Setting your prices might make you want to cry. But learning how to set your pricing for profit will give you the power to build a flourishing business! And I’m showing you exactly how to do that right here.
OH MY WORD, PRICING.
This one is all about the Money Honey.
Money is weird. You make it, you lose it, you gain it. You need it, can’t live without it, etc.
But when you’re just starting out in your business, one of the first things you need to know is how to price your offers.
My Best Tips for Setting Prices as a New Business Owner
Don’t charge based on what you’re willing to pay.
I am not my ideal client.
When I first started shooting weddings, I thought $400 was a reasonable amount to pay for a wedding photographer because I couldn’t imagine paying more than that for one myself.
Umm… $400 was barely going to cover my car insurance.
This tactic will hold you back and keep you at prices far lower than what you should be charging.
Don’t set prices based on your competition.
Market-based pricing is essentially the theory that you should charge what other people in your industry (at your level) are charging.
There’s a big problem with this! You have no idea what someone else’s expenses are. You don’t know their cost of living or bills.
You’ve got to know your numbers.
Understand Your Business
Before you set your prices, answer these questions:
- What am I selling?
- What do I do?
- What do I provide?
- What are people paying me for?
And listen, you’ve got to get over any limiting beliefs or self-doubt that pops up when you’re going through these. Be honest and vulnerable in your answers.
The Cost of Doing Business
To understand the cost of your business (not anyone else’s), answer these questions:
- How much do I want/need to make an hour?
- What are my monthly business expenses?
- What are my yearly business expenses?
- How much are my bills?
- Do you have a family?
- Do you need to match your current 9-5 income?
Get out of debt.
Don’t start a new business when you’ve got a bunch of debt. It’s just not a good idea!
You want the freedom to start something new, and debt is a major burden.
How to Set Your Prices
I’ve done the math, and all things considered, shooting a wedding takes me between 30-60 hours. That includes emails, phone calls, planning, drive time, actually shooting the wedding, editing, and delivery.
To set your prices, look at the number of weddings you plan to book for a year. Let’s say that’s 25.
50 hours x 25 weddings = 1250 hours
You set your hourly rate based on your expenses, which comes out to $50 an hour.
1250 hours (the hours you’ll work on the weddings you plan to book) x $50 an hour = $62,500 for your yearly salary
So when setting your package prices, you can use these numbers to set package prices that will allow you to reach your salary goal.
You would price your basic wedding package at $2,500 in order to help you make your goal.
You’ve Got the Power
Once you’ve set prices that make sense for your business, given your unique goals, expenses, and situation… you’re in control.
You’ll know how much money you’re bringing in, how close you are to hitting your goals, and where you’re losing money.
Having this knowledge will help you make smarter, better decisions and will ultimately help your business flourish!
