Latest / The 3Bz Podcast - Building Better Business / EP147 - Your Pricing Isn’t the Problem. Your Confidence Is.

Transcript

EP147 - Your Pricing Isn’t the Problem. Your Confidence Is. · The 3Bz Podcast - Building Better Business

• 0:01
  Hi there business owner, and welcome to the Three BS Podcast,
• 0:04
  the place where we go beyond the numbers and dive into the
• 0:07
  strategies to help you build a Better Business one step at a
• 0:10
  time. I'm your host, Stephanie, a
• 0:12
  multi awarding entrepreneur with over a decade of experience in
• 0:15
  the bookkeeping and currency world.
• 0:17
  If you're a business owner looking to streamline, grow, and
• 0:19
  get back the time that you deserve, you're in the right
• 0:21
  place tackling real world problems, answering tough
• 0:24
  questions, and digging deep into business building secrets in
• 0:27
  just 15 minutes each week. So, Are you ready to build a
• 0:31
  Better Business with confidence and clarity?
• 0:33
  Then let's go. Hello and welcome back to
• 0:36
  another episode of the Three B's Podcast.
• 0:39
  Your go to place 15 minutes of CPD certified motivation,
• 0:43
  inspiration and education to help you build a Better
• 0:47
  Business. I can't believe we're almost at
• 0:49
  episode 150. I cannot believe we have
• 0:53
  consistently been here every Thursday for over 2 years and I
• 0:57
  hope that these episodes are really helping you build a
• 1:00
  Better Business. Now this week's episode, I've
• 1:03
  got a feeling may ruffle a few feathers because there's going
• 1:05
  to be some home truth here, but I really hope that you take from
• 1:08
  this with love that I am speaking from experience.
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  I have also made the same mistakes and I am trying to
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  build a Better Business right alongside you.
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  If you've been feeling busy but not particularly profitable of
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  January has highlighted a few uncomfortable truths about your
• 1:24
  cash flow. And if you don't know what I
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  mean by that, do go and listen to last week's episode.
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  Then this week's episode is for you.
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  Because today we're talking about pricing.
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  More specifically, why your pricing might be holding your
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  business back more than you realize.
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  This is not about charging premium just for the sake of it.
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  It's about alignment between your time, your expertise, your
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  energy, and the income your business generates.
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  So let's get into it. Most business owners don't make
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  up one day and think, oh, my pricing is wrong.
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  It shows up in those little more subtle ways.
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  You're fully booked but still stressing about money.
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  You resent certain clients, all types of work that are coming
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  in. You keep saying yes because you
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  feel you can't afford to say no. That's a big one.
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  You're scared to raise prices because you think your client
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  will leave. Your business feels fragile
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  despite working hard. Sound familiar?
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  These are not motivation issues. They're more often than not
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  pricing issues. Pricing effects more than
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  income. It affects your client's
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  behaviour, it affects boundaries, workload and most
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  importantly your confidence. So why is underpricing so calm?
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  Because it is one of the most common things I see with all the
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  businesses that I work with. Underpricing is very rarely
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  actually about the maths and the pricing itself.
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  It's more about the psychology. Most business owners start
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  pricing based on what they used to earn when they were employed,
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  what competitors are charging around them, what feels
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  comfortable to say out loud, fear of being seen as expensive,
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  and fear of losing work by being too expensive.
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  But here's the thing. Your pricing needs to reflect
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  the cost of running a business, not just the task itself.
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  Now that includes your time, your expertise, your overheads,
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  your tax obligations, your risk, and your capacity.
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  If your prices don't cover all of that, something else pays the
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  price and that's usually you. Let's link this back to last
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  week's episode because like I said, last week's episode was
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  about cash flow and how in January it really does tend to
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  magnify any red flags that are already in your cash flow.
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  I think January is such a tight month anyway for many people and
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  many business owners post Christmas sales are down.
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  Suppliers still need to be paid. That cash flow problem
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  highlights more red flags than usual, and sometimes people
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  blame it on January when actually there's a much deeper
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  cash flow problem. Poor pricing actually creates
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  those cash flow problems. Even in busy businesses, if your
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  margins are too tight, one late payment or a quiet month can
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  knock everything off balance. And that is why it's so
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  important to plan ahead and look at your cash flow on a regular
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  basis. By margins, I mean what is left
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  from the money coming into money going out on each product or
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  service that you sell. That is why January often
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  exposes those pricing issues because when volume dips, weak
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  pricing has nowhere to hide. And if you need constant sales
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  just to stand still, then your business model isn't working and
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  we need to do something about it.
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  You're probably thinking, OK, Stephanie, So what are we
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  supposed to do? What are we meant to review in
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  our prices? Where do we start?
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  If you're questioning your pricing, I would start here
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  first. Review your most time consuming
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  work. Does it generate enough income
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  for the effort involved or is it quietly draining your business?
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  Quite often I see this more on service based businesses and
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  product based businesses and that is because when you are
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  selling a product it's much easier to work out the
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  manufacturer cost, the labour cost and the things that make
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  that product come to fruition before you sell that product on.
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  When you're a service based, there's no physical tangible
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  product at the end of it, so you often priced dependent on what
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  everybody else is charging or what you used to charge when
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  you're employed, not taking into consideration the labour cost
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  for you to do that work or whoever else is doing that
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  service work for you can review client behaviour.
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  Now I hate to say this, but clients who pay more usually
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  require less chasing. They usually respect your
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  boundaries better and value your expertise.
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  Those that start to haggle you on price, want the cheapest
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  deal, want a discount, don't value you, and are usually the
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  ones that are messaging you at 8:00 on a Sunday night,
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  stressing about something or requiring your attention outside
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  of working hours, or the ones that give you the biggest
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  headache. I'll let you into a secret.
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  In the bookkeeping and accountancy industry, we call
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  them pitters. Pain in the, you know, third,
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  review your capacity. If you're fully booked, your
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  current prices, that's often assigned to increase them.
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  Now, I've heard all the excuses, but I don't know how long each
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  service is going to take to provide.
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  I don't know how many orders are going to come in.
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  You still need to look at your capacity of your working hours
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  in your week. Take away that CEO time, take
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  away the time you need to to run your own business.
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  Then look at how long it takes to produce each product, to
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  package each product or to provide each service.
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  And when you're looking at services for capacity, I always
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  tend to add an extra sort of 10% on to cover any nuances.
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  Particularly in the bookkeeping accountancy industry.
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  When you start looking at a set of accounts, normally there's a
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  million different rabbit holes you end up going down and a 10
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  minute job turns into a two hour 1.
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  And that in mind when you're looking at your capacity and
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  also what do you want your business to look like?
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  Do you want to work 95 or do you want to make sure that your
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  capacity actually is just 9 till 2?
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  Certainly between the school runs, it's your business and you
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  get to choose how you want to build it.
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  And fourthly, review when you last raised your prices, because
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  I can probably guarantee it's been years or even never.
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  But if it is either of those things, you're likely behind.
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  You only have to think about all the subscriptions we pay
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  annually, our telephone bills, our musics, whether that's our
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  Spotify, Apple Music, YouTube Premium, your Virgin Media, or
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  your Sky TV. Those prices go up every single
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  year, so if you've not raised your prices in a long time,
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  you're likely behind already. And finally, review your
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  confidence. This is a big one.
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  Pricing clarity gives you confidence.
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  Confidence improves sales conversations, and that cycle
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  matters. Now, what I mean by that is if
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  you are confident in your pricing that comes across when
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  you're talking to potential clients, it also means you're
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  less anxious about having no sales conversations, which makes
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  it easier for you to convert those sales into clients.
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  If you're a product based business, if you're not
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  confident about the price of your product, then you're going
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  to have the conversations of it's it's 29990 and then in your
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  head you're already starting to discount it.
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  You're already starting to go, oh, but they're not going to
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  accept that price that I'm going to actually go for something,
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  something smaller or I'm going to put a discount on this
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  because then they might buy so suddenly a 2999 product.
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  You're already going, OK, yeah, but for you, I can do it for 24
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  or if you buy 10, I can do it for for 21 or whatever it may
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  be. And you're already under pricing
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  and undercutting yourself more and more and more.
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  James Ashford once said when you give a price, just give the
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  price and sing happy birthday in your head if you need to.
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  You need to be comfortable with that silence.
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  You need to be comfortable with that thinking time that the
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  client or the potential clients going to need to convert them
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  into a client. It's really important to not
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  fill the gaps because you're actually talking yourself out of
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  pricing. And if we're looking to build a
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  Better Business, which I presume you are by watching or listening
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  to this podcast, we have to start having those
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  conversations. We have to start building that
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  confidence in our own pricing. And what I don't want to happen
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  is for you to panic. And when I say raise your
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  prices, I don't mean overnight shock changes, the website
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  changes overnight. You send out an e-mail to all
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  your clients that from tomorrow it's going to go massive.
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  You can do it in stages if it's easier.
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  So you could start by just increasing prices for new
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  clients 1st and keeping your legacy clients, your existing
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  clients at the price they're currently paying.
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  This works best for service based businesses obviously, but
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  you can also just increase prices for new clients first.
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  You can introduce or remove tiers or packages.
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  So that's something we're going through at Abcs UK right now.
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  We are a premium bookkeeping and accountancy service.
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  We also do business development. It's not something that somebody
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  should be paying £250 a month for.
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  It's far more valuable. There's far more work involved
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  with the new tax changes, with making Tax Digital and Companies
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  House changes and ACSP and all the things we talked about in
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  previous episodes. So actually that £250 amount
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  tier no longer serves us. I am severely under pricing,
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  which means that we will be removing that tier.
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  So we already had tiers and packages, but that tier no
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  longer serves us. That tier needs to be removed.
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  We no longer sell that smaller package to our clients.
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  So again, if you're service based and there's services that
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  you don't like doing, they're not very profitable.
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  They take up lots of capacity. You dread having to do that one
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  job or task. Remove that service if it no
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  longer works for you. You need to look at selling more
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  of the things that you do enjoy. I understand that I am in a very
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  lucky position that I absolutely love Mondays.
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  I don't know if you remember there was an advert at some
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  point on the TV, I think it was one of the recruitment agencies
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  where it said love Mondays. Like that was their big slogan
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  was you should love Mondays. And I know I'm in the minority
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  here, but I love Mondays. I love coming to work.
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  Mondays are my busiest day. I'm usually back-to-back
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  meetings and podcast recordings, and I love coming to work on a
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  Monday. If I didn't enjoy it anymore,
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  something would need to change for me.
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  So actually look at services, removing services that no longer
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  work, removing products that don't sell, that are really
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  awkward to get manufactured or very expensive to get
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  manufactured, and there's not a lot of profit margin in there.
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  Sometimes it's not about increasing prices, it's taking
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  away the things that don't no longer serve you in your
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  business. Importantly, communicate changes
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  clearly and calmly. I think it's really important
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  that you send an e-mail out or you speak to your clients,
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  however you you sell your products or service that you
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  communicate changes clearly and calmly.
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  And I always think it's nice to give a little bit of breathing
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  room. So we often will increase prices
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  in April. The emails will go out in
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  January or we like to give at least 30 days notice for any
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  changes that are about to happen with.
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  When it comes to pricing, when it comes to software changes,
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  when it comes to any changes in our business, we like to
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  communicate them clearly, calmly and give enough time for those
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  emails to be read and absorbed because we all know what it can
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  be like as a small business owner, our emails can sometimes
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  be 2-3 hundred a day and you flag it now and you've got to go
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  back and read it, but you don't have to get there for a week or
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  two. And finally, anchor your pricing
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  to value and not ours. So many people and I this I
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  started at £10 an hour when I started this bookkeeping
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  practice, it didn't last very long, but I did start at £10 an
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  hour. Anchor your pricing to your
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  value. And by value, I don't mean how
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  long you've been in business, although that is a fact that
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  needs to be taken into consideration when you're
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  looking at your pricing. But if you're starting out with
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  a new business, but you are qualified to provide that
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  service and the service is providing a great transformation
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  or outcome for the client, then you should price into that
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  value. A lot of people say you should
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  price to transformation rather than than the actual service
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  itself. If I come to you and go, oh, I
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  sell bookkeeping and accountancy services, that's one thing.
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  If I say I can increase your sales, I can help you increase
• 13:03
  your sales by 587% by streamlining your processes so
• 13:07
  that you save X amount of hours every day.
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  Those sorts of transformations in that language feels more
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  valuable. Therefore that attracts a higher
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  pricing naturally because the value in the transformation is
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  delivered across better. I think is the best way for me
• 13:23
  to explain it because if we're building businesses, that's
• 13:26
  probably not sustainable. And if you looked at your
• 13:28
  margins, by the time you've taken up your overheads, that
• 13:31
  £10 an hour becomes nothing. And this is about
• 13:34
  sustainability, not squeezing people.
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  I'm not saying charge £500 for a 50 LB service at all.
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  However, if you're providing that level of value, absolutely
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  you need to be fair and you need to make money.
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  This is a business, it's not a hobby.
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  And I've said this a few times before and I've I've got heckles
• 13:53
  up before when I've said this, people have got quite offended.
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  But if you are not making money in your business, if you are not
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  taking a wage, if you are not paying a salary, if you are not
• 14:00
  increasing your income on an annual basis, then that's not a
• 14:06
  job, that's a hobby. It's not a business, it's just a
• 14:09
  hobby. And if you want a hobby
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  business, absolutely fine. But if you're looking to build a
• 14:14
  Better Business, whether that's more money, more time, something
• 14:18
  that feels better, then then you have to start making these tough
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  decisions and pricing accordingly and gaining
• 14:24
  confidence in that pricing. I think it's going to be really
• 14:27
  helpful for you. So if January has made you
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  question whether your business is actually working as hard for
• 14:32
  you as you are for it, pricing is a really good place to start.
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  The goal isn't more clients necessarily or selling more
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  products, is about having a better alignment with your
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  values, with your overheads and looking at your business as a
• 14:46
  business and not treating it like a hobby.
• 14:49
  Next week we're going to talk about systems, the ones you
• 14:51
  actually need in place before Q1 gets any busier.
• 14:54
  If you found this episode useful, please do like rate and
• 14:57
  review, subscribe and hit that notification bell on YouTube
• 15:00
  because it helps this podcast reach more business owners who
• 15:03
  need these conversations too. If you know a business owner
• 15:06
  that is under charging, send them this episode and hopefully
• 15:10
  it will help them raise their prices and reassess their values
• 15:13
  too. All the links and the support
• 15:15
  are in the show notes so do get in touch if you want to get a 15
• 15:17
  minute discovery call with me. We do offer help with pricing,
• 15:20
  we do help with consultancy and we do help with systems and
• 15:23
  processes in your business. If you need some support or just
• 15:27
  a sounding board and somebody to see if they can censor you, then
• 15:31
  grab a free 15 minutes. The link is in the show notes
• 15:33
  and I'll see where I can help you.
• 15:35
  Thank you so much. This is the Three Bees Podcast
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  episode 147, and I'll see you next week for the next one.
• 15:42
  Bye. And that brings us to the end of
• 15:44
  another episode of the Three Bees Podcast.
• 15:47
  I hope you found it useful and that you're walking away with
• 15:49
  some motivation, inspiration or education to help you build a
• 15:53
  Better Business. Don't forget to subscribe, leave
• 15:56
  a review and of course, connect with us on social media for more
• 15:58
  insights, tips and behind the scenes content.
• 16:01
  Your next step in building a Better Business is just a click
• 16:04
  away. I can't wait to connect with you
• 16:05
  and I'll see you on the next episode.
• 16:07
  Bye.