The Growth Hub are delighted that local business specialist, Alison Edgar MBE, is delivering a mini-series of three webinars based on her best-selling book Secrets of Successful Sales as part of our This Way Up: Leadership, Digital, Finance webinar programme.
Registration details can be found here.
In this article, as a precursor to the webinar series, Alison takes us through the importance of really understanding your pricing strategy, setting the right pricing level and, perhaps the most important part, valuing what you deliver to customers. As she says: If you don’t value what you bring to the party, why would your potential customers value you?
Many businesses fall into the trap of under-valuing what they do. It’s especially prevalent during the COVID-19 crisis, when so many people are offering their solutions for free out of desperation to secure future leads. If you don’t value what you bring to the party, why would your potential customers value you. In this article, I’m going to teach you how you can set up a sure-fire pricing strategy, which will not only help you during the crisis, but set you in good stead for the future.
- What is your product worth?
- How much should you charge for your services?
- How do you figure that out?
Answering these questions is tough, especially when you’re just starting out. Many of us suffer from self-doubt, it’s a symptom of Impostor Syndrome, and it leads to charging clients less than we should.
Step 1: Know the Competition
- Who else is out there doing what you do?
- How are they doing it?
- How successful are they?
Remember all that glitters isn’t gold! Some people are like swans. On the surface they look like they are cruising along effortlessly, but underneath they are paddling like mad.
Do quantifiable research on others in your field. Try to understand their pricing strategy. Look at their services, rates, testimonials, web and social media presence. If they are a limited company, you could even look up their HMRC returns. Although these are not always an accurate measure, especially during this time, it gives you a good idea if your competitors are really making money. If they are it’s a good indicator that you could too.
Use your competitors as inspiration, if they can make it during this time, so can you. But don’t try to copy them, find your own way. Chances are they’ve been going much longer than you. So, their approaches to marketing and business development probably won’t work for you. Avoid comparing yourself to them too. They will have a better website than you, they will be more active on social media and they will be advertising in places you can’t afford. That can knock your confidence and make you feel inferior. Don’t fall into this trap. Competition keeps you on your toes. It stops you being complacent, and it helps you focus on sales.
When you research your competitors, you’ll quickly discover the differentiators between you and them. This is essential to know so you can stand out. Focus on what makes you different and celebrate it. I’m not the only sales coach or author in the world. I have lots of competition, but I am the only Entrepreneur’s Godmother. I found a niche in the market that I’m truly passionate about and that helped me set a clear vision for the work I wanted to do.
What’s your niche, why are you different to your competitors? Dig deep and think creatively to find it. Steer away from the usual lines like “I give great service” or “I’ve got great experience”. So do your competitors. You aren’t going to sell to everyone, its ok to take a risk with your message.
Step 2: The price is right: Cost vs Price
I know from experience that this is very tricky to master, especially for start-ups. For me when I started, my struggle with pricing strategy came from a lack of understanding of the business, margins and cost of sale. Now when I work with clients who struggle with price, I ask them:
“How much does it cost you to open the doors?"
This is where you calculate the monthly overheads you have before you “open the doors”. This includes networking, advertising, office cost, travel, phone bills, insurance, wage cost, outsourced virtual assistants, social media management, material costs, room hire costs, website hosting, business cards and printing, CRM monthly charge, subsistence and other related overheads. Some of these may not be relevant during the crisis, but they are likely to re-surface post pandemic, and it’s important to factor future expenses into your ‘opening the doors’ cost.
It is IMPERATIVE you know this figure. Without it you cannot set the correct price for your product or service and you won’t make enough money to survive.
I use the rule of thirds, here is an example.
- If your monthly costs are £3,000, your sales target should be £9,000 turnover.
- This gives a third for you and a third to stay in the company.
- If you’re a service provider and you bill 12 days per month, your day rate to hit target is going to be £750 per day.
- Of course, this formula will vary based on the number of days paid work you can get each month.
- You can also vary the amount you choose to pay yourself, leave in the company, or re-invest.
When you know these figures, you can set yourself activity targets.
- How many networking/online events do you need to attend to meet the right number of prospects?
- How many follow up phone calls, emails and Zoom meetings do you need to make to convert prospects to clients?
It all comes down to ratios. As you get more experience you can gather more data and get more efficient and more accurate. This is the formula I followed to take my company from almost zero to six figures in my first year of incorporation, using proactive sales strategies. Granted, the world looks a little different right now, but it’s still the same strategies that will make or break your company.
Getting your pricing right isn’t easy. It’s a combination of good thorough market research, confidence in what you do and your ability to deliver a quality service or product, even during a time where people are more reserved when it comes to parting with their cash.
When your pricing is right, you’re ticking off a huge aspect of the decision process for a lot of potential customers, you only need your marketing backed up by some sure-fire sales skills to close the sale for you.
Having ascertained your correct pricing strategy, Alison will be sharing her insight into how to sell your product or service. Alison is well-placed to run the webinar series: Secrets of Successful Sales.
Based on her book, she will draw on her own blue-chip selling experience and subsequent work with huge conglomerates such as Sky and The Discovery Channel. She coaches individuals and teaches teams to think intrapreneurially; encouraging growth mindsets and outside of the box thinking which in turn, lead to an increase in sales.
Join us for the series by registering here