As a topic, pricing is one that often leads to the most heated conversations amongst business owners. However, it’s also an area that a lot of people struggle with and have questions about. But if you want your business to grow and earn you a decent wage, pricing is something you need to consider and talk about. And if you’re still looking to price by the hour, it’s a conversation we need to have!
Last week we looked at one of the biggest pricing dilemmas - the importance of putting your prices on your website. Now, we’re going to look at why it’s so essential that you don’t price by the hour and what other options are available to you.
No matter how you price your services and products, It helps to know your hourly rate. Primarily, this is so you can accurately reflect the time spent on something and factor that into your pricing decisions. It isn’t a figure that you share with your clients, nor is it a figure that should be used on its own for pricing products or services.
Because when you charge by an hourly rate you’re making the time spent the main point of focus. It opens you up to questions and general criticism about the time you spent on something and the worth of the end result. Other people will judge it based on their view and experiences.
What you want your clients to focus on is the value and service you’re providing. If you price per hour, when you get more experienced at something, there’s a good chance you’ll complete the task faster and more efficiently. But should you then be charging less for that task? Yes, you can increase your hourly rate, but that doesn’t really solve the problem.
You need a pricing model that accurately reflects your expertise and experience, not the time spent on the task.
And that’s why it’s easier and clearer to have package prices. They more accurately represent all the elements and skills you bring together to provide the service. Package prices take into account your experience, skills, training and time, but combine them with the value your customer receives, to determine a package price.
Even with bespoke work. You can have a list of available adjustments to help alter the package prices. You can then offer variations on the package or offer add-on options for the original package.
Pricing conversations can get really heated, as so many small business owners have fears and hangups around pricing. These can hold you back from growing your business to the scale you want and pricing your real worth. So set aside some time to start tackling your pricing gremlins, so they no longer interfere with pricing decisions.
Pricing is often a heated topic, but it doesn’t need to be. If you want your business to grow and make a decent wage for you, you need to price according to your worth - and when you price by the hour, that just doesn’t happen. Instead, look to create packages of services, so you’re focusing on the value to your client, rather than the time you need to set aside to get the job done.
If you’re ready to get clarity around your business numbers, take a few minutes to sign up for my pricing calculator. It works out all the business figures you need, including how much it costs per hour, to run your business.