Why Does Pricing Feel Difficult?
Pricing causes anxiety because many business owners worry that increasing prices will cause them to lose customers, even when their service delivers strong value. Many also focus too heavily on charging for their time instead of the years of experience, expertise and results they bring to their customers.
Pricing strategy is one of the biggest challenges for small business owners and often leads to undercharging, reduced profitability and unnecessary stress.
For many business owners, raising prices feels really uncomfortable, because pricing is emotional.
As soon as we start thinking about it, those little procrastination voices inside our heads start knocking our confidence…
Am I charging too much?
Will people leave?
What if nobody buys?
What if they think I’m not offering enough value?
In a recent episode of the ‘Everyday’s A Business School Day’ podcast, Nicky Thomas (Founder of The Growth Community) and James Marriott (Podcast Expert and Founder of Sound Media) chatted to Business Consultant and Coach, Heath Gunn from Move That Mountain.
Heath explained why pricing causes so much anxiety and how business owners can approach it with more confidence. This blog covers the outputs from the session (but you can also listen to the podcast on Spotify or wherever you like to enjoy them).
Why Business Owners Struggle With Pricing
Most pricing anxiety comes from one fear:
“If I raise my prices, I’ll lose customers.”
The reality is usually quite different. In fact, many find the opposite is true!
In the podcast episode, Heath shared an example of a client whose cheapest package was £35, while his competitor charged £55. The client thought being cheaper would help him grow. Instead, he was struggling to break even. When he was pushed to increase his prices, he gained 12 new customers and lost three difficult ones.
Suddenly he was no longer perceived as the cheap option. Overnight he looked more credible, professional and valuable – and he was more profitable too.
If Everyone Says Yes, You’re Probably Too Cheap
Another strong point made in the episode was that many business owners see high conversion rate as a success. But if nobody is pushing back on price, it’s possible you are undervaluing your offering.
Heath described winning every quote as a ‘warning sign’ and that there is probably room for change.
It doesn’t mean doubling your prices overnight, but it does mean you should be reviewing it regularly, instead of something you avoid for years at a time.
Pricing is not just about being the cheapest option. It’s about charging appropriately for your:
Expertise
Experience
Results
And The Value You Create.
Pricing Is More Than Just Profit
Charging what you are worth is much more than a healthy bottom line. It’s also about your quality of life and ability to experience healthy growth.
Many business owners focus entirely on getting more clients instead of improving profitability. More clients, does not necessarily mean, better business. Doubling your client base means more work, more hours and probably more stress.
As Heath said: “Better pricing creates breathing room.”
It gives you more time to think strategically, improve your customer experience and enjoy running your business.
And you’ll find time to remember why you became a business owner in the first place – to have the freedom to make your own choices and enjoy a better lifestyle!
Why Undercharging Hurts Your Business
Not charging what you are worth risks significant problems further down the line. By placing your focus on attracting the ‘right kind of clients’ – who are aligned with your way of working and value what you do – you’ll need less of them and the work you’re doing will be way more enjoyable (and lucrative).
If you are just in a numbers game, you’ll quickly find yourself at risk of burnout; cash flow pressures; lacking energy to innovate and improve; and ultimately you’ll just end up resenting the whole thing.
The business will be running you – not the other way around.
Reviewing your pricing at least once a year is also essential. Otherwise, your profit margins will continue to shrink due to rises in your own costs and inflation. Less operating pounds mean less investment for marketing, outsourcing, innovation and business development.
Ultimately, you’ll be overworked and underpaid.
How To Price Your Services More Confidently
Here are some of the useful tips that Heath shared in the podcast episode:
Review Your Pricing Regularly
Do not leave your pricing unchanged for years. Build in annual pricing reviews.
Understand Your Market Position
Be clear on where you want your business to sit in your marketplace. Do you want to be perceived as:
Budget
Mid Market
Premium
(better still, if you can, have a multi-level fee offering!)
Your pricing should reflect your position in your marketplace.
Stop Competing On Price Alone
If you are in a race to the bottom on price, you’ll run the risk of attracting difficult customers who want a lot of your time and energy for the least amount of money.
Aim for customers who value quality, expertise and service who are usually not in the market for the cheapest option.
This will deliver higher profits and definitely increase enjoyment!
Research consistently shows that customers often associate higher prices with higher quality and credibility.
Factor In ALL Of Your Costs
When considering your pricing make sure you include:
Delivery time
Admin
Planning
Marketing
Customer Acquisition costs
And don’t forget your years of experience and expertise.
Build Confidence In Your Value
Don’t forget that your customers are not just paying for your time. They are paying for what YOU know that they don’t, such as knowledge, insight, problem-solving skills and measurable results.
As Heath says: “You’re not paying for a day. You’re paying for 30 years of experience.”
Don’t Take It Personally
Rejection is uncomfortable, but don’t make it personal. If somebody says it’s more than they wanted to pay don’t change the narrative to “I’m obviously not worth that”.
Sometimes a customer is not right for you.
Sometimes they are just not ready to buy.
Sometimes they genuinely can’t afford your service (yet).
It doesn’t mean your pricing is wrong.
Stay focused on the types of clients you want to help and the value you create.
Heath’s Simple Pricing Exercise
At the end of the episode, (as is customary on the ‘Everyday’s A Business School Day’ podcast) Heath gave the listeners a piece of homework to try when pricing up a job:
“Next time you’re about to send a proposal, add 10% before you hit send.”
Yes, it might feel uncomfortable, but as he said, most business owners are charging less than they are worth and this is an easy way to show you believe in the value you are providing.
FAQs
How do I know if my prices are too low?
If customers rarely question your pricing or you are winning almost every proposal, you may be undercharging.
Will raising prices lose customers?
Some customers may leave, but many businesses find that better pricing attracts higher-quality clients and improves profitability.
How often should I review pricing?
Most businesses should review pricing at least once a year.
Why do business owners struggle with pricing?
Pricing often feels personal because it is linked to confidence, rejection, and perceived value.
Further Resources
This blog is based on an episode which is part of Season Three of Everyday’s A Business School Day podcast. You can listen to move episodes on Spotify or wherever you like to listen to podcasts.
Why not have a read of some of our other blogs in our library.
Identify the right networking format for you
Decide if networking groups are worth the effort
How to get the most out of your 121s
Ways you can build trust with your connections
Learn more about Growth Community member only meetings
Why member only meetings add value to membership
Try some Growth Community relaxed but very purposeful networking?
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