Finding the perfect price for your online services can feel like a you’re playing a guessing game.
Should you shoot for the moon with an expensive package and see if anyone bites? Should you aim for a lower, entry-price offer to gain traction? Or do something else?
If these are questions you’re asking yourself, it means you’ve been winging it… and that’s no way to run a successful business (in fact, it can totally backfire).
When your prices are set the right way, you confidently talk about your services, clients are thrilled to pay what you charge, and your bank account grows effortlessly.
So how do you price your services with confidence no matter what stage of business you’re in?
I have a simple pricing strategy that guarantees you’re charging the right price for every offer.
The awesome thing about this approach is that it provides a straightforward way to continually improve your business and sets you up to confidently raise your rates over time.
Whether you’re a newbie or old pro, if you follow this approach, you’ll nail it every time!
How to Price Your Services
When pricing your services, you must stop guessing and you must start evaluating.
To do that, you must price your services according to what I call your “lowest common denominator.” Here’s what I mean…
When you’re just starting out or have only been in business for a few years, there are four foundational skills that you’ll need to master in order to succeed online:
- Service skills
- Content quality and consistency
- Customer experience
- Marketing skills
To determine how much you should charge for your services, you must evaluate your level of expertise in each skill area, then price yourself according to the area in which you’re the weakest (your lowest common denominator, or LCD).
Click to TweetNot sure how much to charge for your services? Jenny Shih shares her simple pricing strategy.The Lowest Common Denominator for New Business Owners
If you want to make money, have satisfied clients who are thrilled to refer you, and a solid reputation in your industry, you must start by pricing your offers based on your lowest common denominator.
Pricing yourself according to your weakest skills may feel like a tough pill to swallow, but it helps you get more traction faster, and ultimately create the success you want.
Please, avoid the temptation to deviate from this even if it makes you nervous. And remember, you can and should raise your prices as you gain experience. (More on that in just a minute.)
Once you get that the LCD approach is the way to go, the next question becomes, how do you determine your lowest common denominator?
We’re going to walk through each foundational business skill, so you can see exactly how to master each and determine where you need to grow AND price accordingly for where you are right now.
Service skills
If you’re a newly certified coach or a seasoned business owner who is pivoting to a new business model or offer, your service skills are your lowest common denominator.
In order to price at a premium level, you must gain more experience by working with as many clients as you can and solidifying your offers and your expertise.
This means you must start low and slowly increase your prices as you uplevel your expertise and prove that you can create stellar results for clients (or hit your next LCD).
Content quality and consistency
If you inconsistently blog or rarely communicate with your list, this could be your LCD.
Although list-building, blogging, and writing newsletters might not feel like the most sexy side of business, it’s vital to establishing your expertise. The pros you love provide valuable content regularly, and you must do the same if you want to establish yourself as an expert (and price yourself as one).
Customer experience
Ooooh, I love this one. Too many business owners completely ignore the customer experience, and it hurts their business. (Don’t be one of those people!)
A poor customer experience can be difficult to diagnose because, often, your clients don’t report their frustration.
Here are a few signs that customer service might be your lowest common denominator:
- You lack a process for tracking and onboarding new clients.
- Clients email you confused about what’s expected of them.
- Three-month packages stretch to four, five, or even six months because of poor scheduling.
- Your clients can’t keep track of the worksheets or guides that you create for them.
- You don’t have a system in place for gathering client testimonials.
It takes time and practice to iron out a solid customer experience, but upleveling your prices requires you nail this one. (Hint: It’s way easier to improve your customer experience when you work with clients one-on-one.)
Online marketing skills
If you’re new to running an online business, and even if you’re an experienced therapist or have a thriving offline business, your online marketing skills are likely your lowest common denominator.
If you don’t know how to speak to your clients’ language, confidently and consistently get the word out about your business online, or keep your website up to date and attractive to target clients, then this is definitely your LCD.
If this is you, start with a bite-sized offer, work on writing great copy, grow your list, and begin to promote yourself on social media until you uplevel this so it’s no longer your LCD.
Click to DownloadHow to Create the Perfect Bite-Sized Offer for Your BusinessWhen to Raise Your Prices
Once you identify your LCD, price your services at an appropriate level.
But I know, you don’t want to stay there forever! That’s why the next step is to focus on upleveling that specific area of your business. Once you’ve done that (with great results), you can raise your rates.
Then you’ll run into a new LCD and focus there. Then… you guessed it, you can raise your rates and identify your newest LCD. And on and on.
This means that the most important thing to do is focus on improving your lowest common denominator, whatever that happens to be.
As you do, you’ll raise your prices to match (that’s your new lowest common denominator!) and continue doing that month after month, year after year.
Let Me Have It
Okay, let’s hear what you think.
Do you get stuck when it comes to pricing your services?
Does the thought of pricing yourself according to your lowest common denominator frustrate you?
Does it feel like a fair way to evaluate your rates?
Give it to me straight! Leave a comment below.
Hmmm. Excellent stuff Jenny. When I first scanned this I thought it would be my marketing skills but after sitting with it I think it’s the customer experience. The customer gets treated like gold, but I don’t have everything automated and systematized and I think I’m holding myself back (emotionally, energetically) from upleveling because I’m not ready to handle it. Definitely highlighted the next steps along my path. Thank you!
I love that you so clearly see your next steps — that’s fantastic! Now that you know, you can take those steps and know that they’ll also naturally lead you to higher prices. Love it!
Valuable insight as always, Jenny. And perfect timing. I’m waffling on pricing my services and reading a lot of different takes on it, but not like this.
It does make sense to evaluate my business and set my prices according to LCD. I’ve only been looking at my Service Skills and trying to set my prices by looking at competitors with similar services. After reading this, I realize my service skills are not my LCD, it’s either my Content or Online Marketing skills that are my LCD. They are close, but I think Content would be the lowest LCD since I’ve learned a lot and have been applying the Online Marketing techniques you mentioned. I have some work yet to do in the marketing area, but I have not put a consistent content strategy in place at all.
With all that said, when it comes to putting that number on my website that I’m charging for my service, should I be looking at competitors who are doing the same quality of work as I am but who have their ducks in row as far as their Content and Marketing go and then pricing lower?
For instance, there is one person who does exactly what I do for Web Design and our work is comparable, but she is amazing at content and online marketing and charges a premium price for her services. If I’m understanding you correctly, I would charge less for the same service until I uplevel my game to be on par with her or other peers who are mastering content and marketing and then I would charge a higher price?
I guess I’m still not sure how to find the number from the LCD.
Thanks, Jenny!
Great insights and good questions! Pricing is a tricky one, isn’t it? This post is just one facet of pricing, certainly not the whole kit and caboodle.
Personally, I’m very hesitant to ever price compare. I feel like it’s our jobs to differentiate what we do in how we do it and deliver for our clients. Sure, you can say, “Take their price minus a bit because I’m not as strong in X area.” That’s one way to start. But you also need to trust yourself when it comes to pricing. What feels right?
Find the sweet spot between:
* What can you confidently SAY you charge
* What feels like you’re giving people a phenomenal service for what they’re paying
* What makes you feel a little bit like a kid in the cookie jar, getting away with something that’s not really bad
When you’re creating something great, can confidently state your prices, know that your client is loving what they get for their investment, and you feel awesome about it — that’s when you’ve got the right price.
Jenny, yes, pricing is tricky, but this post and your response to my question is very helpful in finding clarity. I have been working hard to differentiate myself and feel like I’ve come to a place where what I offer is unique and different from my peers – and way more valuable than just a website. I love what you say about feeling good about what I am charging and being able to feel confident saying it. I also love the LCD concept because it gives me the benchmark AND the way forward when it’s time to raise prices. Thanks!
Hi Jenny,
Thank you so much for this. When I asked my teachers what to charge, they would say, what price feels comfortable to you? That just didn’t leave me feeling confident when I picked an ideal number. Then other business coaches always say to raise your prices. But now I feel like I’ve been asking for too much as a new coach and I’d feel better lowering my prices, hopefully allowing more clients to afford to work with me. I need the experience before I can feel confident charging higher prices and I’m totally down with having a plan to raise them over time as I gain more experience. Right now, I’m feeling stuck, like I’m asking for more than I deserve, because I have more to learn. It seemed like almost all the categories could be LCDs. So my question is how do I successfully maneuver lowering my prices to get going? New Year’s discount? Honesty? I’d love to get your input because I want to be coaching, so I want to figure this out.
Thanks!
Jessica, Trust your instincts. Based simply on what you wrote:
* “I need the experience before I can feel confident charging higher prices”
* “I’m asking for more than I deserve”
I agree with you that you should lower your prices. It’s okay if your prices make you feel a TINY bit uncomfortable, but they shouldn’t make you feel out of alignment. Prospects can feel when you’re not confident with your pricing and that will send a lot of people running away.
When it comes to lowering your prices, just lower them. I promise you that pretty much everyone won’t even notice. And those who do, if they ask, you can simply say, “I wanted to be a little more accessible to folks, and decided to temporarily lower my rates to make that happen.” Don’t explain yourself before you need to. Just do what you need to do!
You’ve got this!
Oh my! I am transitioning from an off line therapist to online coach. Have complete confidence in my old model but am probably weak in all four areas in my new venture. Which area do I focus on improving first ?
Great question, Diann! Always start with your lowest common denominator. In my experience, for therapists moving into the online space, marketing is always their LCD because how you market online is VERY different from how you market offline.
This means you need to work on how you talk about what you do, how you package your services, and how you get yourself in front of new audiences. (Honing a clear message, a compelling offer, and creating consistent outreach.)
I think I saw you in the MIWO Workshop (Yay!), so stay tuned for Lessons 2 and 3 because I’ll touch on your unique challenges in this area and what to do about them. I think it will get you moving on the right course.
I’m trying to see how I can relate this to my photography business.
I’m trying to see how I can relate this to my photography business.
So many photographers in our industry are charging so little
And my coach says to me two things
My pricing needs to match my service – so if I’m offering a really high end service then my pricing should reflect that
And that my prices should not be less than minimum wage
Now my work is not amazing and I know I need to work on number 2 content
My customer service really is my strenght
but my marketing skills are really poor
Should I then decreate my pricing to be below the minium wage, like many of my competitors are?
Or would be it work that I’m higher dispite being poor on 3 out 4 areas because the value I offer in customer services is high?
I agree with your coach that your pricing should match your services and you shouldn’t charge lower than minimum wage because then you may as well go get a job!
There’s a lot that goes into pricing. Check out this article which is a compilation of many of my posts on pricing-related topics: https://jennyshih.com/2017/07/ultimate-pricing-guide/
Focus on the ones that tare most relevant to where you are right now which might be building confidence and getting your first few clients.