients, you might like to share with them why they're increasing and that your experience has increased or that your cost of doing business has increased and therefore you need to increase your prices. Maybe new clients pay your new prices, but you grandfather your existing clients on the prices that they're currently paying or you just do a minor increase for them. Of course, timing is everything, and you don't want to be announcing new prices, for example, on the day that interest rates increase, because when you do that, the shock value alone might cause people to say bye-bye. So think about the timing of your prices.

Speaker 2 22:34

The beginning of a year is always a great time to have a review and to let people know that your prices are going up, it makes a lot of sense. Keep in mind that not everyone is going to love your prices, particularly if they are increasing. You are bound to get pushback and you're bound to get comments about your prices, why you're too expensive. But this is where a resolute mindset takes over. It's where you know the value and transformation you're bringing for that client, and having that at front of mind is really paramount. So the key here is not to get into a long explanation of your pricing, because at some point that is going to work against you. You'll start to feel bad about what you're doing. You'll spiral back to that negative money mindset thinking and that negative self-talk and next minute you'll be discounting. And then you will kick yourself when you get off that strategy call, that discovery call.

Speaker 2 23:29

Instead, when you get pushback, consider doing one of two things Either move on, because you want clients who can afford your services and who are prepared to pay for your services so someone can afford you, or they're not prepared to pay or they want to get into a long, exhaustive discussion about your pricing. They're probably not the clients for you. Let them go somewhere that is cheaper. The other thing that you might like to think about is explaining to your client that you are more than happy to reduce your price for a particular service, but then ask them what part of that package they'd like you to remove. So, rather than discounting which tends to be our immediate go-to to give people a lower price point to use our services instead, think about a different price point where you're actually offering less for that money. So that means that you are still delivering your great service, your transformation, but you're just doing it at a lower price point, which means your client still gets that value, but they also get less deliverables and you spend less time working on their services. So you're getting paid still your full amount. Hope that makes sense.

Speaker 2 24:38

And if you feel bad about that, then I want you to remember one thing Every time you choose to discount, you're taking money out of your pocket. That means you and your family are getting less. You're taking away from yourself and you are leaving that extra money for your client and their family to enjoy. If you're the one who is doing the work, why would you be giving that money to someone else to enjoy the benefits of? So bottom line here find a way to adjust your suite of services to suit your ideal client and one where you're still getting maximum value for every one of your billable hours. You are covering the cost of doing business your wages, your superannuation, your savings and you're making a profit in your business too.

Speaker 2 25:28

So pricing is not just about the numbers. As you can see after this podcast, it's really a mash of self perception, mindset, strategy and then embracing your worth and conquering the fears that you have around money and applying these with some practical tips to the way you pull together your prices so that the prices that you offering align with the incredible value that you bring to the business world. And just remember, if in doubt, you're not alone on this journey. So many of us have just the same fears and concerns about our pricing as you do. But you need to really lean in, feel the fear and do it anyway.

Pricing Tips for Successful Business

Speaker 2 26:17

And if you have questions about today's podcast or you'd like to share your experiences, I would love to hear from you, because I want you to price for profit in your business every single time you offer a service, and in that spirit, I have decided to include a link in the show notes where you can grab my profitable pricing formula for just $27. Yes, I have discounted it, but I've done it because it's the start of a year and I want every single person listening to be able to go into this next year in business making exactly what they want to make and for what they're making to be profitable every single time. Profitable pricing formula will give you everything you need to work out your new year's prices, including a template to populate that will magically work out that ideal hourly rate I mentioned earlier. So you don't even have to do the maths. All you need to do is click on the link, pop your email in $27 and it's all yours. I hope you have enjoyed today's episode all about pricing, and until next time. Here's to your success.

Speaker 1 27:28

Thanks for listening to the Secrets of Successful Business podcast. For more information on all things business, head to focicomau and make sure you hit subscribe on the show so you don't miss another new episode. If you're enjoying the show, please give it a quick rating or review, share it on your socials or with friends who might enjoy it. Catch you next time.