The 5 Things I Did To Make My Pricing Model Work For Me
Pricing is the one of the most important strategic decisions that a business owner can make, and it’s one of the topics that I get asked about most frequently.
With the right pricing strategy, jobs are profitable, staff provide a healthy revenue stream and ROI, we have financial freedom and a healthy work life balance, and we feel content, valued and excited by the opportunities we face. Sounds idyllic, doesn’t it?!
On the flipside, the wrong pricing strategy (or none at all), can leave us feeling like a hamster on a wheel – lots of churn for no gain, unable to successfully grow, financially hamstrung, working all hours, feeling overwhelmed, overworked and undervalued, and anxious about challenges looming in the distance.
Believe me – I’ve experienced both of these situations. When I realised it was time to get off the treadmill and actually move forward, I took a long hard look at my pricing strategy and implemented the below five things to turn my business around.
5 Things I Did To Make My Pricing Model Work For Me
- I ditched Hourly Rates and moved to a Fixed Fee Pricing Model for all regular and repeatable work.
- I stopped offering payment-on-invoice terms and moved to Direct Debit payment options. I make this expectation clear from the get-go and of course include it in my proposal, letter of engagement, and terms. If a client refuses, I have been in the game long enough to know this is an early red flag, so I politely thank them for their time, and move on.
- I moved regular and repeated work to upfront payments. This may be weekly, monthly, quarterly or even annual payments depending on the work and client.
- I learnt the hard way that Rescue Jobs often resulted in delayed payments, payment disputes or flat out non-payment, so I now bill all Rescue Work upfront. If it is difficult to determine how long the Rescue will take, or what is involved, I bill in upfront blocks, e.g. 10 hour block, 20 hour block.
- I introduced an upfront onboarding fee for large clients or complex projects before commencing work. This onboarding is detailed in the scope of works to cover things such as research, exploratory work, initial set up, and systems integration/preparation. (And with more compliance on it’s way with new Proof of Identity requirements, it justifies further the need for an onboarding fee.)
At the time, I remember thinking that these changes were so brazen – how could I possibly think my services were so valuable that I could demand such things?! Then I thought about all the other industries that operated like this – software, hospitality and retail, IT, many service based and consulting industries. I also realised that pricing and trading terms had evolved and tightened across many industries, and that what I was proposing was actually becoming the norm.
More importantly, I came to understand that I had in fact been my biggest barrier to Pricing for Profit. My lack of confidence, unwillingness to back myself, and good old imposter syndrome had both clouded my judgement and stopped me from taking action.
So, I took my new found confidence and rolled out my new Pricing Strategy. I transitioned existing clients and onboarded new clients according to the new terms. There were some honest conversations, though most clients understood – it simply was no longer viable or acceptable to continue as we had.
I found that the few clients who did object were D-class clients anyway – ie not very profitable, not enjoyable to work with, or had a few alarm bells ringing in the distance. And it was time to move them on. My Pricing Model soon became one of my most valued tools in determining whether a prospective client was going to be the ‘right’ client for my business. And I was sticking to my guns – I was only taking on the ‘right’ clients from now on. Letting go of those D-class clients was a huge cleanse and allowed space for higher value, A and B-class clients.
After adopting my new Pricing Model, I shifted the whole trajectory of the business and my cash flow completely turned around. Better yet, I had a new found confidence in myself, in the value I provided to my clients, and in my own capabilities as a business owner. And, I had a deeper appreciation of and mutual respect for my clients, because I knew they were the ‘right’ ones and were worthy of my business.
If pricing strategies, or even knowing how or scope and price is holding you back….head on over to Bookwiz Academy to find out how we can help you!