How many times have you been in this situation?
You’re on the phone with a hot prospect in dire need of your services, and you can tell she’s ready to buy.
Then she pops the dreaded question:
“How much do you charge?”
“Uh,” you mumble, fumbling for your price list. Desperate to end the silence, you blurt out a figure based on your hourly rate. You get the job, but you resent having to do it for such a low figure.
For many of us in service-based businesses, this question can be the kiss of death, especially if you’re just starting out. So what do you do?
Next time, you use a method called “value-based pricing.” It’s very simple, and goes a little something like this:
Client: “How much do you charge for a 5-page website?”
You: “Before I answer that, let me ask you a few questions. How much does your product sell for?”
Client: “$500″
You: “So, if your website gets a thousand visitors, and each one buys your product for $500, that’s $500,000.”
Client: “That’s right.”
You: “For a 5-page website, I charge $1,250″
Client: “Gee. I don’t know. That’s an awful lot.”
You: “Not when compared to how much your website will net you in new business. Wouldn’t you pay $1,250 to make $500,000?”
Client: “Well, since you put it that way, sure! When can you start?”
Perhaps that’s a bit overly simplistic, but you get the picture. Value-based pricing takes the emphasis off what your product or service is–a report, brochure, website or whatever–and putting it on what your product or service does for your customer, i.e., makes them money, saves time, relieves stress, etc.
Note: This is easier if you stick with providing products or services that have a measurable return on investment (ROI) for your client, something that will have a measurable impact in terms of more money, more clients, more whatever for your prospect.
Extra Tip
When quoting a fee, it also helps to have a set fee, or range of fees, in mind. This is how I quickly came up with my $1,250 website estimate (5 pages at $250 per page). You can do this by checking what your competitors charge and by finding out what is acceptable in your industry. If your fees are too low, people will think you are an amateur and won’t respect you. Too high, and you’ll price yourself right out of a job!
So, the next time you’re asked “How much do you charge?” just focus on what your service will do for your client, and you’ll stamp out your pricing fears forever.

