What’s the best way to set prices for your services? You want your business to be profitable, but you don’t want to drive away potential customers.

One of the most common pieces of advice entrepreneurs — especially those with service-based businesses — hear is to “charge what you’re worth.” 

But I don’t think that’s the right approach. In fact, I think there’s an inherent problem with the whole concept of charging what you’re worth. So let’s discuss the issue and figure out a better solution.

Why you shouldn’t charge what you’re worth

Let’s start with my biggest issue with this idea — what does it even mean? How do you know “what you’re worth,” especially when you’re just starting your business?

Does your education determine what your services are worth? Or is it your years of experience? There’s no clear answer.

But there’s an even bigger issue — what happens to your mental health when you assign a financial value to your “worth”? By tying your revenue to your value as a person, you risk losing your self-confidence and ignoring all the other things that make you who you are.

It’s tempting to align your worth with the amount of income you can make — especially if you’re self-employed. But this isn’t a healthy outlook, and it can seriously damage your psyche (ask me how I know).

So let’s make this clear right now: The success or failure of your business has nothing to do with your value as a person.

It’s not always about money

So, if your “worth” doesn’t inform your pricing, what does? How do you decide the value of your services?

The answer is fairly simple — the value of your services is what your customers will pay for them! 

Although the concept is simple, it’s a little more complicated in reality. Not every client (or potential client) will put the same value on your services. Some people would happily pay more than you charge. And some people would never pay your rates no matter how amazing you are as a practitioner.

If a customer says your rate is too expensive, that only means it’s too expensive for them. Maybe they don’t have the budget. Or maybe they just don’t value the type of services you provide — they wouldn’t pay that much to any provider!

In other words, even if some potential clients say that your rates are “too high,” that’s usually a reflection of their financial priorities, not the true value of what you’re offering (or you as a person).

Run the numbers

Now that we’ve covered what not to do, let’s talk about the best way to set your prices. There are several things to consider when deciding what to charge for your services:

• Your profit goals
• Your business’s expenses
• Your market/competitors’ prices

All of these are quantifiable — you can do the math to come up with hard numbers and use those as a place to start.

The exact calculations will depend on the specifics of your business, but in general, start by thinking about your profit. Once you know how much “take home” income you want, you can add in your expenses so you know how much revenue you need to make. 

Compare that with the number of clients you want to see weekly (or monthly), and you’ll get a rough idea of what you need to charge for each session.

Refine your messaging

Once you’ve decided how much you want to charge, how do you get potential clients on board? It’s all about determining how to frame the message in your marketing.

When you’re discussing your rates, focus on the value you provide. For example, you don’t want a potential client to feel like they’re losing $200 every time they have a session with you. 

Instead, you want them to be thrilled at the amazing benefits (better health, less pain, more flexibility, etc.) they get for just $200!

Think about the big picture

It’s hard for entrepreneurs (myself included!) to deal with rejection — especially in the beginning stages of running a business. Every potential client who chooses not to work with you feels like a personal defeat.

But it’s crucial to remember two things:

1. You can’t please everyone. And you shouldn’t try to. Identify your target audience and design your services with them in mind. That’s how you establish a loyal clientele.
2. “No” isn’t always forever. Sometimes, even ideal clients will turn you down. But all that means is that they aren’t ready to commit right now. That might change in a month or a year, so stay the course.

Once you can shift your mindset to the bigger picture, it’s easier to feel confident about your pricing and avoid that feeling of failure when someone chooses not to pay for your services.

Your pricing doesn’t define your worth

“Charge what you’re worth” might be standard advice for entrepreneurs, but it’s not the best approach. Instead of tying your value to the dollar amount that someone will pay for your services, remind yourself that your success or failure as a business owner has nothing to do with your worth as a person.

Then, take an objective approach to pricing. Use your profit goals, expenses, and work availability to calculate how much you need to charge per session. When talking with potential clients, frame that price in terms of value — all the benefits of working with you!

If you’re still feeling unsure about your pricing, that’s OK. We all deal with self-doubt occasionally, and it doesn’t mean you’re doing anything wrong. If you’d like to get personalized advice and guidance about your pricing, I’d love to help! Book a 1:1 call with me to discuss your business finances, pricing strategy, marketing, or anything else!