I have owned and operated six start-ups, and except for six years, I have been self-employed my entire life. That says a lot since I’ve just celebrated my 60th birthday. I’ve been around, and I’ve seen how the market has changed.
In lieu of the fact that 70% of us do not feel we have enough money to retire, we are working long into our retirement years as compared to the generations before us. Americans in their 50’s and 60’s have the highest rate of entrepreneurship than any other age group. Clearly, more and more people are entering the small business market only to find it a little less friendly than they had hoped.
Money is tight and the competition is fierce. The consumer is weighing their options with incredible diligence. Price is the largest comparison made by the American consumer.
Many of the tried and true things about business ownership, such as: have a business plan, know your competition, create your brand, execute a sales strategy, all still hold true and are vital for success. The one thing that has shifted dramatically is the way business owners price their products and services.
When the economy gets tight, innovation is the name of the game. Being able to think outside the box has saved many a small business.
It doesn’t matter if you sell a service or a product, if you don’t price it affordably and competitively, your bottom line suffers. If you price yourself way below market value to attract clients, you may be cutting your own throat, as the bills still need to get paid.
In the past, many of us have lowered our prices in an attempt to attract the consumer, also known as ‘buying the business.’ Our mindset told us that it was just temporary. Not so. Most of the time a small business lowers its pricing on products or services, then they find they are unable to raise them for months, if not years, for fear of losing their customer base. Not the best method to stay on top of the crushing blows that a floundering economy delivers.
Rather than pricing yourself less than what you know you or your product or services are worth, come up with inventive ways which make you stand out from the crowd. Give your customer compelling reasons to do business with you.
PayPal offers a subscription service, whereby you can offer your clients as many months as you deem necessary to pay for your product or service. A smaller bite out of their wallet, and a steady income stream for you. If you are a service oriented business, once you have engaged your clientele in the subscription mindset, it is likely they will renew after the term.
It would also help to offer incentives to your pricing. In other words, you may be a bit more than your competition, but you offer A, B, and C, which makes your value twice as much. Everybody wants a deal. Present your product or service as a way of offering a deal your consumer can’t refuse.
The bottom line here is, as self-employed people, we typically base our income projections on the price and estimated quantity of what we sell. It’s a point per purchase mentality. What we need to be thinking about is the bigger picture. Charge the same (maybe even a bit more) but make it an affordable venture for your consumer, stocked with options and benefits for them.
As my grandpa would always say, there is more than one way to skin a cat. In these times of economic uncertainty, we need to use our imaginations to insure that we are receiving fair compensation for our product/service, yet we remain competitive and offer practical options to our customer base.
I have a consulting business. My hourly fee is $200 per hour. As the consumer landscape changed, my methods of billing had to change with them. Fewer and fewer people are able to justify and afford an hour or two of my coaching services. Once I began a program offering extended consulting, webinar participation and a monthly pay plan that extended into a yearly subscription, my sales soared and my client base is satisfied and loyal.
Toto, we are not in Kansas anymore. Best we figure out the best way to get what we need to stay in business while simultaneously growing our client lists. After all, it appears we will be working for a lot longer than we had anticipated.