Dear Preston: What Are Your 10 Commandments Of Pricing?
December 30, 2014
To say that this was a busy year would be a gross understatement. My staff of five could hardly keep up with the workload, much of it resulting from new clients. Imagine my shock when I met with my accountant and she announced that we did not show a profit. What am I doing wrong?
Shocked and Confused
Dear Shocked and Confused,
First, let me tell you that I have been there. As an artist, I imagine that you were so excited about the new work and having the opportunity to create new designs for your clients that you forgot to ask the most important question in business, “Am I making money?” Though I have been in the business for over three decades, I still struggle with avoidance. At times, the artists takes over and I just want to create great designs and make my clients happy, not focus on my profit margins. Unfortunately, to run a successful business (and have the opportunity to meet and please more clients) we must balance both sides of the equation.
Bottom Line: You’re not charging enough.
Being this is something I feel many artists struggle with, I would like to share my 10 Commandments of Pricing:
Review Your Profit Margin Every Three Months: It might be easier on the mind to procrastinate and do it annually, but then it’s too late to do anything about it.
Do Not Psych Yourself Out: Just because everyone cannot afford you does not mean you will not find clients who can.
Do Not Undervalue Yourself: Make a decision not to lower your prices to the absolute bottom line to get business.
Expect Clients To Push Back: If no one has complained about your prices, it’s time to change them.
Choose a Market: You choose whether or not to be in the low or high-end markets. It’s comes down to how much you value yourself.
Understand The Why Behind Your Prices: Many times, I think “my client will never pay what I know it’s worth.” Most of the time, I am wrong. I believe this comes down to my explanation of the design and what is involved in creating it.
Push Yourself To Be Exceptional: An ordinary product is worth an ordinary price. Work towards outputting extraordinary products.
Value Time: The saying “time is money” is accurate. Be sure to include an hourly rate in your pricing.
Price Yourself: Do not concern yourself with the prices of your competitors. Each of us have our own sets of talents and run our own different businesses.
Learn To Say No: We should always try and accommodate the budgets of our clients, but there are times when we have to say, “I am sorry, no can do.”
S.C, The good news is that your clients love the product you put out. I will tell you what, in the new year, let us all make a commitment to to avoid avoidance.
We are all more inclined to share bad news than good. Let’s give S.C., a bit of encouragement: If you had a profitable year, please share your good news with us and tell us all how you did it.
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Re-Post Best of PB 2013