What should you charge?

Published: Wed, 03/23/22

My wife woke up sick on Monday and sighed, "I don't have time for this! I have to teach our Food Entrepreneur Accelerator tonight!"

"What's the topic?" I asked.

"Pricing and cost structure," she said, "none of my employees are comfortable teaching it..."

I chuckled and offhandedly remarked, "need me to do it?"

To be fair, I meant it as a joke, but that's how I ended up teaching a class on pricing and cost structure to a bunch of food entrepreneurs on Monday night.

I wish I could dramatize it and say that I was sweaty with stress and hyperventilating into a paper-bag before the presentation, but I helped her develop the curriculum so I was already fairly fluent.

The most intimidating thing was actually teaching in front of some of the mentors we asked to join us for the breakout sessions because some of them were MY former mentors and business coaches so I had to be on my A-Game.

However, it reminded me that the most common questions I come across in forums and Facebook groups is this:

“What should I charge for [insert what you do here]?”

And you’ll see everything from the hot-shots charging thousands of dollars to the

newbies charging $5/hour...

And of course, somebody will inevitably post this gif:

And if you’ve read those threads, I bet you’re still just as confused as before because you still don’t know what the real answer is.

You may have more ideas, yet you’re still left with the same question:

What should I charge for MY WORK?

The truth is...there’s no right or wrong answer.

Charge too low and you’re stuck with low-quality clients that make your life a nightmare.

Charge too high and nobody will hire you and you can't even start your career.

So where is that sweet spot?

That sweet spot where you get to wake up and work on things you love while making an income that supports you?

It varies for everybody because everybody's economic situation is different. Some people can easily get by on $50,000/year whereas some people need six-figures just to make ends meet.

But when you're trying to price your products and services, there are three ways of looking at it:

Cost-Plus Pricing: Where you estimate the cost of producing a product or fulfilling a service and add a margin. Unless you can command high margins, this will eventually eat up all your profits.
Competition-Pricing: Where you look at what all your competitors are charging and you price a little lower to be competitive. This is a bad idea and results in a race to the bottom.
Value-Based-Pricing: This is where you want to be. You create an offer that's unique based on the value that you bring to the customer.

Value-based pricing does take more work, but it's ultimately a more profitable way of doing business, regardless of what industry you're in.

My latest book, You Get What You Give, spends a lot of time talking about value-based pricing and the mindset of running a business that makes both you and your customers better off.

It's only $4.99 and you can get it here: www.YouGetWhatYouGiveBook.com

P.S.

If you're not interested in business and just want to chill around the house and eat cookies all day, I also run a food business that sells unique mesquite flour chocolate chip cookie mixes .

Use the coupon code audioissues to get 20% off your first order right here.