6. Difficulty with pricing & the value formula

Many solopreneurs determine their ‘rates for service’ based on a mindset of scarcity. There are a few different fears at play here, that ultimately push away what you actually need to sustain a practical, profitable, and consistent business offering.

Here are 3 scarcity-based fears.

1. I’m afraid that people will think it’s too much and not buy, so I have to charge less.
2. To be able to help more people, I need to charge less so that my price doesn't exclude others.
3. I must be competitive in my pricing because other people charge “x” amount.

The problem with these questions is that they focus on what you believe others want, instead of what is practical for you and your business. These fears are based on scarcity, assuming that you will miss out on opportunities if you charge too much.

There's a classic dilemma at play here. By always seeking the lowest price to remain competitive, a business may find itself in a stalemate with its competitors. The only outcome of this strategy is a reduction in the quality of service, as both parties cut corners to reduce costs.

Lowering your prices will result in needing more clients, but having more clients will reduce the attention and value you can provide per client. There’s a balance here, of course, but it’s important to truly see this. What we need to consider is practicality, asking the question… “If I’m going to provide a fantastic service that truly impacts people’s lives, what would the price need to be for that to happen?”

Here are some questions and insights to consider when determining a practical price.

1. How much time per month will I spend creating free content to build an audience?

   • The price you charge customers needs to include your time spend finding those customers. In the same way, the price needs to cover your marketing expenses.
   • For example, it may cost you “x” number of hours to find the right client, those hours need to be paid for.

2. How many clients do I actually want to focus on and give my full attention to?

   • To really provide value, to really ‘show up’ in an outstanding and focused way, you have to value your time and not spread yourself too thin. The price of your services needs to honor your self-care.
   • For example, if your price determines you need 20 clients per month, and this only leaves you stressed out, you’ll ultimately end up in poor health, which decreases your life and business enjoyment, which results in a lower quality service. The price you ultimately need to charge needs to honor your commitment to take care of clients AND yourself.

3. What is the minimum amount of income/revenue I need to comfortably cover my monthly or annual expenses?

   • This isn’t a question so much about how you want to live in the future, it’s more about practical questions about right now. The question is about setting yourself up, so you can focus on your business. Often, the biggest struggle for being able to focus for solopreneurs is operating from survival mode and chasing the next payment because their bills are coming up. The price you charge needs to remove this obstacle, so you can focus and serve from a place of joyful service and NOT from a scarcity-based service.
   • For example, if my monthly expenses are €3,000 per month, what I need is €5,000 per month to reduce the stress about covering my expenses. This gives me a joyful buffer that allows me to joyfully focus. The price you charge needs to value this sanity-saving buffer.
     • Warning: This only works if you're devoted to your business and service. If you're looking to make money to spend money on frivolous things, then you’ll just burn through this extra €2,000 and put yourself back into the same spot.

   As a very general formula and guide, and strictly as an example, here’s what a practical price might look like.

   Practical Pricing Formula

   • Target Monthly Income (TMI): €5,000
   • Time Investment (marketing): 40%
   • Business Management: 10%
   • Business Learning & Self Development 20%:
   • Self Care, Personal Sanity: 10%
   • Client Services: 20%
     • I can devote 20% of my work time to offering my paid services.
   • 160 hours per Month (full time), x’s 20% = 32 hours per month.
   • Client attention and focus? 8 hours per month
     • You’ll be spending time supporting your client, beyond your direct interaction with your client.
   • Total clients per month: 32 hours (div) 8 hours = 4 Clients
   • This implies your services only take 1 month to deliver. If your services take longer, then you have to consider stacking client time month after month.
   • Final price per client: €1,250

   Here's a simplified text-version of the above formula:

   If you're a solopreneur looking to determine the price of your services, you can start by figuring out your target monthly income. Then, divide your time investment between marketing, business management, business learning & self-development, self-care, and client services.

   For example, if you have a target monthly income of €5,000, and you devote 20% of your time to client services, you can take on 4 clients per month (based on 160 work hours per month).

   If your services take 1 month to deliver, then you can charge each client €1,250. It's important to note that if your services take longer to deliver, you need to consider stacking client time month after month.

   Imagine that you spend only 4 hours directly with a client. At first glance, the rate of €312.50 per hour may seem extreme to most people. However, the total price includes much more than just the hour you spend with them. What you charge is what you need to deliver the service in a practical, profitable, and consistent way.

   To be a successful solopreneur and truly thrive, we must get away from the mindset that focuses solely on hours worked. This mindset is common among employees, who are paid a set amount per hour. However, the ultimate value that a company delivers is much more than what they pay their employees. For example, a company may pay an employee €50 per hour, but the company delivers €500 in value to their clients.

This is about Value, not an hourly rate

There is a massive mindset shift that needs to take place, notably from a mindset of lack to abundance, or from scarcity-based service to joy-based service.

You are not trading your hour for offering support. You’re exchanging your knowledge, wisdom, and skill set, which have been developed over the years, to provide a service to someone who will provide a value worth much more than what you’re charging.

This speaks so directly to understanding the value of what you provide, which most people have no clue about.

For example, … What is the overall value of helping someone heal their relationship conflict? How much is that worth to them? For some, the value of that support could be worth a certain number of joy-points, which can be converted to € or $, etc. Let's say that the value of that support is €20,000. So, by charging 'ABC' amount, you can help the client reach 'XYZ' amount of value in their life. In the bigger picture, the ‘ABC' amount is small compared to the ‘XYZ' amount.

Furthermore, if you help them reach ‘XYZ’ amount, then what they paid ‘ABC amount’ was 100% worth it.

Assuming I help a business CEO become a better leader, resulting in 30% more connection and productivity with their team, and an additional company profit of €500,000 per year, charging the CEO or company €30,000 for my services is a remarkable deal. The value of my services extends beyond the first-year increase, and the value provided over a 5-year period makes it an even better deal. Additionally, what about the personal value for the human being (the leader), and the lives that the leader touches which adds value to their personal lives? Oh my god, so much value. Now, my price appears to be a great and extraordinary offer.

Many solopreneurs determine their ‘rates for service’ based on a mindset of scarcity. There are a few different fears at play here, that ultimately push away what you actually need to sustain a practical, profitable, and consistent business offering.