5 Things to Consider when Setting Pricing

Foreign. Hello, I'm Katie McManus, business strategist and leadership coach. Happy Saturday morning, everyone. Coming to you live. Haven't brushed my hair yet. Still in the shirt that I slept in. But you know what? This is day 10 of me going live every day in September. It is also September 10, you know, funny how that works. Anyway, today I wanted to talk about a question. I get a lot from my just starting out clients is, hey, I'm just starting. How do I decide what I should charge? And the general inclination that comes from feeling self conscious about just starting out and comes from being used to being paid an hourly wage 40 hours a week is that I should discount. I should really figure out what my hour is worth and go from there. And that is wrong. That is wrong. That is the wrongest answer. And I don't want you to feel bad if that's where you're feeling like you should start. It is totally normal. Put my coffee down. Okay, so I want you to take a deep breath with me because we are going to be talking money in this live. And whenever we talk money, we tend to get all crunchy and freaked out and worried that, you know, someone's gonna. We're gonna name how much we charge for our services and someone out there is gonna be like, no, that's. That's despicable. You're an evil human. You're money grubbing, greedy, and you must go. You're gonna be going to hell. You need to let that go, okay? You need to let that go. And remember that you are separate from your business. You are a human being. Your business is an entity. It is something that you work through, is something you get paid from, and it's something that other people hire. They are separate. Okay? So you are not selling yourself. That is illegal. Your business is selling a service. That is what is actually happening here. But when you sell a service, it can feel so personal, like you're selling yourself. You're selling your time. You're selling all the brilliance that is in your mind. Okay, I'm going to talk about five things that you need to consider when you're deciding to set your pricing in the very, very beginning of starting your business. And if you've already set your pricing and you kind of screwed it up and you're doing stuff that's contrary to what I'm remember, it's not too late. You can always change it, okay? It is your business. You own this thing. Okay? So number one, do not sell your time by the hour. Don't do it, don't do it. And if you do, if you're in a profession like you're a lawyer or you're a consultant, where people typically get paid by an hour, remember, you get to pad it, because when you work for someone else, they were padding it. They. You were not getting paid every single dollar that the client paid to the business that got trickled down to you, you got paid an hourly rate. The client paid more. Okay? So here's something that a lot of new business owners get freaked out about. I'm just gonna cross my legs so it's a little more comfortable on my butt that I. I hurt falling down the stairs two weeks ago. So here's the thing I want you to remember. Your clients do not give a flying fuck what you think your time is worth. You may think they do, and there may be a couple out there who will start questioning. Wow, you got paid that much per hour. They are not your ideal client. Okay? Your ideal client cares about the results that they will get by working with you. Simple as that. They care about the results that they will get by working with you. Now what you have to ask yourself is how much are those results worth to them? If you're a marriage coach and you help people get better in their marriage and avoid the big D word, divorce. How much do divorces cost? How much are the legal fees? How much does it. How much do you lose when you split all your assets? Like, how expensive is it going forward? Running two households instead of one. You know, they're like buying double for all your kids, buying another bed for them, buying stuff for mom's house and for dad's house. Or maybe mom and mom. Maybe dad and dad. No judgment. You know, want everyone to feel included here. Divorce happens. And also relationships can be worked out with the right support. If you're. If you're a marriage coach who, who helps people avoid divorce, you're actually helping them avoid very expensive laundry list of things. And. Sorry, my brain is moving a couple miles a mile. Miles a minute. I've drunk a little too much coffee this morning. So if you are a lawyer, you know, if you're a lawyer who works with clients who have to litigate and, you know, they have to go after contractors who haven't paid them. They wouldn't get paid. They wouldn't get paid. Otherwise they have to sue a contractor who hasn't been paying or some. Someone who hasn't been paying them for their work. You know, what is that worth to them? Okay, I want to. I'M actually going to pause the content here. I am getting in my head about something that I said earlier, and I'm like, oh, well, that was weird. They're going to start thinking I'm weird and all this stuff. I just want to name this because this happens. This is so normal. This is what so many people are afraid of when they think about going live. They're like, oh, my God, what if I say something stupid or it comes out weird and then you have to correct it and then I'm going to get weird and then I'm going to freeze. I just want to name this because this happens. I go live all the time. I go live all the time, and it happens to the best of us. And deep breath. If this ever happens to you, you get to take a deep breath and you get to name it to your audience, and you get to invite them in behind the scenes and you get to say, oh, my God, like, I said something weird for a second there, and I'm overthinking it now. Now, of course, everyone who's in. Hi, Sean, welcome. Everyone who's joining now is going to go back and watch the weird thing that I said. It's not that weird. It's just. I said it weird. And it. Anyway, it's not that big of a deal. It's not that big. Big of a deal. Going live has its risks. Going live, you know, you could stutter, you could stammer, you could start sweating. You could say the wrong thing. You can always make it right, okay? And you can start getting in your own head about it and let it get in the way of the content that you're delivering, or you can name it and then you can get back to the content. Okay. Like I'm gonna do right now. Okay? So number one is you have to remember that your ideal clients do not give a flying what you think your hour is worth. All they care about is what results they will get with you after working with you, and what is that worth to them? You know, if you're working with clients who want to get a better job, they want to switch, say, from. From an engineering role to a sales role, you know, and sales roles, typically, depending on what engineering role you're in, you can make a lot of money in sales, right? You can make anywhere from like 10 to $50,000 more per year in sales if you're good at it. Right? Imagine over the course of a lifetime, Jason, going human. Yes. I love the going human moments. Just imagine over the course of a lifetime, like how much money they're going to be able to more. They're going to be able to put to their 401k and retire with how much more money they're going to make and have a better quality of life. You know, the things that they'll be able to go and do, the experiences they'll be able to have with that extra money. You know, you charging $20 an hour is a drop in the bucket compared to that. Your client doesn't care about how much you charge per hour. They care about the results that they are going to get. Okay, you really don't factor in here. It's the results that factor in. Okay, so that's number one, the number one thing I want you to consider. Number two, it's so tempting when you start out to think I'm just going to discount myself, I'm going to discount my services, and then I'm going to get all these clients and then I'm going to prove to them that I'm really good at what I do, and I'm going to get amazing testimonials from them, and then I'm going to go out, I'm going to charge more. What actually happens when you discount your rates? Let's say there are a few things that happen here. Number one, when you discount your services, guess who you attract. You attract discount clients. These are the worst of the worst clients. They are. I mean, I hate. I hate cheating on any kind of human, but these are the clients who will be the most difficult, will be the most demanding, who will be the least respectful of your time. They will expect a Ritz Carlton service for Motel 6 prices. And because you have discounted your services, because you have filled up your business with these discount clients, you are going to be maxed out on time. You're going to be absolutely maxed out on time. You're not going to have the time to deliver the Ritz Carlton experience for the Motel 6 price because you're going to have to have too many clients to be able to make ends meet. Okay? Which means. So let's just back out. Let's zoom out and look at what this look means. So you have clients who have huge expectations, are paying a little, and you have this much time available to deliver. Right? That is not going to match up to good testimonials. That's going to match up to testimonials that are actually the opposite. They are bad. They are bad reviews on Yelp, bad reviews on Google business pages, bad reviews on Facebook business pages. You do not want that. That's just one part of it. Okay? The other element here is that you're going to start selling your services at a discounted price and you may get some clients that are actually good and decent and you like working with. You are going to feel so terrible raising their rates later. You're going to feel just awful raising their rates because they've gotten used to this service at this price. You're also something happens when you ask for a certain amount and you receive it and you start that exchange there subconsciously, you start identifying with, I'm the kind of person who makes this much money. You're making it harder on your own brain, your own identity to start recognizing with that higher rate. So when you do, when it does come time to raise your rates, you can be like, no, like, I'm the kind of person who makes this much. I can't charge that much. We're going to be talking about money mindset and in a minute. But you have to charge. You have to charge enough to live, right. When I have my clients figure out their pricing, I literally have them take how much money they want to make in a year and want to make, meaning want to make when the business is full time, successful, has all the clients that they want. I have them take that number and divide it by 12, 12 months in a year, okay? And then I have them take that number, that monthly amount that they have to make and divide it by how many clients they would love to work with. That is the rate you need to go with. Because in the beginning, you're not going to fill up right away. You're not going to fill up to full time in, in six months. It's just not going to happen. Okay? It's very highly unlikely unless there's massive demand for what it is that you offer, AKA therapists right now. Okay? There you have to. You're not going to fill up, all right? Okay. So if you want to make $300,000, still determine your pricing per client on that $300,000 end goal. Because year one, you're not going to fill up. You're going to have maybe a quarter of that. And a quarter of that is still pretty damn good. Okay? A quarter of that is still good. It's still something. Whereas if you discounted, you'd be making not even close to that. Okay? If you're curious about how to set up pricing, I do have the money map. I think there's a link in my link tree. If you go to my about section, click on the link tree and then it's in there if you want to download that. It is a guide to figure out how you should set up your pricing and what you should charge. It's really simple. It's just an equation. We're not over complicating it here, people. Okay, so number three. Three. I want to talk about your money mindset. Okay. What do you believe when it comes to money? Okay, so many entrepreneurs fail, not for numerous reasons, but the core of it is that they never did their money work. They never reckoned with the bad beliefs that they have about money and how money comes to them and how money works in the world. Right. I can't tell you how many clients I have. I have. And, you know, we do this work on the regular about what does it mean to be someone who charges a lot? Because everyone has this built into their psyche from our society that people who make a lot of money are evil. The head. If you're making a lot of money, you're selfish, you're money grubbing, you're out for yourself. You're not. You're not being generous with other humans. It's a really, really toxic belief that we have about people who charge a lot of money. You know, we imagine the Scrooge McDuck who's doing the backstroke through piles of gold coins, right? Here's the truth. Money makes you more of who you are. If you're already a bad person, if you're already a selfish person, if you're already, you know, greedy and don't care about other people, money's going to make you more of that. If you're, if you're watching me, like, I don't think I attract that kind of person. I don't think I have a lot of those people in my life. I think you're probably the other kind of person who is kind and good and wants to give back and wants to influence their world for the good. Money, more money is only going to make you more of that. Not only that, but more money is going to give you more power to influence your world for the good. All right? Our world, the power structures are designed around money. Whether you believe that's right or wrong, it's just how it is. When you, as a good person has more money, you have more power to do good. Remember that asking for more money does not make you a bad person. It just makes you you who has more money and more clout. That's it. That's all it is. And if you're building A business. You need to be doing your money work. You need to be cleaning up any family beliefs that have been passed down, and we all have them. You need to be cleaning up any bad habits you have around money. Because here's the thing, how you. How you do one thing is how you do everything. So if you have bad money habits in your personal life, they're not going to stay in your personal life. They're going to go to your business as well. You need to clean that up so that it doesn't leak over into your business. Building a business with the bad money mindset, with bad money beliefs is like building a house on partially a marsh, right? The marsh is like waterlogged. It's not stable ground, okay? It gets flooded, it gets perfect. Parts of it gets get washed out. It's held together literally by reeds. If you try to build a house where like a third of it is on marshland, guess what's going to start happening to that house? First, the foundation is going to start crumbling and rotting. And when the foundation starts crumbling and rotting, the parts of the house that are built over it, there's going to be an immense strain on them because there's going to be nothing holding them up. They're going to start cracking and breaking. And when they start cracking and breaking, the doors to those rooms are going to start, you know, warping. So they're not going to be able to open and close because the frame is going to start cracking and breaking. Windows are going to shatter, and before you know it, you're going to have a house that's half crumbled into this stupid marsh. You're going to have a family of raccoons living in one of the rooms and bats in the attic because. Because everything can get in. And guess what? You're not going to be able to live in that house. It's not going to be a habitable house. This is what happens in your business. When you have a bad relationship with money. It's not. Your business is not going to be sustainable. Now, we're going to be talking about sustainability in your business later. But are you sold on this? Are you sold on doing your money work? If you aren't sure how to do your money work, if you've never even thought about doing work on your money mindset, few options for you. DM me. I have a list of books that can help if you're ready to start getting serious about your business and learning all the things that you don't know. I have trainings on this in my BYOB program that is available to all of my clients. All right? Your money mindset is that important. And finally, if you're not ready for any of those things, here's your homework is I want you to set aside an hour. Actually, no, fuck that, a half hour. You can do this in a half hour. I want you to write down, do a full inventory of every belief you have about money and just start it off. It's just stream of consciousness. Your hand is not allowed to start. Stop moving. So you're going to write I believe and then just finish it out with any belief you have about money. Now the, the trick here is that you're gonna run out of things to say after a while. When that happens, you're going to switch from your dominant hand to your non dominant hand and you're going to continue writing. Now, you're not going to be able to read what you write unless you're ambidextrous. You're not going to be able to read what you write. It's just. But you're going to know what you're writing. You want to get all of this out, and then you want to assess that list and be like, cool, what do I know to be true? That's the very first step to dealing with your money mindset is you have to know what your money mindset is, your conscious beliefs and your subconscious beliefs. Okay, a little bit of homework for you. Now, number four, I want to talk about. It can feel so gross too. So, like, say, say you're used to making $100 an hour in your regular job. Okay, That's a lot for an hourly wage, right? So say you're making $100 an hour in your normal job. That's what, $4,000 at the end of the week? If you're working at 40 hour week, right? You're being paid for each hour you show up to the office. Even if you're in the office not doing anything, even if you're going for coffee, even if you're just powwowing with some colleagues. No business expects, except for maybe Amazon expects, that every employee is going to be productive every hour that they're clocked in. Okay? Now, in your business, you have to have that same expectation for yourself. But if you're going from $4,000 a week to starting your own business, you're not gonna be able to just cut that in half or into a quarter. You're not gonna be able to afford it. So you really do have to factor in, okay, I'M gonna have to spend 10 hours a week marketing. I'm gonna have to spend another 10 hours a week on sales. I'm gonna have to spend another five hours a week. I'm making the math complicated on myself. But another five hours a week on backend admin, that's 15 hours. If you're working a 40 hour week that you're going to actually be able to bill for, you're going to have to charge more than what you were paid hourly in your job. Okay. Because you have to factor in that a lot of the work that you do is not going to be paid. You have to make that money. All right, finally. And this can feel, this can feel really energetically gross when you're starting out because you feel guilty. You're like, oh my God. Well, if I normally only make a hundred dollars an hour for this kind of work, that's unfair to my client. To make them pay for my marketing, for my sales process, for my backend systems, that's unfair to them. No, it's not unfair. And this brings me to point number five is sustainability. For your clients who have signed up with you so they can get a result from working with you, for them to get sustainable support from you to get that result, they need your business to be sustainable too. Let me repeat that. For your clients to get sustained support from you, your business has to be sustainable. Meaning you have to be able to do the work, maintain the business, rest and recharge and relax and live your life and eat and exercise and be a human. Otherwise this is never going to work. Now when my clients work with me, they get, if they're say they're in my brave business program, they're working with me for a minimum of nine months. In that those nine months they get two hours of, of coaching time. Like live like coaching strategy. We're planning everything. I'm training them on stuff. We're, we' problem solving. We're coming up on with the next big thing. They also get on demand support with me, meaning they can text and call me and I will answer questions. I will, you know, talk them off the edge. I will brainstorm with them on this new idea that they have whatever it is that they need. I'll also edit things for them if they need, need me to, if they write something up and they need some editing work. I also host, you know, group trainings for only my one on one clients so that they can learn and network a little bit with other people. Okay. And Sean, I'm going to show Your comment in just one second. I just don't want to lose my train of thought here. I can't do that if I don't have the time for it. I can't deliver on all the things that I do for my one on one clients if I haven't set up the math of my business to make sure that I have the time available. If I, to make money, if I have to be able to bill for every single hour that I work, I'm gonna have to take on way too many clients. And I'm sorry, like if I get text messages from, from 13 of them in one day, I'm not going to be able to follow up with all of them. You have to, you have to bill appropriately. And Sean. Yes, absolutely spot on. Do a cost benefit analysis as well as work out your budget 100%. Yes. Let me see. Hussein. Pricing is a complicated process, but it starts from the time you choose a product and starts to price it roughly before you buy it. And if you see that you can put an increase rate on surprises, whether shipping prices or others and give up part of the profit margin. Yes, so, exactly. So this is, this is a little different is selling a product versus selling time, selling a service. But absolutely, you have to plan buffers for surprises, for things not going well for. I know a lot of people in the UK are struggling right now because their energy prices have quadrupled or maybe even more. I can't remember. I've, I've been seeing a lot of different posts about a lot of different things. There's. You have to make sure that your business is sustainable because here's the thing. Say, say you've started a coaching business and you're a year in and you have seven clients who are really happy with your work and they rely on you and they're in the midst of big transformations in their lives and you haven't priced accordingly. And you have to say, you know what, I'm so sorry. I have to go back and get a real job now. I have to go back and I have to get a job that pays me enough to live because this isn't paying me enough to live. That's not your client's problem. That is your fault. That is not the market's fault. It is your fault. You have to ask for enough money to live. If you don't ask for it, no one's going to give it to you. And here's the thing, we're also afraid of hearing no. We're also afraid of getting on a Sales call and saying, this is how much I charge, and hearing someone go, oh, that's too much. I afford that buy. Click, it's gonna happen. It's gonna happen. If you've priced appropriately, you should. Seriously. I tell this to my clients when someone gets on the phone with me and we're talking about working together and I ask them, what percentage of people say yes to working with you? If they say 100%, that is a huge red flag to me that they're not charging enough because 100% of people should not work with you. 25 to 50% of the people you speak to should say yes. That's it. Either 1 out of 4 or 2 out of 4 people should say, yes, I'm ready to work with you. If it's more, you're not charging enough, that means two to three people out of four should say, you know what? I'm so sorry, this is too expensive, can't do it. That is okay. There's nothing wrong with that. It becomes a problem if more than one out of four people say no, but we can deal with that anyway. I didn't mean to go for this long. This is almost a half hour. I have to get grocery shopping and cleaning and get my life in order after this crap. Crazy week. Hussein, Sean, Jason, and whoever else is tuned in. I can't see everyone. Thank you so much for watching. I hope this is super useful. If you have any questions about your own pricing, if you're just starting out, you really don't know how to figure this out. Two things. Okay? So in my about section of my LinkedIn, there is a link tree. Okay? In my about section, go there. You can download the money map for coaches. It doesn't just work for coaches. The formula is the same. If you're charging for your time for your service, go and download that. Okay? If that's not enough of an answer, if you have more questions, if you're starting this business and kind of realizing like, oh, shit, I don't even know what it is that I don't know, which means I don't even know what questions that I need to be asking to figure this out. In there also is a link to a generate income strategy call. I want you to go and book one right now. Go ahead and book one right now. You and I will hop on the phone for 30 minutes. We will game plan your next three steps. And if you need further support, then we're going to talk about different options for you, for us to work together or for you to get continued support somewhere else, okay? Because I'm not the fit for everyone that's normal. Anyway, happy Saturday. Thank you so much for tuning in. And I look forward to going live with you again tomorrow and every other day this month of September. Stay tuned. So much more to come. All right, have a great day. Talk to you soon. Bye. I'm always so awkward with endings. I don't know why. I should just give myself a script or something.