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I’m often asked if there is a magic pricing formula.  Sorry … there isn’t one. 

However, I do have some opinions about pricing and how it should be set with an eye towards profitability.  Profitability means two things.  First, your price allows you to retain a reasonable portion of the money for yourself.  Second, your price should leave you emotionally happy and not feeling any resentment toward your customers about what you are getting paid. 

A lot of entrepreneurs run into a common problem when it comes to price setting: They ask themselves what they think customers will pay instead of evaluating what the result of their product or service is worth. And this method lets entrepreneurs avoid selling. But selling isn’t defined by whether or not your prices make it easy for a customer to purchase.

While this is a popular practice, it isn’t always fruitful.  You got into business to make money, right?  You have to think about your prices as a way to recoup expenses, get paid for the value you provide and take some money home.

Instead, pricing is a delicate balance.  You have to decide if you want to help a broad number of people or if you want to help a few.  You have to put a price on the invisible things you do to help your customers, such as writing follow-up emails or doing research to resolve their challenges.

The other way to look at price setting is to think about what you don’t want.  For example, if you had a free hour instead of coaching someone, what would you do with that hour if you could do anything you wanted?  How much is that hour worth to you?  My free hour is worth a lot to me. My prices are higher than most because that free hour is worth more than most are willing to pay to be coached.  But that is my prerogative since I only want to work with highly motivated clients. 

If you have a product based company, you might start to factor in the time you spend educating customers.  Especially if your sales cycle takes longer because your price is higher and you have to educate them on why.

The worst thing you could do is set your prices by what you think your customers will pay and then resent them for paying so little.  That doesn’t serve anyone. It’s also likely your customers will pick up on it and not buy from you again.  That is a huge waste of talent and energy.  It costs part of your spirit because you aren’t happy. 

Your price has to feel good to you. Your customers will gauge how they feel about the price based on how confident you are. What you broadcast energetically to your clients about how you feel about your prices is picked up on and sent right back to you.  Believe in the value they get and set your prices so you feel like you both got a great deal!  That is the magic price-setting formula.

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Julie Steelman sold her way out of Corporate America after generating over $100 million in revenue. She retired in Hawaii and now helps entrepreneurs build lucrative, soul-satisfying businesses from the inside out. Julie is known as the entrepreneur’s selling mentor and the bankability guru. Her book, The Effortless Yes, is now available on Amazon here.