Does Your Business Go through Feast-Or-Famine Cycles? Your price structure may be at fault…

December 11th, 2007 | by Erin Banister |

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Many small business owners find their business goes through ‘feast or famine’ cycles yearly. This is increasingly difficult to cope with, especially if you’re trying to build a business in addition to a full-time job. While there can be many culprits of this feast-or-famine cycle (customer service that isn’t-quite-there, seasonal products, etc), there may be a cure.

As James D. Brausch discusses in his article, “The $200 Horse,” we oftentimes devalue our services.

How Do we Devalue our Services?

To be frank, it’s easier for us to price our services low because there’s no need for justification. Think about it: it’s much easier to sell coaching services at $75 per session than it is to sell it at $300 per session. $300 is a sizable investment for some people, and we feel that people won’t pay the price. This however, is dead wrong.

You can, and should, offer better results at a higher price.

Some entrepreneurs have difficulty grasping the value of an eBook, pricing their eBook at $5 or $10. Then, when they learn that some eBooks go for upwards of $110, they ask, “How does a book sell for so much?”

It Solves a Problem. Like that eBook, you too will solve a problem. And, your issue is not finding people who will pay your fee, but rather people who want the exact results you’re offering. Sure, you’ll have to do some marketing, but I’d much rather market more and get clients aligned with your results, then having 50 clients who don’t match my services.

It’s only when you understand the type of customer you want, will you understand the value of your pricing. In fact, often times you don’t want the type of client who is only willing to spend $50 for an hour of your time. You want the client who is willing to spend $300 for an hour of your time, because they know how much your service is worth or how much you help them.

As James said:

His grandpa had to sell a horse fast. It was a great horse, but his situation required that he sell it… and fast. So he priced it at $200 and told as many people as he could about it.

It didn’t sell fast. In fact, it didn’t sell at all.

He finally started to ask people why they weren’t interested. It was a great horse. It was a great price. Why didn’t it sell instantly?

He received the same answer over and over. The prospects just weren’t interested in a $200 horse. Who wants a $200 horse anyways?

He changed the price to $1,000 and sold it instantly.

If you sold your services for $300 an hour instead of $50 and hour, how many clients would you need to fulfill your monetary quota? How much more time would you have to do other things, like create your products and write your ebooks?

Maybe $300 really is too rich for your market. It’s up to you to find that ‘perfect pricing’.

In the end, you’ll have better clients who will be more loyal and understand the value of your services. Also, you’ll have more time to do other things, like create a product, write an ebook, or just spend time with family.

Tags: Business, clients, entrepreneurs, pricing, results, service pricing

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