How Your Service Pricing Changes When You Choose to Have a Team
Episode 658: Show Notes
For those of you who have reached the point of hitting your first or second six figures and are beginning to tap out of what you personally do within your business, there’s a conversation that needs to be had. A lot of people decide to ditch their current offers for an entirely different set of offers because they think that’s the only way to move up, however, we think pricing is a great opportunity to expand. Oftentimes, the clients that work with us in the Incubator can work with fewer people and make more money, if they’re priced appropriately. But something we don’t see happening as much as it should, is people moving to a premium pricing model to set them up to grow their team. Tune in to discover how to grow your team ethically, calculate appropriate service pricing, and why you might be pricing inappropriately, to begin with!
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How to Grow Your Team Ethically
An unethical trend to avoid is hiring before you can afford to! So many people find themselves in a position of paying high salaries when their company simply isn’t making enough money to justify it. We know this is generally done with great intentions, but it’s ultimately causing harm to you and your team! Before you start scaling a team or even thinking about new hires, you need to address pricing.
Calculating Appropriate Service Pricing
People often price according to what they think is right, without looking at the hard facts. We’re currently developing a new calculator for our clients that accurately takes all costs into account. Your company is not free to run and, if you have staff, you have costs. These include salaries, tax costs, benefit costs, and other overhead costs to sustain employees. You may even have rent and insurance costs, as well as virtual ‘wear and tear.’
When calculating pricing, you need to factor in your time and the costs of running your business. We suggest you should be making three or four X your costs on any given project. If you’re pricing without a multiplier, you’re literally only getting paid when you’re actively clocked in to do the work for a client, and that’s simply not sustainable. When your clients are your income, they don’t just pay for their project, they pay for you to run your company. You have every right to include your costs in your pricing!
Otherwise, you’ll land up taking on multiple undesirable clients, which costs more and leads to team burnout. You need to bridge the gap early, even if you don’t yet have staff! Start working with the caliber of clients that will pay the premium price point, so when you are ready to delegate more, your systems are in place.
Why People Are Pricing Inappropriately In The First Place
We have all been there and there’s no shame in it, but your good intentions to make your services accessible might be the very thing that’s letting you down. By doing so, you have likely set your pricing so low that you are struggling to pay yourself, let alone bring in a team or cover the expenses of a growing company. Let’s get you paid so you can afford to work on passion projects!
For us, our premium price point hasn’t changed much over the past seven years, but the required minimum, because we have a team, has changed radically. Working premium from the get-go does more than just line the pockets of your business; it builds self-belief and the skills required for long-term success. Apply for the Incubator today so we can do these calculations for you and ensure you and your business are set up to thrive for the long haul!
Quote This
If you’re pricing without a multiplier, you’re literally only getting paid when you’re actively clocked in to do the work for that client.
Highlights
How to Grow Your Team Ethically [0:06:28]
Calculating Appropriate Service Pricing [0:08:20]
Why People Are Pricing Inappropriately In The First Place. [0:18:17]
ON TODAY’S SHOW
Abagail & Emylee
The Strategy Hour Podcast
We help overwhelmed and creative entrepreneurs break down their Oprah-sized dreams to create a functioning command center to tame the chaos of their business. Basically, we think you’re totally bomb diggity, we’re about to uplevel the shiz out of your business.
