Undercutting seems to be a major bugbear for a lot of geeks so I thought I would share my opinion and suggestions on the matter with you. I am not trying to 'preach to the converted' but hopefully give 'food for thought' to some.
I have read lots of posts about the perils of Groupon and the like, as well as reports of ridiculously low prices for treatments. Are we heading towards Pound Shops for Hair and Beauty somewhere down the line?
I believe many people lack the confidence and experience needed to truly understand the value of their products and services and consequently underprice as a result. Another group are those that are controlled by their feelings of desperation (ruthless to say, but get a new mind set or get an employer) or greed (cutting your nose off to spite your face).
Either way, by not getting pricing right it has a detrimental affect on the industry, it keeps the average wage low and gives the public the impression that a service can always be found cheaper elsewhere (if 'cheap' is what they're looking for) so in turn they do not value you as a professional with expertise in your field. In order for the public to place value on the industry you must first place value in yourself.
Why are lawyers so expensive? because they value the time, cost and effort put in to learning their subject and gaining the expertise and knowledge to be a professional in their field. You do not see them trying to undercut each other, they rely on their reputation and experience. So why don't some of you feel the same value for yourselves? I am not saying the cost and time is the same but you too have made an investment.
The temptation to look at what everyone else is charging and figure, 'that's what I'll charge too! is a big mistake, and charging much less than others is an even bigger one! it is important not to fall victim to a pricing war.
So now that you're in the right money mindset for pricing your products and services, here are few key things that you need to look at.
1. Set your price based on the value of your time and expertise. Do you really believe you are only worth the hourly minimum wage or less, after the amount of studying and practice you have done and the cost to you? If you don't set your prices in a manner that adequately compensates you for your time and effort, you are going to become a slave to your business. Make sure the price of your products and services are worth whatever you put into them.
2. Make sure the cost of product in delivering the service is built into your price so that your margin makes you profitable. This means including absolutely everything, down to kitchen roll!
3. Add the cost of your overheads, expenses, and investments.
4. Continue to invest in yourself, I'm not just talking about the latest new treatment, I mean in you as a business. Take time to research, read up on marketing, business development, do some short courses etc. You need to be in a position to avoid pitfalls and take advantage of opportunities.
5. Make sure that you're providing a bit more value than you're charging for. This could be, excellent customer service, advice, knowledge, an occasional free sample etc.
6. Identify your target market and go after them. You need to make sure that your ideal customer and what you're offering are a match. Its no use trying to reach low-income students with high end products and services, you need to ensure that your business model and price list will match what they can pay.
7. Look at what your competitors charge. Do this so that you can see what type of value they are offering for what they charge. This will help you articulate why your service is better or different from theirs. Do not do this as a means of setting your own pricing!
8. If you are worried that people will want refunds or not feel happy about your service, maybe you're not providing as much value as you should. If you do your work with excellence, and can meet your client's expectations you should have nothing to worry about. Confidence and character go a long way in being able to charge what you'e truly worth.
Just my thoughts.
Kathie x
I have read lots of posts about the perils of Groupon and the like, as well as reports of ridiculously low prices for treatments. Are we heading towards Pound Shops for Hair and Beauty somewhere down the line?
I believe many people lack the confidence and experience needed to truly understand the value of their products and services and consequently underprice as a result. Another group are those that are controlled by their feelings of desperation (ruthless to say, but get a new mind set or get an employer) or greed (cutting your nose off to spite your face).
Either way, by not getting pricing right it has a detrimental affect on the industry, it keeps the average wage low and gives the public the impression that a service can always be found cheaper elsewhere (if 'cheap' is what they're looking for) so in turn they do not value you as a professional with expertise in your field. In order for the public to place value on the industry you must first place value in yourself.
Why are lawyers so expensive? because they value the time, cost and effort put in to learning their subject and gaining the expertise and knowledge to be a professional in their field. You do not see them trying to undercut each other, they rely on their reputation and experience. So why don't some of you feel the same value for yourselves? I am not saying the cost and time is the same but you too have made an investment.
The temptation to look at what everyone else is charging and figure, 'that's what I'll charge too! is a big mistake, and charging much less than others is an even bigger one! it is important not to fall victim to a pricing war.
So now that you're in the right money mindset for pricing your products and services, here are few key things that you need to look at.
1. Set your price based on the value of your time and expertise. Do you really believe you are only worth the hourly minimum wage or less, after the amount of studying and practice you have done and the cost to you? If you don't set your prices in a manner that adequately compensates you for your time and effort, you are going to become a slave to your business. Make sure the price of your products and services are worth whatever you put into them.
2. Make sure the cost of product in delivering the service is built into your price so that your margin makes you profitable. This means including absolutely everything, down to kitchen roll!
3. Add the cost of your overheads, expenses, and investments.
4. Continue to invest in yourself, I'm not just talking about the latest new treatment, I mean in you as a business. Take time to research, read up on marketing, business development, do some short courses etc. You need to be in a position to avoid pitfalls and take advantage of opportunities.
5. Make sure that you're providing a bit more value than you're charging for. This could be, excellent customer service, advice, knowledge, an occasional free sample etc.
6. Identify your target market and go after them. You need to make sure that your ideal customer and what you're offering are a match. Its no use trying to reach low-income students with high end products and services, you need to ensure that your business model and price list will match what they can pay.
7. Look at what your competitors charge. Do this so that you can see what type of value they are offering for what they charge. This will help you articulate why your service is better or different from theirs. Do not do this as a means of setting your own pricing!
8. If you are worried that people will want refunds or not feel happy about your service, maybe you're not providing as much value as you should. If you do your work with excellence, and can meet your client's expectations you should have nothing to worry about. Confidence and character go a long way in being able to charge what you'e truly worth.
Just my thoughts.
Kathie x
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Techs also need to fund their own lives, restock, pay tax AND keep money by for further education, it is on going.. £15 a set? Forget it 
