Are you charging enough for your products and services?

image There are two binary constants that happen in my business. There are people who are actually pleased to drop their Amex down on a cake; and then there’s those who take one look at my menu board, utter an audible “tsk” and mosey on out. One woman came in last week and was asking about cakes. I directed her to the menu board and she mouth grew agape. She raised her hand to her mouth to shield her question from anyone who could possibly walk in at that moment and asked, “Why are your cakes so expensive?” When I set my prices, I compared myself to other locations nearby. My cupcake prices are average, and they are definitely not New York City prices. Cakes, however, I think people are used to the grocery store and big box store prices. These products, are frozen or quickly made without personality. We’re also talking bulk, mass-produced stabilizer-riddled confections. And the frosting? Don’t get me started on the frosting, that painfully-sweet paste that arrives in five-gallon white tubs for an hourly-paid employee to shovel out into a pastry bag and slather on a thawed sheet of cake. So I explained to the woman, that the prices are a simple reflection of time/overhead/economy. What to consider when coming up with your product or service prices:

Cheap rates

  • Will drive you insane
  • Need to take on more clients to make your living
  • Clients will demand more from you
  • Lower quality of work

Middle-of-the-road rates

  • Not nearly as many clients needed with cheap rates
  • Clients will be more conscientious of your work system
  • Average quality work, won’t be low quality and it won’t be high quality either

Higher rates

  • You can choose who you work with, there less clients and more time to
  • put into their projects
  • Clients will appreciate your work and value their time and dedication
  • put into high-quality work.
  • Quality work is custom, based on the needs of the client. Will result
  • in return work.

Of course, your rates will reflect how much you want to put into the business and what kind of work you offer. If you have rates that are more middle-of-the-road or are close to competitors, make sure you offer something that makes you stand out and apart from the rest. Offer a little something extra, but make sure it will reflect back on your final work. How do you set your rates and prices?

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