Pricing your products or services can be nerve-wracking, especially if you’re not naturally drawn to sales or negotiation. But sis, finding the right price is essential—it’s the bridge between honoring your value and meeting your customers’ budgets. Many Black women entrepreneurs face this challenge, and that’s why Sistahbiz is here to help. With these five steps, you’ll walk away with a solid strategy to price confidently while staying profitable. And while you’re at it, check out our related blog, 7 Tips for Charging What You’re Worth, to take your pricing game even further.
Time is money, sis! Every hour you spend on your business—whether it’s delivering a service, prepping behind the scenes, or coordinating with your team—costs your business resources. If you’re not charging for your time, you’re essentially giving it away for free, and that’s no way to sustain a profitable hustle.
Here’s what to keep in mind when calculating hourly time:
- Man-Hours: Your price should reflect not only your time but also the time of anyone contributing to your product or service. That includes employees, contractors, or external support. Their hours are part of your delivery cost, and they need to be accounted for.
- Planning Time: Time spent planning, organizing, or meeting with clients is still work! These hours may not seem as obvious, but they add up quickly and are essential to the final product or service.
To make sure you’re pricing correctly, start tracking your time consistently. Use tools like Toggl, Clockify, or Harvest to monitor hours spent on different tasks. These tools can help you see where your time goes and ensure that every minute you invest in your business is reflected in your pricing.
2. Understand the Cost of Production
Every product or service you sell has a cost attached to it. These costs are what it takes to create and deliver what you’re offering, and they are the foundation of your pricing. If you’re not doing the math, you might be charging too little—and that’s a quick way to lose money without even realizing it.
Here’s what you need to include when calculating your costs:
- Cost of Goods or Supplies: This includes everything you buy to create your product or service—like materials for a product or tools you use to deliver a service. For example, if you’re a baker, this could mean ingredients like flour, sugar, and eggs. If you’re a consultant, it might be the software or tools you need to do your work.
- Labor Costs: Anyone who helps you deliver your product or service—whether it’s an employee, a contractor, or even yourself—needs to be accounted for. Their wages or fees are part of your total cost.
- Fixed Costs: These are the expenses that stay the same no matter how much you sell, like rent for your workspace, utilities, or insurance.
- Variable Costs: These are costs that change based on how much you produce, like packaging, shipping, or extra materials needed for larger orders.
Once you’ve added all these up, divide the total by the number of products or services you expect to sell. This gives you a clear picture of how much each one actually costs you.
Why is this important? Writing it all down often reveals hidden expenses you might have overlooked. For example, you may think you’re making a profit, but once you see the real numbers, you might discover you’re barely breaking even—or worse, losing money. Knowing your costs empowers you to set prices that cover your expenses and leave room for profit.
3. Price for Expertise and Niche
Your expertise and unique approach add immense value to your pricing. Ask yourself:
- Are you a leader, trainer, or innovator in your industry?
- Do you have a unique method, framework, or niche?
Customers pay more for exclusivity and expertise. For example, many service providers, like salons, price their services based on the practitioner’s skill level. Similarly, you can tier your pricing to reflect your niche mastery.
4. Study the Competition (and Stand Out)
Understanding your competition is a game-changer when it comes to setting strategic prices. Knowing where you stand in the market helps you make informed decisions about how to position your product or service.
- Low Competition: If your offering is rare or hard to find, you have a golden opportunity to price higher. When customers have limited options, they’re more likely to pay a premium for what you bring to the table. Take advantage of this scarcity and position your product or service as a must-have solution.
- High Competition: When the market is saturated, standing out becomes your priority. Instead of trying to undercut everyone on price, focus on adding value. Use strategies like offering discounts, bonuses, or attractive add-ons to differentiate yourself. These extras can make your product or service feel like the better deal without cutting into your bottom line too much.
Pro Tip: No matter the competition, always emphasize what makes your business unique. Highlight the qualities that set you apart—whether it’s your expertise, the quality of your product, or the personalized touch you bring. Even in crowded markets, customers are willing to pay more for a solution that feels tailored to their needs. Remember, your value is what sells, not just your price
5. Consider Customer Urgency
When your customers need your product or service, urgency allows you to price higher. But here’s the catch: they must recognize their pain points and feel the pressure to act. Shifting to a more urgent audience requires intentional moves in how you position your offer. Here are two specific ways to make that shift:
1. From “Nice-to-Have” to “Must-Have”
Example: A wellness coach offering general health tips shifts to targeting professionals suffering from chronic burnout.
Instead of marketing general wellness plans, the coach focuses on executives and entrepreneurs experiencing high levels of stress and fatigue. By emphasizing the risks of burnout—like decreased productivity, health issues, and even job loss—the coach highlights the urgency of addressing these challenges. Their messaging shifts from “Feel better overall” to “Reclaim your energy and prevent burnout before it derails your career.”
With this audience, the coach can create premium-priced programs, like a 90-day burnout recovery plan, because the stakes are high and the pain point is immediate.
With these five steps, you’re equipped to price your offerings in a way that reflects your value and meets your business goals. Need more tips? Don’t forget to read 7 Tips for Charging What You’re Worth for deeper insights.
Ready to take your pricing strategy even further? A Sistahbiz coach can help you refine your business model, pricing, and more. Schedule a coaching session today and start building a business that pays you what you deserve.