Latest / The SmallBizChat with Melinda Emerson / When to Adjust Your Pricing Strategy with Linda Hunt

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When to Adjust Your Pricing Strategy with Linda Hunt · The SmallBizChat with Melinda Emerson

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  Three, 2, 1, 0.
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  Ignition.
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  Lift off.
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  Ending small business failure.
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  Welcome to the Small Biz Chat podcast with the number one small business expert, Melinda
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  Emerson.
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  Melinda's goal is to end small business failure, and she'll give you the information
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  you need to succeed and live the life you dream of.
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  Now here's your host, the small biz chat lady herself, Melinda Emerson.
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  Have you subscribed to the Small Biz Chat podcast?
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  Well, it's time.
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  Every Wednesday, we offer listeners bite sized actionable tips to start and grow a successful
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  small business.
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  In just twenty minutes or so a week, you can get a ton of insight and resources to propel
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  your business forward.
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  Be sure to subscribe to the Small Biz Chat podcast today.
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  Hi, everybody.
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  Welcome to the Small Biz Chat podcast, the go to destination for entrepreneurs who want to
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  build a profitable business that creates freedom, wealth, and lasting impact.
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  I'm your host, Melinda Emerson, Small Biz Lady, America's number one small business expert.
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  And our mission here is simple, to end small business failure by giving you the strategy,
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  systems, and the confidence to succeed as your own boss.
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  Every week, you'll hear inspiring conversations with today's top business experts, successful
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  entrepreneurs and industry leaders who share practical real world advice you can put into
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  action immediately.
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  If you're ready to grow smarter, learn, lead stronger, and build a business that you
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  envision, you are in the right place.
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  Now one of the toughest challenges entrepreneurs are facing right now is knowing
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  what to charge, especially when customers are watching every dollar.
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  But pricing isn't just about the numbers, it's about communicating your value, standing behind
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  your expertise, and building a business that's profitable enough to thrive in any economy.
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  Now, we dive into today's conversation, if you are a fan of the Small Bitchette podcast,
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  please take a moment to subscribe and leave a five star review on Apple Podcasts, Spotify, or
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  wherever you listen to your favorite podcasts.
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  Your review helps us reach more entrepreneurs and continue our mission to end small business
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  failure.
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  Today's guest is Linda Hunt, founder of Some Solutions and the author of The Speak the
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  Truth, Set the Standards, and Get Paid Without Apology.
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  Linda helps service based entrepreneurs build the financial and operational foundation to
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  sustain success.
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  Decades of experience in corporate finance, as well as an early pioneer of, what is it, remote
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  accounting services, Linda is an expert in how to build the right price for your business.
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  If you've ever hesitated to raise your prices and struggle to explain your value, this is the
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  episode you need.
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  Linda, welcome to the Small Business Chat podcast.
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  Hi, Melinda.
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  Nice to meet you.
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  Nice to see you.
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  Alright, Linda.
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  Let's jump into it.
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  How often should a small business owner adjust their pricing?
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  At a minimum, a small business owner should adjust their pricing on an annual basis.
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  Just we don't ask for permission.
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  You just go ahead and you raise those prices.
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  Right.
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  Because corporations don't have no problem raising their price on you for sure.
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  Not at all.
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  Now one of the biggest challenges that I see is that small business owners price their products
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  and services based on their competitors.
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  Oh my gosh.
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  How should people actually develop their pricing model?
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  Right.
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  So, you know, you've actually touched on something many business owners like they
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  Google, they ask ChatGPT, or they're comparing themselves to, you know, someone down the road
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  who's doing something similar.
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  And I want to reframe...
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  I actually want to reframe this.
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  I've got a couple things I want to say.
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  One, pricing is not math, right?
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  Because if we were able to pick a number, say that number and get paid that number, there
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  would not be any issues in our...
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  We wouldn't be having this conversation.
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  Okay, number one.
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  Number two, pricing is an expression through your business of who you are, how you show up
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  right in that business, and the transformation that you are delivering.
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  Okay, whether it's a product or a service, it's a...
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  The person buying your product or service is getting a result.
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  And I want be super clear here.
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  Who you are, your value as a human being has nothing to do with your price.
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  Right?
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  So what we want to do is get clear on the transformation that you're delivering, the
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  result that you're providing, and you're never gonna have a pricing problem.
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  So that's like the the global...
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  My global reframing on that.
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  But to answer your question, how do you figure out how to price?
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  You have to come up with your minimum aligned price.
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  You got to know how much you need in your life to support your life.
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  And I'm not talking about just getting by.
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  Heard...
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  You know, there are so many business owners that say, I don't pay myself.
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  And that breaks my heart, right?
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  So you want to make sure that your business...
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  Your minimum aligned price can support what you need to live comfortably and what your business
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  needs and base that on true capacity.
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  And ChatGPT or Google can't give you that.
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  I love that.
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  So do you have a simple pricing framework that every business owner can use to make sure
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  they're charging enough and covering their costs and I generating a
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  absolutely do.
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  It's a free resource on my website at somesolutions.com.
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  It is called the Perfect Pricing Formula.
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  And I call it the perfect pricing formula because it teaches the minimum aligned price.
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  You can go through that exercise within thirty minutes and really understand what your number
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  is.
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  Okay?
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  And that's your floor.
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  That is the price if you are charging below that.
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  You are actually paying your clients to work for them.
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  That...
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  I felt that when you said that.
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  That's like really, really scary.
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  You're paying your clients for the privilege to work for them.
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  Correct.
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  So it's the floor.
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  It's not this...
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  So so what we're doing is we're establishing the floor with that minimum aligned price, that
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  perfect pricing formula.
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  And then you know, we need to build in the value.
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  Right?
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  We need to build the expertise, the value and all that other stuff.
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  But this will give you that number.
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  And here's the interesting thing.
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  Most people, most business owners know what that number is or they're close to it.
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  Right?
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  But that number is just eking by.
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  You're just getting by.
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  You're not really able to grow your business, leverage your business, and and take your
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  business to the next level.
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  So tell me often business owners are just fearful to raise the prices even when their
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  expenses increase.
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  Yes.
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  How should they proceed?
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  Like how do they need to look themselves in the mirror and be like Melinda
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  tell
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  them the price.
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  Tell them the price.
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  You know not for nothing Melinda that's part of it you know because so I'll tell a personal
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  story.
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  So when I used to work in corporate and then when I left corporate I had trouble.
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  First of all there was a couple things going on right.
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  And I think a lot of entrepreneurs go through this right.
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  Especially if you're coming out of corporate and there are a lot of people coming out of
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  corporate right now starting their own businesses.
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  In corporate there's structures, there's processes, there's scaffolding that holds you
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  up.
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  So you get to do what you do, you know be brilliant at.
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  But when you become a business owner we're all wearing many, many hats right?
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  And now we have to not sell our services right?
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  We have to be able to communicate what we're doing.
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  And part of that when you especially when you have a service business it is your passion
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  right?
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  It is your soul.
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  It is your heart and sometimes communicating that number can feel very, very personal.
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  So it's scary, right?
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  So this is the reason why I wrote the money conversation because the money conversation
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  came out of my personal experience where I wasn't able to say my rate without my voice
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  wobbling.
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  So what I did for myself is I created a process because I couldn't wait to get my mindset right
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  and figure out all of my issues.
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  I had to pay bills, right?
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  So I created a little process for myself that where I wrote down a script.
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  And yes, I did look in the mirror and I practiced that script.
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  And whether it was raising my rates or whether it was negotiating a price or was just
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  basically saying this is what I do and this is how I charge for it because I needed to come
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  across as a confident entrepreneur.
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  Right?
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  Because everything's energy.
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  Everything is energy and scared money don't make money.
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  I tell you that.
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  Scared money don't make money.
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  I love that.
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  And honestly people can smell desperation on you too.
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  So you have to be really careful about how you come across when you are pitching your business
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  and telling people your price.
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  And I think this is especially important for women.
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  I think it's even harder for women of color, Linda.
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  Totally agree.
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  Because people don't want to pay people that look a certain way a certain amount of money.
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  Absolutely.
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  I have certainly experienced this myself.
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  Now let's talk about, I love how you said the money conversation you have with yourself.
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  The money conversation you can have with your clients, I love that.
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  But let's talk about service businesses are different.
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  Service companies have to remake their revenue every year.
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  I mean, we don't necessarily always have long term contracts because a lot of us are project
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  based.
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  Correct.
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  What are the biggest pricing mistakes you see service based businesses make?
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  Oh gosh.
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  Okay.
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  I think so.
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  So basically, I categorize this into three categories.
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  Right?
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  The first one is in the conversation and then we'll we'll talk a little bit about...
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  I wanted to say what the three are.
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  So I see mistakes happening in the conversation so that's up front, right?
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  When we're talking with the customer, talking about the transformation, communicating our
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  prices.
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  Then the second batch of mistakes happen inside the work.
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  So when you know like you said you might be a project and you've said we're going to do x y
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  and z but then inside the work once you're inside of that things change a little bit and
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  they ask for something.
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  Scope creep.
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  Yeah.
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  Yeah.
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  Then they start asking you for stuff that's outside of scope and then expecting you to do
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  it for free.
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  That's what...
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  And I have...
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  I've had battles over
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  this very thing.
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  Yes.
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  Yep.
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  So so that's the second place I see it.
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  And then the third place I see it is the structure, right?
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  How is your business set up?
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  Because service businesses, a lot of what we do, 80% of it is repeatable and you want to set
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  it up and structure it in your business in a way that allows you to deliver quality
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  consistently.
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  And then you price to that.
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  That's your basic package right?
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  That's the basic project level, the entry level, whatever you want to call it.
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  And then you customize or you add on on top of that when they want something a little bit
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  differently.
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  So I see symptoms, pricing symptoms happening in those three pillars.
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  And oftentimes, Melinda, it's happening in more than one area.
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  Right?
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  So if you're experiencing pricing issues, those are symptoms or pricing pressures.
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  Those are symptoms of an underlying condition in your business that needs to be looked at.
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  And oftentimes we chase the symptom and not the condition.
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  That's true in healthcare and in business, right?
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  Yes.
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  So what can we do to fix it, Linda?
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  What can we do?
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  Linda help us.
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  I do.
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  This is what I do.
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  I mean I love helping business owners basically identify those underlying conditions.
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  And honestly the place to start if you're having trouble speaking about your price,
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  raising rates, renegotiating scope creep, start with the book.
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  Right?
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  The Money Conversation.
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  That book is my lived experience.
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  It's a short book but it's packed with so much real information and there's some mindsets, you
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  know, so like this is the belief that you have going in there.
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  It may not be exactly your belief but it's the framework.
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  And then here's how to make this your own because I'm a true believer in take the
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  information, make it yours, and make it work for you.
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  Right?
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  The second thing is, you know, we really have to create that structure for ourselves.
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  We have to sit back, look at our process, look at the service that we're delivering, and
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  design it in a way that we want to deliver it.
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  And so one of the things I...
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  When you were talking before, know having to have conversations with those clients about,
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  hey I'm not just including this.
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  If it's something that you're finding your clients always asking for and it's easy for you
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  to do, put it in your package as a standard.
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  Been asked to do this on a one to one basis but I have been asked by so many folks to put
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  together a class on this and I am going be doing that in the fall.
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  Right?
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  So it's going be called the Profitability Masterclass Find the Money You're Already
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  Losing and we're going to be talking exactly to this.
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  But having said that, it is really what I would say to you is sit down, map out, I do this, I
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  do this, I do this, I do this.
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  And then put it together as an offering and talk to the transformation.
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  Get so clear on the transformation that you're giving to your clients.
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  And if you don't know what that is, ask your clients.
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  Ask clients that you really trust and that you've worked with in the past because they're
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  going to tell give you words that resonate for them.
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  Because you're in what you do.
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  Right?
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  So the way you think about it is correct, but it's not going to resonate with the words that
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  they're looking for.
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  That's going to connect with them and that's going to connect with their pain.
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  That's really interesting because I think this is a real issue.
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  I think pricing is such an issue.
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  I don't think people price properly in the first place and then they struggle to raise
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  their pricing and then it becomes a cyclical thing.
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  Correct.
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  And then you work with a vendor like I work with only Fortune 500 companies, and they have
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  no problem paying you net 90 on a project where you're already spending money on.
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  So there's all these different negotiation points.
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  Some are negotiable, a lot of times they're not depending on how big the company is.
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  I find the bigger the company, the worse they pay.
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  The worse their payment terms.
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  Or there's companies that come along after the fact and will discount an invoice, want you to
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  discount an invoice after the fact to get your money after you've already done the work.
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  Right?
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  So I've seen all iterations of this stuff.
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  Yes.
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  Twenty seven years of business.
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  How
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  profit gets eroded
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  from service based Every single thing affects profitability.
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  Right?
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  And you just highlighted several.
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  And you're right.
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  The bigger the company you deal with, you're subjected to this is how we do it.
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  Right?
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  And I'm a big believer in trying to get a deposit.
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  I know sometimes it's hard to get them out of those Fortune 500 companies to deposit upfront,
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  but you're expending energy.
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  And money is energy and there has to be an equal giving for an equal receiving.
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  So I don't know ways to get around.
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  I don't know all ways to get around that, but we had a client who...
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  IT company and they used to work with these Fortune 500 companies.
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  And we really had to get creative in how they did their terms and the upfront contract
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  because they were getting paid net 120.
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  Yeah.
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  Don't know how you stay in business getting
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  paid
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  net 120.
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  I mean, net 90 is bad enough, but net one twenty is insane.
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  It's insane.
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  And I think that that's really, really, really, really, really bad.
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  But Linda, I feel like I could talk to you forever about this stuff.
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  You're such a dearth of information.
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  Tell me, what is the best business advice anyone ever gave you?
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  Oh, best business advice anyone ever gave me was to stop chasing the symptoms.
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  Like, you know, because I was...
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  Know, one of the things I was talking to my mentor about was cash flow.
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  And basically what she said to me was, you're chasing the symptom.
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  Look underneath.
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  Because what often looks like different problems is really the same underlying business
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  condition.
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  And that advice became the framework for how I service my clients.
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  So it was the best advice for me to turn things around.
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  And that is how I work with my clients today.
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  Let me tell you something, that's brilliant.
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  That's I mean, like, that's really like, it's kind of obvious, but kind of not.
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  And I think there's a lot of people talking about cash flow when it's really a sales
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  problem.
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  Like it's a lead problem.
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  It's a qualified lead problem.
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  So I get into this a lot as well.
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  But thank you so much for being here and being such a valuable guest on the Small Bitch Chat
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  podcast.
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  I really appreciate you, Linda.
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  Make sure you guys go to our website, somesolutions.com.
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  She's amazing.
• 19:26
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  Visit cofounder.ai and discover a smarter way to expand your team.
• 19:51
  Thanks for listening to the Small Biz Chat podcast with Melinda Emerson.
• 19:56
  Subscribe to this podcast wherever you listen to podcasts, and join us next Wednesday for
• 20:01
  more fantastic information and interviews.
• 20:04
  You can find more sources and small business success strategies by visiting Melinda's
• 20:09
  website, succeedasyourownboss.com.
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  Thanks again for listening, and we'll see you next week.