One of the most challenging decisions for many entrepreneurs is trying to decide what to sell. The second difficult decision is asking yourself “how much should you charge?” I wanted to share a great way to work through the decision making process that I’ve used to protect my time, have conversations with my future clients and thoughtfully design future products. I would like to introduce you to the “Pay What It’s Worth” pricing model and how I use it in my business.
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- When I first started working for myself, I found that I was spending a lot of time on things that weren’t moving my business forward. I also found myself struggling internally with some deep philosophical questions. Those were:
- How do I protect my time? Coffee meetups, specifically “pick your brains” ate up a lot of my time. Time that I could be spent developing my own products, refining them, or selling them.
- How can I be of service to members of my community who aren’t ready to invest for 1-on-1 coaching or group coaching programs?
- How can I be compensated in some way for giving and sharing individualized advice to folks who seek it out from me?
- I finally decided to test out a “Pay What It’s Worth” product model. To be honest, I stumbled upon this idea because I was nervous about what to charge for my time. How does it work? Basically, you provide a service and prior to giving that service-give guidance to clients that they are to pay what they think the hour was worth via: PayPal/Venmo/Zelle-you have to provide those details. Again, the client has to think about what the information you provided was worth to them. The most important aspect of this pricing model is to get entrepreneurs to consider this pricing from their perspective as an entrepreneur. Basically, they are asking themselves what would THEY like to be paid for the same service…when figuring out what to pay YOU.
- What happened? It became a fantastic way for me to do the following:
- Validate that I could even find coaching clients who would pay for my time.
- Get a feel for what people were interested in getting my help with. I didn’t have to guess about what clients needed my help with.
- Discovering who my ideal clients were.
- How often do I do this? I now build in about 5 of these meetings a month. This is built into my business as an equity and accessibility practice. Five hours or so hours a month is perfect for market research.
- Having this pricing tier allows you to work with clients who may be priced out of your higher tiers. And, also allows you to give people an opportunity to test out working with you. They may be perfectly willing to pay you for a group coaching package or for 1-on-1 coaching but would like to test out working with you first without a long-term commitment. Also, this pricing tier is your “Pick Your Brains” tier. You get paid, but the client is guiding the pricing process. This process also helps you to avoid feeling resentment when receiving “pick your brains” requests. You can steer people towards this option.
- What to watch out for?
- Being very clear about who your ideal clients are. Mine are basically somewhere in the intermediate phase of their business. This actually impacts the amount that people will pay. If you’re working with someone who is brand new to business, just starting out, they will definitely pay less because it’s likely that they’ve never had to have a philosophical pricing conversation with themselves within their business. Working with clients who are in the infancy stage of their business was always harder and they always paid the least. Create free resources to guide those clients towards.
- Make sure that the person you’re coaching is legit. There is a risk of non-payment.
- If your client has money mindset issues that may impact their ability to imagine what would be an equitable price to pay YOU. They may have a hard time figuring out what to pay themselves.
- Check that your future client has at least a website and understanding of how to pay online. I had one person who didn’t even have a PayPal account and didn’t know how to user it.
- What to avoid?
- Do not use the “Pay What It’s Worth” pricing model in lieu of setting an actual price for your services. There’s a point when you have to price your services. Use the average of the pay what it’s worth model to set your hourly price. I was paid between $150-$600 an hour with the average being $200. So, currently my 1 hour regular coaching slots are now $200 an hour.
- Set a certain # of slots that you provide for this service and DO NOT CHANGE THE NUMBER OF SLOTS. In fact, you can create a waitlist for the upcoming month’s slots.
- Avoid not taking note of what your coaching clients are coming to you for. If possible, record these sessions. Provide the recording to your client. It’s great for them and great for you.
- Not knowing when to phase out this model for the products that you’re testing. And being clear about why you’re using this pricing model.
- If you’re working with clientele that’s also overseas, do take into account cultural norms that impact pricing. For example: there’s always the debate around tipping in the US vs. what the rest of the World does.
- Always go above and beyond and leave these clients with actionable steps that helps them win. And then get a testimonial.
That’s it! The “Pay What It’s Worth” pricing model. I would love to hear if you decide to incorporate this into your pricing model. Let me know how it goes.
I spend a lot of time at coffee shops working on my content. In fact, coffee shops helped me make it through the first year of the pandemic. I love supporting these small local businesses whenever I’m able to. Buy Me a Coffee is a quick and easy way to support my work and support a local business as well. Thanks so much and I’ll shout you out as well.