I often come across business owners who aren’t making enough money and it’s usually because their prices are too low. When I challenge them on their offering, I often get told that they are miles better than their competitors. This video talks about why your product or service is only worth the price you charge.
So one of the biggest killers of small business I’ve actually seen is low pricing. There’s so many business owners out there who just do not charge enough to pay their teams, pay their supplies, and pay themselves. And what eventually happens is their suppliers leave, their team leaves, and they end up in a position where they can’t make ends meet. So this video today does loosely cover pricing. And it also talks about one of the biggest challenges I’ve seen for small business owners with their pricing.
So the video is called Why you can’t be the cheapest and the best. And I’ll tell you why I called it that. So I’ve had quite a few conversations with clients over the years, and I can see from their reports, the profit and loss, all sorts of other indicators in their business, that they don’t charge enough money for the work they do. And when I challenge them on it, they acknowledge it, but putting your pricing up is often a really nerve-wracking and risky thing for business owners. Often they build it up as something that’s a lot more severe in their mind than it actually is.
But I often challenge business owners on their pricing and say, okay, well, why aren’t you charging more? Do you know how much you need to charge? And I quite often get the response, okay, fine. I do need to charge more. Then what I do is then I steer the conversation into, okay, what do you have to do to charge more? And quite often I get the response, well, we are already the best. We’re miles better than our competitors. So we probably don’t need to do anything else to charge more.
So I wanted to challenge this assumption that you can be the cheapest and the best. Ultimately your product and service is only worth what you charge for it. And the reason people are charging less for their products and service is because they haven’t fully convinced themselves it is worth something that is worth paying more for. So when people say to me, okay, well, we are the best, we’re way better than our competitors, our quality is better than our competitors, well, they may know it themselves, but they’re not confident that their customers know it.
And it’s probably for one of two reasons. Firstly, they just haven’t invested in their marketing infrastructure and educating the public about what they do and why it is so much better. Or secondly, it could just be, well, they might say they’re the best, but they might actually be what we call a “me too” business like, they’re a plumber, I’m also a plumber. Me too. They’re a mechanic, I’m also a mechanic. Me too. So a lot of the time it’s either because they are better, but they haven’t spent any time telling anyone, which is why they don’t have the confidence to charge more or it’s because they actually aren’t necessarily better. They’re not necessarily worse either, but they just haven’t put any effort into understanding what the unique selling point is as a business, what they do better than anyone else. And because they haven’t done that in their minds, they don’t have the personal confidence to go and charge more.
So the reality is, you are charging what your product is worth. So if your product was worth more, you’d already be charging more. That’s what you’ve got to understand. So, if you do start think about price increases, if you do start thinking about changing your packages, then it’s really, really important that you’re absolutely crystal clear with yourself and your customers, what the added value they’re going to get is. And that’s a really important point. Some businesses, maybe they just haven’t had a chance to catch their pricing up, but they’re in a transition phase. But that’s not who I’m really talking about. It’s the people who are saying, okay, we do an amazing service and we have an amazing product, but we just don’t have the confidence to charge for it. And then you just got to ask the question, well, is that product that amazing? Is that service that good?
The stellar advert gets it right and it’s like reassuring the expensive. And ultimately when you pay more, there’s motivation on all parties to make that work. Ultimately there’s a saying, when you pay, you pay attention. So by charging more, you often get more engagement from your customers because they’ve got bigger stake in what you’re doing together. So they want to make it work. So you get better cooperation. You are earning more money yourself, so you’ve got a bigger stake in it as well. So you want to deliver the very best service so you can do more of that type of work and your team also then has that motivation to actually deliver because they understand it’s better to work with a few really good high value customers than to work with hundreds of low value ones. But by charging more, you’re getting everyone engaged, which means naturally you will then deliver much, much better service.
So if you want any advice on pricing, if you want to talk about the growth of your business, as accountants, we specialize in helping people build their million pound business, that is the business they can sell for a million pounds. So I’d like to offer you a free strategy session. So, get yourself booked in. And as always, if you found this content useful, then just remember to like, share and follow. Okay. Have a great day and I will catch up soon. Thank you.