Hey everyone,

this episode might be a bit more emotional as pricing can bring up many feelings! I don’t have any rules or universal answers for you, but a lot of good stuff to explore:

• Some thoughts on valuing your time and energy
• Tools you can use to make your work more accessible
• An introduction to calculating fixed and variable costs per unit sold
• Some thoughts on class and accessibility
• Ideas for pricing online courses

I hope this is giving you some food for thought as you explore your own options around pricing, accessibility and long term strategy. This is something we often talk about in the Embodied Business Community as well, so check that offer out if you are interested in more in-depth conversations around this topic. 

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⋒ Hi, my name is Yarrow and I am your host.

My Embodied Business podcast explores what it means to build a livelihood with integrity, joy and anti capitalist values. I offer practical guidance on tech, strategy, ethical marketing, creativity and money and interview other small business owners who do things their own way. 

You can learn more about my work, listen to other episodes or join my community at PinkWellStudio.com

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Transcript

Hey, everyone. Welcome back. My name is Yarrow and you’re listening to the DIY business magic podcast. So this Monday, I want to talk about something that’s emotional for many of us, which is pricing our offerings. Before I go into it, just a last reminder that I’m running a free online workshop tomorrow all about business planning, for 2019. So that’s really exciting. I think it’s going to be great people. So far more than 100 have signed up. I’ll share tips and resources and inspirations and stories, you get to ask me anything, and I’ll share some journaling. So the link to sign up for that is in the show notes, as always. And if you’re listening to this in the future, check the link out anyway. Because under that same page, I’m always offering workshops that you can sign up for. Cool, okay, so let’s dive in. Before I start, I really want to say that pricing is something that’s super individual, there’s really no one that can tell you exactly how you should price your offerings. And so I’m really not trying to do that. I’m just offering some thoughts, and we can take whatever feels good to you, and then leave the rest. And I also want to say, say that I think what feels right, right really changed over time. And it’s something that I’m revisiting at least once a year. So for example, the prices for my web design offerings and packages have increased over the years. And that’s because I gained more experience, I built my portfolio, I’ve added services within that package that seem to make sense to me. And on the other hand, my prices for courses that I’m offering have actually decreased, which is unusual, but it works for me. So when I first started teaching online courses two and a half years ago, I charged more because I expected to sell less than I had a certain year, I had certain costs around production. And I needed to make that back. And I also just didn’t have the confidence yet to experiment with different alternative business models like running a Patreon offering sliding scales. So yeah, all this to say, prices are not static, you can allow yourself to revisit this and see what feels good a year from now. And that’s totally cool. So I want to start by inviting you to just ask yourself how you’re currently feeling about your pricing, how you’re feeling about communicating on social media, on your website, what you’re asking for? How are you feeling about communicating that in real life saying to someone’s face, this is what it costs to work with me or this is how much my products are. Maybe this girl that’s coming up, maybe there’s some shame, maybe there’s some resentment because you’re feeling that you’re underpricing yourself. And maybe you’re upset when people ask for discounts. Maybe you feel like you’re being taken advantage of maybe you’re feeling super happy and confident about your prices. And you’re feeling good about what you’re charging. And I think, yeah, just want to say all these feelings are valid. I think pricing under capitalism is something that’s really, really hard. And I don’t know any business owner that hasn’t struggled with this, at some point in their business. So yeah, don’t be hard on yourself. The next step that I want to invite you to think about is calculating your costs in a really holistic way. So of course, we can look at the costs for each product that we’re offering in very specific ways. But it’s also good to think more holistically about the energy costs that we are putting into it, the development of ideas, maybe the amount of training, we need to be offering what we’re offering. And that just gives us a better bigger picture of our pricing structure. So this is like a business 101 recap. But I think it’s important because not many of us have been taught how to price our services and how to think about production costs and all that stuff. So I want to recap that really briefly. There are fixed costs, and they’ll be independent from the amount of humans units you’re offering of your product. So that’s when I say product, I mean, both services and physical product doesn’t really matter. So for example, the rent that you pay for your work praise workplace might be $300. And you’ll be paying that $300 each month regardless of how many human units or hours of your time or products you’re selling. And so that’s a fixed cost. And then you have variable costs and these are related to the amount of products you’re selling. So for example, at your herbalist, you might be paying those $300 for your studio space where you producing your stuff and working.
And then you might have cost per product like bottles and oils and alcohol and vinegar. And plant material that you want to be working with. So maybe you can calculate, okay, you’re paying $3 per bottle, and then you’re paying $300 in rent, and you’re budgeting or you’re estimating that you’re going to be selling 100 bottles each month. So for each of those bottles, your costs will be $6 $3 are the fixed material costs. And then $3 are the fraction of the study around that you’re paying. Of course, it’s super simplified, I know there’ll be more stuff that goes into this, there will be time for admin and marketing that you want to pay yourself for. And that might be software costs as well. But this is just to give you an idea of the difference between Variable And Fixed costs and how it makes sense to budget that. So I would really recommend that you sit down, and whether you know, regardless of what you’re offering, even if it’s like an a service that you offer on the internet, with Think about your fixed cost, and list them in an extra sheet. Now think about the costs that go into each unit that you’re selling, be that an hour of your time, or product that you’re selling. And, and if you haven’t done that, in the past, please don’t beat yourself up. I think many, many business owners, I know are not doing this. And, and again, that’s totally normal, because we’re kind of learning as we’re going along. This is not something that we’ve been taught, but it is super useful to really understand how you, you know what costs you’re coming up against as you’re offering your products? Yeah, yeah. So you know, some of us might run online businesses in a very kind of slim way, I’d say I, for example, have software costs are generally you know, generally my overhead for my business is less than $150 a month, and that’s fixed costs. And then on top of that, I say it’s been quite of money on education and travel. And that will vary throughout the year, of course, and that was vary a lot from year to year. And then the next question I want to invite you to ask yourself is how much you want to pay yourself? And that’s really, really hard. I know for sure. I really struggle with this question. But if this will hurt, maybe expand that question to asking, What do you need in order to feel safe, supported and respected. I’m saying respected very intentionally here because I think when we’re feeling resentful, when we’re feeling people are overstepping our boundaries by asking for discounts, or we’re underpricing ourselves out of insecurity, it can sometimes feel like our time is being disrespected. And that’s painful. And, and then make a list of any other costs that you might not currently be budgeting for. So that could be stuff like shipping or storage, even if you are say, if you run your business from your own home, and you have an home office, and then you’re devoting some storage to your office, to sorry, to your business, that’s taking away from your whole space. And even if you’re not, you know, thinking about your brand, or splitting it up in a particular way, that’s an energetic expense. Because you’re giving some of your private space up. And whether or not you’ll find a way to kind of bring that into your pricing or not, it’s good to just write that down. And then also think about how much time you’re spending each week on marketing and administration and social media and outreach and PR, it’s so easy to forget these hours. And I think, especially those of us who are offering services at an hourly rate, sometimes feel some resistance around the hourly rate that we actually want to charge because it seems outrageous, possibly compared to someone who’s an employment. But then an important thing to remember here is that people that are employed, get sick pay, they get holiday pay, and they don’t do any unpaid time for admin or marketing or social media the way most small business owners do. So you just have to factor that in and remember that your hourly rate is just really not comparable to what someone is earning in employment. Another thing that I want to offer you to consider which is a little bit more complex, and really tricky, is the idea that I personally believe that my time is not worth more than anyone else’s. And neither is my energy. And I really hold that I can really, really believe that’s true. But I also need to acknowledge that under capitalism, it’s incredibly difficult to really live live that belief, you know, and to find a way to trade with other people that feels fair and good. And that reflects the value that I have.
And a common argument for example is that education means that people get to charge more because they are more specialised. They’re highly trained, they’ve invested in education. I’d say to that that actually, I think education is a beautiful privilege, I’m really, really feeling super lucky for the time that I got to spend in education in my life. Not all my education was great or good experience, or has shaped me in positive ways, even. But overall, I’m just feeling really lucky that I got to go to university. And, of course, there’s also the reality that some, many of us have student loans and that and I have to repay these and in some ways, we have to budget that into our living costs now. So like I said, I do believe this. And at the same time, I’m totally aware that under capitalism, it is hard to live that belief. But see how that feels for you. Like, do you think your time is more or less worth more than someone else’s? And if so, why? And if not, why is that? And then the next question I want to ask you is, who do you want to offer something to? So something I feel that’s often overlooked, and small business marketing or pricing in general is class and and I just noticed that sometimes when we offer a programme, say, that costs 100, or $200, we are output we’re making a decision conscious or unconscious, to our price working class folks. And of course, that you know, there’s a very broad statement, I don’t mean to say that whenever you charge $100, for something, you’re effectively out pricing working class people, that’s not true. You know, people can afford different things at different stages in their lives, for all kinds of reasons. But generally, I would say, I think it’s a shame that we’re not talking about this, because it’s playing a very important role in how we’re pricing. And sometimes we’re making decisions that are out pricing all kinds of people that we actually really care about. And this is really not to guilt trip you in any way. Because there might be really good reasons for why you’re charging what you’re charging. And I don’t want to challenge you in that, I just want to invite you to consider that you can make that decision more conscious. And even if that’s uncomfortable for now, it might in the long run actually give you more depth and clarity around how you want to be of service in the world.
So so I want to share a couple of tools that you can utilise. For example, if you’re feeling stuck in this place, where you know that there’s a certain amount that you’d like to charge that feels good, because it feels like it’s honouring your time, the energy you put into education and all the love that you pour into what you’re offering. And at the same time, that makes your work more accessible. So one option would be sliding scales. And within skying scales, there’s also very many ways that you can do this. So one way would be, you give people very clear instructions on where they need to place themselves on a scale, you could say, if you earn X amount of money, you can pay this, if you are in y amount of money, then you pay this. And then you can either ask for proof, or you can ask people to just decide for themselves and you can decide to trust them. And again, that’s a totally personal decision, there’s no right or wrong way, it’s just about thinking about these different options that we have. Another way of doing it is to say, look, this is the base level price here, I’m charging $100 for this thing, because that’s that’s what it costs. And you know, this is honouring my time. And while I think that’s what it what it’s worth, but I’m also offering three spots at a sliding scale, and you can pay whatever you want for that. And so if maybe you want to experiment with sliding scales, but you’re feeling unsure about offering your whole offering on a sliding scale, that might be a nice way of, of kind of like dipping your toes into that water and see how that feels, and maybe have a very good and maybe it won’t feel so good, but just you know, consider giving it a try. Another option would be offering scholarships. And again, within that there’s different options, you can ask people to send in an application for a scholarship. Or you can randomly kind of draw someone for my hat. You can also ask people that are able to pay the full price to maybe consider paying a little bit more so that you can offer more scholarships, so they wouldn’t cost you anything which is interesting. Another option would be offering DIY courses or learning resources. So for example, if you’re offering a service that people could possibly teach themselves the way I do, you could offer learning materials at a cheaper rate. So I know for example, that my web design packages are not affordable for very many people. And I wish it wasn’t that way but I just put a lot of energy into each of the websites I make. So I need to you know, I need to be sure that I’m still paying my rent And, and so that’s why I started teaching courses on web design and branding. And I’m making them available at a very low cost on my Patreon. And that really works for me. So, I do offer a couple of sliding scale websites each year. But beyond that, I’m offering people the option to teach themselves and that feels good to me. Another idea would be running a blog offering online workshops, or offering learning resources like blog, blogs, or podcasts, like this one. My experience with sliding scales is really positive. And I know that’s really not the case where everyone’s I’ve heard other people who felt that was really tricky and hard to navigate. I think for me, I’m pretty lucky that my services are online. So you know, if, for example, had travel costs, or if I was hosting a retreat, and, and I felt that not enough people, were paying a high enough price to make it viable. I would feel resentful, of course, with the online programmes that I’m offering on a sliding scale. It doesn’t cost me anything, if someone you know, pays the minimum rate, and I’m honestly totally happy with that I love. I love it when people pay the minimum price and a Patreon because they know I’ve reached more people and made it more accessible. And this person might have not been able to sign up if it hadn’t been available at this price. And I guess that it doesn’t cost me anything. It’s more people in the programme. Short is a bit more space holding and answering questions and more people in their life webinars. But that feels okay and doable. And it might be different if you’re offering something that’s more labour intensive for sure. I want to talk a little bit about online courses as well and how to price them because that’s really tricky. And many people kind of feel stuck on where to begin with this. So again, I don’t have a good answer, I just have some questions that I want to offer to you. So the first thing is actually more of an observation, I often see that courses about making money have incredibly inflated prices. Because, you know, teaching someone how to make more money is,
wow, it’s relative, it’s comparatively easier to market, I would argue, because most people want to earn more money. And if you can sell them the idea that you can teach them how to do that, which you may be able to do, I’m not saying that’s impossible, then that is something that you can charge good money for. Because it’s a no brainer, if if someone you know, charges me $500 and teaches me how to make 2000, then that’s a great investment. I’ve taken the course like this myself, and I’ve learned a tonne from it. However, I also have really mixed feelings and a lot of questions around how inflated this industry has become and how it sometimes almost feels like a Ponzi scheme where you can really only justify spending that much on a course if you then walk away and teach the next group of people that much money for this kind, of course. And that has worked really well for a lot of people, I can’t deny that. But I think there must be a better way of sharing skills online and spreading knowledge and ideas and information. So I’m excited about thinking about these things. So in a more practical level, I would look at the cost of production of your course and the cost of running it. So the production might be things like you needing to invest in some lighting or a microphone. Maybe you have texts that have cost like software that you need to shoot your videos. And then there’ll be ongoing costs, like the time that you might spend in a Facebook group ads in questions. Or maybe you will run live webinars that you need to budget preparation and actual running time for maybe you’ll have ongoing software costs, like a teachable platform, I use the free version. But some you know, for some people, it’s right to to upgrade that. And so again, map all of that out, see what your actual costs are, make a good estimate of how many students you think you’ll bring in. And again, I know that’s super tricky. And that’s something that you’re going to have to learn about overtime, because you’re getting to know your audience. And it’s just very hard in the beginning. And then think about how much you want to spend, how much you want to pay yourself in the process. And I would also say ask yourself how much this course will be value. You know how much value this course will have to students. But again, that’s a super abstract question. And, and it really depends and I think it’s also interesting to think about how we value different things in different areas of our lives. So for example, many people would agree that a business course that teaches you how to make money is very valuable. Whereas maybe a course that teaches you how to look better, better look after your body and create herbal potions. made by the general public be perceived to be less valuable. So arguably, I would say our health and well being is super important. And, you know, but anyway, let’s not go down that rabbit hole, that’s just a thought. I think that online courses can be a credit and incredibly beautiful way to share your skills and enable people to learn something that you’re really excited about. And there’s many ways in which you can make that very accessible. I don’t want to say though, that pricing is the only concern when it comes to accessibility. So for example, I know that I’m currently not offering any transcripts in my courses. And that’s something that I’d really like to do. So right now, I can’t justify hiring someone to do these for me with what I’m making and what I’m putting into these courses. But in the long term, I know it will make them more accessible. So I would really love to do that. And then finally, I want to talk a little bit about discounts and what they can mean. Maybe I just want to say, you know, there’s so much pressure on so small business owners, and I saw that, in particular, around Black Friday and Cyber Monday to discount ourselves. And I really just want to remind you that you’re running a business because you want to play by your own rules. So maybe it feels good to offer a discount, and Ks in that case, EA you know, shout it from the rooftops, but maybe it doesn’t, then that’s totally fine, too. Maybe you just feel good about where your prices currently are. And you just don’t want to offer a discount. And I think that’s totally valid. I think something that’s really good for people to hear people that are interested in your work is what are you putting in and how you making these decisions. So for example, share that you’re spending a certain amount of money to mother software, or share that you’re spending a certain amount of hours each week on things like social media, or admin or customer care, because people really forget, and they can’t know because, you know, not everyone has experienced being a freelancer or running a small business. And so I think it’s really positive to be transparent around pricing, and to say things like, Hey, you know, this is what feels right for me right now.
I notice is complicated. Because we’re all live in a capitalism, I would like to my work to be unconditionally accessible. But I also really need to honour my time and my energy, and I have bills to pay. And so this is the compromise that I’m making. This is what I’m offering you. And these are my boundaries. And this is what feels good to me. So yeah, I hope that some of these thoughts that I’ve shared have, maybe allow you to have a little bit more clarity or fuel into your own understanding of this. And if you have any questions at all, I would love to hear from you. Thank you.