The Profit Scale

Pricing—Myths, Mistakes and Mindset - Ep. #21

Episode Summary

Salutations, friend! It’s RJ here. I’m delighted to share with you that in today’s conversation, or should I say, Coin-versation, I will be sharing a clip where we talked about pricing as one of the biggest challenges that entrepreneurs face. Again, in these monthly Coin-versations, we hold money-related business discussions geared towards creating a safe space for Black, Indigenous and People of Color (BIPOC) communities to share experiences and to learn from each other.

Episode Notes

Salutations, friend! Today’s Coin-versation is yet another insightful discussion where we talked about the pay disparity between women and men, as well as its prevalence amongst BIPOC entrepreneurs, and demystified some of the pricing myths, mistakes and mindsets. 

As you listen to this episode, we urge you to think about how this topic applies to your business, and reflect on your beliefs and practices to ensure that we advance our businesses from the same viewpoint, especially in our pricing.

Links

Episode Transcription

Episode 21 - Pricing—Myths, Mistakes and Mindset

Introduction

Salutations friend, and welcome to an episode of The Profit Scale. This is the podcast for consultants, experts and service providers who are either already serving corporate clients or transitioning towards it. This is the place where you can find tailored solutions to help you close your first, next or biggest client yet.    

I'm your host and Income Strategist, RJ Connell, and if you are looking for expert strategies to help you build on your existing success, then you, my friend, are in the right place. Turn up the volume and lean in, 'cause we are about to get started.

Episode Content

Salutations, friend! It’s RJ Connell here, your favourite Corporate Consultant. And what do you know? It’s that time again. We recently held our monthly August Coin-versations on the Myths, Mistakes and Mindset around pricing. 

Pricing is one of the biggest challenges entrepreneurs face, whether you are serving business-to-consumer (B2C) clients or business-to-business (B2B) clients, knowing how to charge for the full value of your service is a struggle that we see with so many of our clients here, so we decided to talk about it, to shine the light on the false facts and to challenge the mindset and the taboo that surrounds it.

In today's episode, we will share a clip from our Coin-versation on pricing to give you just a glimpse of some of the powerful information that we shared. As usual, you can catch the full replay on our website at rjcconsulting.com/cvreplay, or click the link in the show notes below to access the full video.

Before we jump into today's conversation, we are opening up 10 spots in September to support you in your pricing through our Priced for Profit package. This package provides you with industry-leading training on one of our signature frameworks—The Pillars of Pricing—to help you understand what factors go into your pricing so that your business can thrive and not just survive. It includes a one-to-one pricing consultation to help you make sure that you are priced for profit and not just revenue.

We have limited spots available so we can serve both you and our new Systems That Scale clients to the highest degree. If you are ready to stop under-charging and under-paying yourself, then join the waitlist using the link in our show notes to find out when our scheduling calendar becomes available, first access will be given to those on the waitlist and it's first come first serve. Join the waitlist now, so you do not forget.

Alright. Let's get started. 

We always start our Coin-versations with statistics to show how the research supports the discussion we are about to have, and this week was no different. We shared some statistics about the pay disparity between women and men that I'm going to share with you now before we jump into the clip to give you some more context on our discussion. 

These numbers represent data from this year, 2020, and studies conducted by PayScale show that women, in general, earn $0.81 for every $1 earned by a man. This disparity alone results in a loss of income of $900,000 over a 40-year career which means that women earn nearly $1 million less throughout their career for doing the same work as a male. This is staggering. 

The statistics get worse as women progress in their professional careers. The same study showed that female executives earned $0.61 for every $1 earned by a man which means that the pay gap for women increases as they progress in their careers. 

So what about women in business then? Well, the statistics are not much different. The average women-owned firm generates average annual revenue of $142,000 while the average male-owned firm generates average annual revenue of $474,900, which means that even when we start our businesses, we are still earning more than three (3) times less than our male counterparts. 

Considering that many of us started our businesses to create financial freedom, this is a huge problem. Although the statistics shared are mainly about women, the pay gap—both in traditionally professional careers and in entrepreneurship—exist and are more prevalent amongst Black, Indigenous and People of Color (BIPOC) entrepreneurs. These are just some of the statistics we shared, and this is part of the reason we are having this discussion. So as you listen, I urge you to consider how our discussion reflects your beliefs and practices in your business.

Are there ways that you contribute to these statistics, and what are you doing to ensure that you do not become one of these statistics yourself? Wealth starts with knowledge, my friend, and that is why we hold these Coin-versations monthly. 

Now that you have some background information, let's jump in.

Alright. Well, thank you so much for being here. Welcome to our August 2020 Coin-versation. We are talking about Pricing—Myths, Mistakes and the Mindset. I'm excited about jumping into today's conversation and just hearing back from you guys. 

Mindset

The three (3) mindset obstacles as it relates to pricing are:

  1. Fear
  2. Confidence
  3. Scarcity

These three (3) pricing mindset obstacles are at the root of nearly every pricing challenge, especially as it relates to female entrepreneurs. So I want to dig into it a little bit more when it comes to fear. 

Fear as a pricing mindset obstacle is about worrying that people will not pay you or that you will lose clients if you charge at a particular level. It is not only about the fear that clients will not pay you, but also about the fear that if you charge at the right level for your business, services or products, they—even your family or friends—will perceive you in a particular way.

It encompasses the fear that you will not be able to make enough money. It is the fear that you will maybe go out of business or that you will not be able to keep money flowing because clients won't come to you. 

When it comes to confidence, it is a lack of belief that you deserve what you are charging or that your service is worth that amount. It is a lack of conviction that is, again, tied into worrying if people will pay when you charge at a particular level, and because you are uncertain of what is going to happen, you would rather keep it as it is or charge lower.

When it comes to scarcity, it is when you are thinking, "It isn’t enough for me to charge at this higher level." Rather than finding the people who can pay and need your service at that level, you are reasoning like, "Well, here are the people around me right now and are the ones available to me in terms of my business."

When we think that way, it might not be a conscious thought, but that is the premise of, "I have to get the clients that I have around me right now." It is having this mindset behind you that makes you think that you will not be able to reach other people, or there are no other people who can pay at your elevated price point.

I believe some of this is cultural, and we will get into that in just a few minutes, but when it comes to scarcity, it is like we have this mentality and tell me if this is just me, maybe it is, and that is okay—or was just me, not who I am now, but who I was. We have this mentality of never spending too much money. We think like there is a finite amount of money in our lives, and because of that, we remind ourselves of the following: 

We have this mindset of scarcity around everything that we do, which is not even just strictly related to business, so we associate it with our personal lives and the way we interact with money, in general. We are always looking at how little we can spend. We, as individuals, not our clients. We as individuals. So when we step into business, we carry that mindset forward.

Other people are always looking at how little they can spend because it is the way we think. We project our thought processes over our potential clients, and we structure our business in a way that has those limitations without even knowing it.

When we do attract the clients that we set up our business to entice, which are the clients who are always looking at how little they can spend because it is what we are putting out there, we create almost this self-fulfilling cycle of, "Well, these are what my clients are always thinking." 

When that is the way we are presenting our service, that is the way we are gearing our business, and realistically, it is still because of our mindset. We have not done the work to change and shift it yet, so we are attracting people who are at the same level of thinking. It is not necessarily their fault. There is still work that we have to do. 

So we are now going to cover the myths and mistakes. 

Myths

When it comes to pricing, a few of the most common myths—two of the biggest ones—in my opinion, and in my research as well, especially for women, is charging what you are worth. This is a huge one, and I only put two on here because this was enough to make sure we spent some good time here, on these two ones alone. So the first myth is charging what you are worth. 

Let me help you understand why I put this as a myth. When it comes to pricing, there are a lot of times where that phrase is common. Charging what you are worth has become very popular. We often think about what we value our services as, so we tend to price our services, products, or business from a personal perspective, from what we believe, and based on our feelings. The reason why I put charging your worth as a myth is because when we do it, we make the mistake of making what should be a professional matter personal. You will see that under the mistakes.

Rather than charging what you are worth, you charge for the value you add and not for the value you are. I want to say that again, you charge for the value you add and not for the value you are. You can never charge what you are worth. How can you value your worth as a person? 

If this is not a personal matter—it is a professional matter—we have to approach it as such because we are stepping into realms, again, where we are already earning significantly less than our counterparts. It means we have to handle this strategically. We cannot approach professionalism in business and price our products and services based on how we feel. 

When you do not have a pricing strategy behind your pricing, it is easier for you to kind of fall into that realm because your pricing has been based on how you feel. It is hard to quantify, qualify or even communicate the other factors that go into your pricing as opposed to what you feel, what other people are charging, or earning in your business, market, or industry.

Another myth is that people who say you are too expensive do not value your services. It is not necessarily true. Again, especially in the online world, there is this whole thing of charging what you are worth, which means requiring higher price points. 

Well, I am all for you collecting coins. It is why we are here today to help you do so. Not everybody needs to be charging exorbitantly high prices. It just does not work. If every car dealership was a Ferrari or a Lamborghini dealer, no one or just a few people would be driving. If there were no Walmarts and just Nordstroms, a lot of people would not have a lot of things. It does not work like that. 

Your pricing has to match your market, who it is that you want to serve and work with, and your position in your market. These two things have to align, so when it comes to people saying that you are too expensive, you might be too expensive for them, and that is not because they do not value your service. It could just be they are not the right people. 

Again, this is where we take it out of a personal perspective, look at it more strategically and say, "Okay. Well, that person does not align with my business, and that is fine." Then, we move on to find the right people for our business.

We have to understand that we need to be strategic in our pricing. The statistics we discussed at the beginning of this Coin-versation provide evidence that we are not being strategic in our pricing, and we have to change that because women are earning less than men in general. Black women are even earning significantly less than that. 

Mistakes

Another mistake is not educating ourselves and not having a pricing strategy behind what we are doing. All of those things play together, and that is part of the education piece. I'm sure you guys have taken a lot of online courses, business courses, webinars, yet pricing is the one thing I find, consistently, that nobody talks about from a strategic perspective. 

They give you strategies for marketing, Instagram, Facebook, and email list—all of these things—no one ever talks about pricing. The way that I like to say it is that so much more money was invested in your marketing than your actual money when your marketing is to earn the money.

Let's look at how we can change these things. 

When it comes to changing your mindset, there are a few key things I want to share with you. Understanding your circle of influence has a tremendous impact on the way that you see and interact with money, both in your personal life and professional life, as it relates to your business. Surround yourself with people who are doing better and are more educated than you, financially, which means people who are not scarce when it comes to investing, people who spend and share liberally, and who are willing to. 

I'm not necessarily talking about giving you free advice, but they operate in a realm and world where there is abundance, and that is their life and core belief. Having these people as part of your circle of influence is going to normalize the way that you think about money, wanting to earn more, and investing in your business in ways that you might not see other people around you doing in the same way. 

Having a circle of influence with people who will naturally pull you forward because they are already ahead of you is going to affect and help you change your mindset when it comes to money and change your practices when it comes to pricing as well.

The second thing that I would like to touch on is becoming conscious. I like to say, "Capture and correct the thoughts that do not serve an abundant life," so when it comes to the way you think about your money, spending, investing, how much you have or don’t have, I want you to listen to your thoughts. As you are listening to them, capture them.

Does this serve me? Am I thinking of scarcity or abundance? Am I thinking of what I don't have or what I do have? What will I be able to do with that? Am I thinking of a place of gratitude or of victimizing myself because I do not have certain money, and we do not see the means, maybe?

I want you to become aware of your thought process as it relates to money. Becoming conscious of your thoughts, as well as correcting them—replacing them—there is more than enough. There is more than enough, and one of the practices I have is I always like to ask myself, "What's the worst that will happen?"

To play out that scenario, for example, if I'm thinking of investing, and this year we have invested so much back into the company more than I ever have before, and it was a surprisingly good experience for me to see how my mindset has shifted over the years. In that, investing this money was a lot easier than it has ever been in the past, and it is the most we have ever invested back into the company. 

In the periods when this mindset did come up, and it was like, "Oh my gosh! You are going to spend that money, and you are not going to have it for something else." It was like, "Okay. Well, let's play that out. What's the worst that could happen? The worst that could happen is if I spend and invest in that particular area and I do not have the money to spend in another area, can I earn more? Yes. So then what is the worst that is going to happen? The worst that is going to happen is that I have to earn more, which I have to do anyway. The whole point of running a business is not just to earn money one time." Play out some of those thoughts to help you uproot and remove them from your life and normal way of thinking. 

Lastly, how do you collect your coins?

When it comes to actual pricing in your business, how do you go about changing your pricing? We have talked a lot about the mindset, cultural aspect, challenges, and obstacles. Now that you have some foundation to help you rewrite some of those scripts, how do you begin to change those things? 

The first thing you are going to start with is research. Understand the solution that you are creating within your business, whether it is a product or service, and understand the problem it solves with expertise. Become an expert around what you do, how you do it, and who you do it for.

You have to be an expert. When I'm saying expertise, it means you have to know your solution with such clarity and conviction. Know your services—what you do and how you do them. Then understand who you serve and how it affects their business.

Before you think about raising your prices, you need to start there. We all need to start there to make sure we are stable and can deliver what it is that we are selling. It is the first place to start. 

Who you serve and how you serve them is okay for it to be different than anyone else in your industry. If you have a unique methodology or a very particular niche, it's okay. Often, the way you operate when you do have specificity in those areas, whether it is your methodology or niche, is going to be very different than other people in your industry offering the same or very similar services to you.

You are not going to be comparing apples to apples because what you do is different. Do not compare your pricing and level of success to other people who are in the industry. Focus on you and what you are doing. And the research that you do at the beginning is going to help with that.

Invest in your money, and not just your marketing. Whether it is hiring and doing a consultation, or spending in an online course to help you understand the strategic side of your business and to set up its foundations, you can invest your money in all of these things. It does not have to be with one person. It could be through reading books, taking courses online, joining particular groups, and learning and investing with an expert who is leading that particular group. 

There are ways for you to invest in hiring help for yourself, and it could simply start with a book; it really could. Understanding those things and foundations are going to help you be more strategic with your pricing and help you learn how to change your pricing.

I do not recommend everyone to just raise their prices. It is not always the best way to move forward, and it is not always right for your business. Sometimes, in doing so, you cut yourself from the market you are trying to reach because your pricing does not align. 

It is not just a matter of raising your pricing to charge what you are worth, as we already talked about, that is not a thing that we do. It is about being strategic and understanding the other factors that go into your pricing before you make any changes, whether that is up or down. Understanding those things are going to help you and what I would recommend is investing in some help. We, here at RJC Consulting, are happy to help you do so because we specialize in pricing as well.

Operating in a niche will enable you to find the right people and will allow them to find you. The more specific you are with who you serve and how you serve them, the easier it is for them to self-identify and say, "Yes. That is me." It will also be more straightforward for you to identify them and to eliminate the people who are not the right fit for your business.

The way I like to put it is if you are under $5K in monthly revenue consistently, then you need to be operating within a niche. It means that you are too broad even with your marketing efforts—whether it is through social media, more traditional means of marketing, broadcast or anything like that—it is too broad. If you do not see that revenue consistently, it is because people do not know whether you apply to them or not.

Creating a niche is a great place to start because then again, it allows you to do more specific research to say, "Who is it that I want to serve? What does this market look like?" 

Get a better understanding of the realm you are operating in and then make changes accordingly. It enables you to hire help better rather than just choosing a general business coach. As an example, you can hire a specialist in the area and the niche you were operating in. Having that niche is a strategic move for your business; it helps with your pricing and eases how you adjust it.

These are some of the areas where you can start when it comes to shifting your price points in your business right now, and these are very keen foundations.

In the past, one of the things that I saw very commonly was, "What feels good to you?" and "How much money do you need to hire yourself?" Those things can play a role in how much you pay yourself, but not necessarily how much you charge; it is not how you determine your pricing. You can ask those questions, and they factor into the personal salary that you take from your business, but when it comes to how much you are charging other people, how would you feel if someone was charging you an amount that they needed to pay their bills? 

While I can empathize, that is not my issue. It is not my focus. I'm not coming to you to help me with my copy so that you can pay your rent. It just does not translate like that. It is why I'm saying you do not charge for the value you are, you charge for the value you add. You have to be able to communicate that and say, "This is why I require the pricing that I do within my company."

Closing

So what did you think? I hope this discussion challenged the way you think about money and pricing in your business. Wealth starts in mind, and when we shift our mindset from lack to abundance, we approach everything in our business from that same standpoint, including our pricing. 

I would love to share access to the full replay with you, so you can have the full context behind what you heard today. Click the link in the show notes to access the full replay of our Coin-versations on Pricing—Myths, Mistakes and Mindset, or you can head over to rjcconsulting.com/cvreplay.

Friend, these Coin-versations are geared towards supporting Black, Indigenous and People of Color (BIPOC) entrepreneurs to build sustainable and wealth-generating businesses. We will have these Coin-versations monthly, and there will be no cost to attend. All I ask is that you invite a fellow entrepreneur who is part of the BIPOC community to have a seat at the table with us.

Our next Coin-versation will take place on September 19th at 10:00 AM Eastern, and the topic is the Four (4) C’s of Scaling your Business. Click the link in the show notes to save your seat and register for the next one. 

Before you go, remember to join the waitlist for our Priced for Profit package for a pricing consultation and elite training by clicking the link in our show notes or head over to our website at rjcconsulting.com/pfp. There are only 10 consulting spots available. During these consultations, we will study your pricing so that you can make sure you are earning at your highest level. Join the waitlist now, so you don’t miss out. 

As always, friend, I am so grateful for this time we have together, and I'm very excited to see your name on the registration list for next month's Coin-versation and Priced for Profit. Until then, I wish you coins, confidence and all the bags. Bye for now.