How much do you charge?
I recently received some information from another Training Provider. It made me see red…Here is what they wrote:
“There are numerous ways you can charge for your services, and you will have to identify the one that works for you. Your fees will be based upon:
* Nature of the tasks involved (the amount of work you have to do and the time involved).
* Your level of expertise (experienced consultants will be in greater demand, and can therefore charge more).
* The affluence of your client. Richer, more expansive clients will be prepared to spend more.
* The competition in your area. See what your competitors are charging and think how you want to position yourself in the market.
THE PRICING OPTIONS
When you enter the market you will have to make a choice about how you want to charge your clients. The options available to you are:
1. Service based flat fee
2. A fee per hour
3. Daily fee
A very important point is to look at the competition in your area. If there are other image consultants make sure you are competitive in relation to their prices.”
OK so why was my blood boiling? Well this advice while well-meaning is quite simplistic and could see your business travel down a very slippery slope, very quickly.
It’s not that the information is wrong – but in an attempt to make the text as short as possible they’ve left out several critical factors for a pricing structure:
- Most pricing models will tell you to stay away from hourly rates/daily fees. There are only so many hours in a day and if you are clearly basing your pricing structure by the hour – you can see that there are not enough hours in a day or week…and you cap your earning potential…However, you do need to know the absolute minimum you can charge per hour so that you will always at least cover your costs….even if you are prepared to do a special price for someone
- It’s easy to underestimate the time it will take to prepare for a client. Using Colour Analysis as an example…as well as the session time, you must factor in your set-up time and how long it takes to tidy away, and clean your kit. Ordering top-up fans, make-up and salon consumables, also takes time. As does client follow up, both post-booking and prior to the appointment and post-appointment follow up. It’s easiest when you have a room set aside for use as your studio, but becomes harder and longer if you have to pack away your equipment. If you are offering a mobile service – travel time must be factored into your prices
- Experience does not necessarily equate with demand – you can be the most experienced Image Consultant in the world but not have a busy, thriving business or be in demand, or you may actively be choosing to limit your personal one-to-one sessions
- In my experience more affluent clients are sometimes even more hesitant to spend money – often it’s the ladies who have to save for our services that value our advice more
- You can look at the competition in your area until the cows come home – but how do you really know that their service is comparable to yours?
- Sure, you can get a general feel for what is going on but this method misses several important points:
Is the consultant in your area who is charging £50 for a colour analysis really making any money – is she working as a business or just making pin money?
Can you be certain that someone charging £75 for colour has their pricing structure worked out properly…or are they just a month from closing?
Pricing is “multi-factorial” but comes down to two things – the value that your service can bring to your client and knowing very clearly who your ideal client is (see last months “Keeping in Touch Article”).
“If everyone bought on price we’d all be driving around in the same car.”
I have recently been mentoring another Image Consultant (not Colourflair trained). As a new business she was offering a 2 hour colour analysis including swatches for £35, as a special offer. (Yes, I was shocked when I found this out!) Offering this service for such a low price had given her quite a few contacts and some business, but these had not converted or “up-sold” to other services, and although a super cheap offer, it was not attracting the number of clients she wanted. In fact her most popular service was 4 x more popular than the Colour Analysis at £35.
Her potential clients did just not see the value of the service, even priced at £35!
When we looked at her business model and her aims and objectives it was clear she needed to put her prices up. I advised her that her colour analysis session should be priced at £90 minimum.
In the first week of January she was phoned by a friend of someone who had had a colour analysis during 2013. This lady had seen the results (the value) of her friends Colour Analysis and wanted to book herself for a colour analysis – for £35.
What happened next? The lady was advised that the £35 Colour Analysis was a special promotion and that the price was now £90. The lady at the end of the phone went quiet for a short while…and then booked for £90.
Our services give real value to our clients, please don’t sell yours short! Now is a good time to review your price list and just take a look at what your competitors are charging. Could you up your prices, or could they do with a little adjustment?
PS Just so you don’t have to search my website: www.imaginationonline.info I currently charge £175 for Colour Analysis – which leaves me scope to offer special offers at £99 or £145…and yes I do have customers!