Inevitably, as I am working with business people the question comes up, “How much do I charge?” and remarkably the truth is, most businesses do not operate at an effective enough margin to achieve much more than a working wage, when entrepreneurialism should reward the savvy businessperson with an abundant lifestyle, not just a job.
In fact, if you’re an entrepreneur and your working for a living (basically trading hours for cash) you’re not doing it right. Although, if that is the lifestyle you want to live, then Bravo, more power to you. No judgment, here. Everyone gets to choose their own path and if that’s what you want, then, “Good for you.”
I attract business people to my practice who are intent on inviting more abundance into their life while offering products or services at a reasonable price. More often than not, what they think is reasonable is well below their potential. Much of this is due to fear. Fear of being competitive, fear of charging too much, fear of pricing yourself out of business, fear of loss, fear of change, fear of failure and most of all fear of yourself, your own worthiness to achieve your highest and best and reaching high levels of excellence.
When someone asks me for input on how much they should charge, just the asking of the question, “how much do I charge?” is a clear indication that they are charging too little. I’m serious. If someone asks me about their price point, I can guarantee that they’re probably generating half of the revenue they should be bringing in – minimum – and should be considering a plan to increase their business ten-fold.
Of course, making the leap to ten times your business revenue is likely going to take a more strategic approach than simply charging ten-times more for the same product or service that you’re offering today. No, you’re going to have to raise the value of your product of service ten times (or more) to reasonably achieve that feat.
The first fallacy in business is to assume that you can sell your product for a lower price and this will create competition for others in a similar business. If you choose this path, you are assuming that you can achieve higher volume sales while operating on a lower margin than your competitors.
In most cases (though not all) businesses who compete strictly in the low-pricing space are unable to compete long-term, and are less likely to break-through to the massive success they envisioned at the outset. When you’re operating on a tight margin, one wrong step could put you out of business. Without deep pockets, you may not be able to manage a misstep. On the other hand, if you are extremely well-funded, you may be able to weather the storm and achieve market domination (though this is very rare).
The Excellence Marketplace
You are far better off positioning yourself in the excellence marketplace, where high end products and services are offered to an exclusive clientele. Operating in the excellence marketplace, you are able to weather the storms that you may encounter along the way, and you are grateful for the lesser-priced providers of similar products or services for offering something of value to those who cannot afford your services.
If you encounter a potential client who is looking for a bargain price for you, your products and/or services, you can refer them to another provider who is better suited for their price point and expectations. You, your product or service is not for everyone (and if you tell me it is, we have a long way to go).
Let’s say you need to buy a new car, so you go shopping for the car you want and saunter into your local Mercedes dealership and select a C-300, an affordable entry level Benz. You love it and challenge the sales manager with your ability to get a Chevy Spark for a much lower price. (I will allow your common sense to follow this scenario to its logical conclusion.)
In any marketplace it is up to you to decide where you will position yourself in your industry. You can take the hard road and play in the excellence marketplace, or you can take the low-priced road in hopes that you might be able to survive in the long-run.
This is a decision that only you can make, and if it’s not too late, there is time for you to make adjustments and find the right marketplace for you to enjoy your future and all the best things this life has waiting for you; your reward for answering the call, whatever it may be.