Panic pricing is not a great idea.
A while ago I had a very talented music producer in one of my workshops, he had the skills, the following and the set up but his business was not making him a steady profit. He had a family to support and he was feeling panicky about turning down work and as a consequence had a very slapdash pricing system. Some people were paying $100 bucks an hour, some $200, some $60, and some he was charging as low as $25 an hour. When I questioned him about this his answer was, “I’d rather do producing work than mow lawns.” And my response was, “Mow lawns.”
Having pricing that’s inconsistent makes it very hard for you to build credibility around the value of your product, and I am all about creative industry professionals, communicating with confidence, their value.
So here are three reasons why you really need to ditch the pricing panic:-
1. Customer Loyalty
An inconsistent price does not help you build a loyal customer base. If some people are paying twice what other people are paying, with no clear rhyme or reason, then the high payers are going to feel pissed off. Even if what they’re paying is totally worth it, the fact that someone else is getting the same products for so much less is going to tread on some toes. It’s also very confusing for people. If they’re trying to budget or if they are making a decision based on price, then how are they supposed to know whether you’re the right fit for them? Picking a pricing schedule and sticking to it is very important. If you feel uncomfortable about raising your prices, start at a lower base price and call it an introductory rate, you can always strategically raise your prices down the track. Or vice versa, start high, and if people aren’t willing to pay then drop further down the track, or better still keep the price static but add more value.
2. False Economy
Charging $25 an hour for a premium service that costs you lots of money to provide, and is a result of specialist training, skills, and talents, is a false economy. You are better off mowing a lawn for $25 an hour and sticking with a steady $100/hr (or whatever else is right for your skills and market) for what you’re doing. Suddenly one hour of what you love is making you the same as mowing four lawns, you may get less hours work but your bottom line stays the same. The fact is, you may risk losing certain customers but chances are you’ll gain customers too. Customers who believe that what you’re selling is worth the price tag. Hang tight, a new pricing structure might take a while to catch on but it’s worth the time investment.
3. Be Part of The Revolution
The Arts is a valuable commodity. Your particular creativity can’t be bought out buy technology, outsourced or automated. As a creative you have something special to offer, a spark of magic and that’s worth a price tag. So please, put that price tag on and be part of a revolution toward communicating the value of creative product.
And just to let you know, with some clever pricing and some strategic business tweaks, the lawn mowing producer actually didn’t end up needing to mow any lawns at all and his income tripled within only a couple of months.