Pricing – The #1 Question
When I was a few years into my business I had a client tell me to double my rate when I charged them. Yes, it’s true! I couldn’t believe it! And I did double it. And yes, they paid it.
It’s funny how low you value your own time, experience and knowledge, versus how others actually value you.
When I started I was charging $35 per hour and I had a 5 hour package, along with my 10 and 20 hour packages. Now I charge about$60 per hour, have eliminated the 5 hour package (although I do have a 2 hour entree package), and have added a 50 hour package. And yes, people do buy the 50 hour package!
This has been an evolution as I gained confidence in my business and what I could deliver. One thing I have learnt, through personal experience as well as observing others, is that you will always start out pricing yourself too low. I haven’t yet met a personal concierge who has priced themselves too high.
So how on earth do you set your price?
Your Personal Value – First of all you must really value yourself. Don’t think about being ‘just’ a small business, or the fact that you are brand new. Instead, think about all your own personal experience and knowledge. Really reflect on what you bring to the table and what benefit you offer your clients. Let me assure you, there is a lot, you just have to take the time to delve into this. If you don’t have at least 10 things on your list, you still have work to do!
Consider Your Costs – One of the things I love about the personal concierge industry is that there are relatively few establishment costs. If you have a phone, a computer and a car, you can start. Actually, if you have a smart phone, you don’t even need a computer! More than likely you will already have these things. However, you need to think about present costs such as petrol, insurance, printing, website hosting, phone calls…….as well as future costs such as replacing your computer or hiring staff. All of these things need to be considered when looking at your costs. Surprises happen and it’s best to over estimate your outgoings when building this into what you will charge. If you’re wrong, you’re simply going to earn more!
Don’t Undercut your Competitors – I always tell people to be wary of setting their price purely based on their competitors. Or rather, don’t automatically charge a touch less than what your competitors are charging because you think you are either less experienced, or will get more customers. It is unlikely your clients are basing their purchase on price, rather they want to feel comfortable with the person they are outsourcing to. Also, you need to ensure you are perceived as offering a quality service. A low price could imply a low level service. Price cutting is generally not a good pricing strategy, in any service industry.
One of the best ways to evaluate the suitability of your pricing is to think about what hourly rate your ideal client is earning. Let’s say it’s $100 per hour. If you charge $60 per hour, doesn’t it make much more sense for them to pay you to sit and wait for the phone company, rather than them taking time out of their work day when they could be earning $100 an hour. They would be losing $40 per hour simply by not engaging your services!
Now, I’m not saying you need to charge $60 per hour. Nor am I suggesting you go and find out what your competitors are charging and automatically charge more. The main message I want to give you is, once you have finished all your research, calculated your costs and identified your ideal client, when you set your price based on the facts, don’t look at that number and think, “no, I couldn’t possibly charge that!” and then halve it. You came up with that number for a reason. Either stick with it, or, if you feel really uncomfortable, consider dropping it 5% or 10%. But please, please, don’t price yourself too low!
Be realistic, and value yourself. What we do as personal concierges is amazing and deeply valued by our clients. Charge what you’re worth. You’re worth it!
Needing even more support? Get direct access to Abbie, and work with other personal concierge business owners to nail your business pricing, as well as identify your ideal client, and grow your business. Join The Personal Concierge Mastermind today! Or, take a look at membership to The Concierge Secret Society including a 35 minute training video and accompanying workbook. Get immediate access by joining The Concierge Secret Society plus access to all the amazing resources inside.
Abbie Allen is the founder of The Concierge Society, as well as Lifestyle Elements and le Porter. She started Lifestyle Elements in 2004 at the age of 23 and now operates internationally from her head office in Adelaide, South Australia. She was the 2014 Institute of Concierge and Lifestyle Managers Association Golden Key Award winner, as well as a finalist in the South Australia Telstra Business Women’s Awards in 2012. She works with her husband Tim, and they have three daughters. If you handed Abbie a brand new book, a glass of red wine and some chocolate, plus the time to enjoy it, you would have made her day! Have you joined our free private community? Click here now!