Chapter 5: Setting Prices
The decision of how much to charge for your services will have a tremendous impact on the success of your business. In addition to having obvious effects on immediate cash flow, the prices you choose will also affect your credibility, market positioning, and the way you view yourself as a business.
Think back to Chapter 1 when Dr. Deborah Osgood recommended envisioning the lifestyle you want. The prices you set will determine whether or not you're eventually able to live that lifestyle — and if you are, in what timeframe.
But maybe you already know that. Maybe that's why you're intimidated by the prospect of setting prices — and potentially setting them wrong. We get it. We asked some experts what they recommended, and we found there are three major forces you should consider when setting prices: your practical financial needs, the way you want to position your business, and the psychological effects your prices will have on clients.
“How you value what you do and how others value what you do are completely different. Things that may be obvious and easy to you are business stoppers for someone else. On the flip side, things that are challenging to you and are vital for technology may be incomprehensible to the client and not be worth explaining. Charge what your service is worth to the client, not to yourself. And explain things in terms of benefits and end results instead of steps and technologies.” — Tim Singleton , owner of Strive Technology Consulting
Next: Part 1: What Your Prices Really Need to Cover