Dealing with Price Resistance
The age-old question: How much should I charge for my services, or how much should I ask for? Well, let’s put it this way: if everyone can afford you, you are not charging enough money! The point is not to offer a service or product that absolutely every person can afford. If that is the case, you need to increase what you charge. Remember, people value what they pay for. If you don’t charge enough, they may feel they are getting a substandard product or service. Harry Beckwith, author of Selling the Invisible, says this: “Don’t assume that logical pricing is smart pricing. Maybe your price, which makes you look like a good value, actually makes you look second-rate.” Ouch, that’s painful advice.
But before I look at price resistance, let’s examine why it is so hard for women to ask for more money. I believe there are three reasons. First, we want to be liked. We fear that if we raise our rates, our clients, and potential clients, might not like it. They might not like us. And that is hard to think about. And of course, we fear that we might lose potential business or customers. No one likes that idea. For some people, this is also about possibly losing relationships. Many of us form long-lasting relationships with the people we sell to, and thinking about them being mad or upset over a rate change, or worse, walking away, is more than some of us can handle. If we are salaried and asking for more money, we often fear that our boss, or potential boss, will be irritated at us asking for more, or worse, that it might cost us the job.
I also believe that often times we have a hard time asking for more, because at our core, we fear we are not worth the extra amount of money. It takes a strong sense of self to believe that we are worth a lot of money! (It helps to create affirmations for this, affirming to yourself over and over that you are “worth” this much money.) And asking for more money pushes us out of our comfort zone. I don’t know about you, but my comfort zone is so comfy! When we force ourselves to leave our comfort zone, we find that our comfort zone expands. Under-earners have a notoriously difficult time leaving their comfort zone, but they must venture out of it. The payoff is worth it.
How do we know how high to push our rates? “Price resistance” is not an exact science, but if no one complains about your price, it’s too low. If everyone complains, it’s too high. Harry Beckwith recommends that you raise your rates until 15 to 20 percent of the people you come in contact with “resist” it. (They won’t buy from you.) That’s right, 15 to 20 percent. Why is that? Because close to ten percent of people will complain about any price! (This can be for a variety of reasons.) So if you throw out that group, you want to aim for resistance in ten percent of those remaining cases. That is what brings you to twenty percent. So ask yourself, after you throw out the ten percent that always balks, how often do I encounter price resistance?
Salaried women can benefit from thinking about this as well. You don’t want everyone to be able to “afford” you. Your skills, talents and experience should place you above the bottom of the market! And just because not every employer can afford you, doesn’t mean you won’t find a match. In every case, it is important to know your bottom line and what you are willing to take. I suspect that it is time for many women to raise their bottom line.
© 2006, Mikelann R. Valterra and the Women’s Earning Institute. Empowering professional women to earn what they’re really worth.
Related article: “Finding Your Resentment Number”