When I was a kid I used to cut lawns for money. Pricing was something that I, as a ten year old kid, wasn’t prepared for. My mother, who was also my pricing mentor, held the belief that when you provided superior service, good people would recognize that, and then pay you fairly for the value of your services. And so when I asked her how much to charge for my service, she would simply say, “do a good job and they will pay you what it’s worth.” But that rarely happened.
Don’t Leave Pricing Decisions to Fairness
I wouldn’t make much for a full day of work. That was extremely frustrating. Fortunately for me, fate intervened. I had a scouting function which prevented me from cutting one of my customers’ lawn. Since I couldn’t do it, so I asked my oldest brother if he would do it after football practice. He agreed.
Later that night, after we were all back in the house, there was a knock at the door and it was the customer whose lawn my brother had cut. She called him to the door, apologized to him, handed him a ten dollar bill and ask if he would come by Sunday and finish the job. I had never gotten more than $2.50 from the lady. I asked my brother what had happened.
Be Prepared to Walk Away
“Simple. When I started to cut her lawn I saw her getting into her car. So, I turned the mower off and went over to her and asked if she could pay me before she left. She agreed, and handed me $2.50. I told her that I charged $10.00. She nearly fell out and said she would never pay that. I explained to her how much work her lawn entailed and told her that I would do an excellent job, but wouldn’t cut it for less. I told her that my work was worth $10.00. She disagreed. So, I thanked her, gave her back the $2.50 and came home.”
“It was that simple?” I asked.
Hold Firm to Your Pricing Model
“No, it wasn’t. I hated walking away from her house. But you see, little brother, here’s the thing. I wasn’t going to let her take advantage of me. I do excellent work and it is worth what I charge. And I don’t back down.”
Don’t Give Your Stuff Away!
I learned a valuable lesson that day, one that I have taken with me all of my life. It is a lesson that I have used in my own businesses and in negotiating salaries and benefits. So, if you have your own business, be sure that you understand the worth of your services. Don’t just take anything. Know how to price your services so that you can account for expenses, taxes and other factors. Pricing your service properly is critical and as a result, your business will be better off for it. Don’t give your stuff away!
Educate Yourself on Pricing
There are countless articles on pricing if you do a little research through Google. One of the better articles out there is How to Price Business Services, on Inc.com. It’s a pretty comprehensive article that takes a more in-depth look into pricing your goods and services.
Also, the Small Business Administration offers many resources on pricing, among them, this gem of a video Intro to Pricing.
Get your pricing right and you’ll be on your way to profitable business results.
