Today I want to tell you about why you should STOP worrying about what everyone else is charging and since you shouldn’t be worrying about what they are charging, you definitely SHOULD NOT be basing your own prices on what other people charge. Usually when someone starts a business, they aren’t sure what they should charge so they do some internet digging and other research, and they try to figure out what other people with the same service or product are charging. Then they decide to charge about 25-50% less than what everyone else seems to be charging in an attempt to get some quick business.
Now there are a whole lot of issues happening here, but don’t feel bad if this is how you set your prices for the first time. You are in good company as this is how pretty much everyone I’ve ever talked to or coached or consulted with also did it. Even I did it this way when I first started out. Unfortunately this method is pretty problematic because many people in the creative business world and especially the wedding industry are not making money, or they are making very little. I know this because I’ve spoken with hundreds of them. They might look successful and have a nice website, and appear to be doing decent work, but even if it’s their 5th year in business, they might barely be making a profit. Therefore you do not want to be basing what you charge off of what they are doing.
For instance, let’s say that you’ve decided to set your prices lower than the rest of the market, and you know that you probably won’t make any money to start, but you figure, hey I just want to get some business and some experience, and then I’ll raise my prices. Since you set your prices so low, more than likely, most of your clients did not necessarily hire you because you are amazing (even if you totally are), they hired you because you were cheap. So when you go and raise your rates and finally start competing with the rest of your market, you no longer stand out because the only thing that made you unique was your low price and you’re not going to be able to book clients easily at that higher price point.
Next let us discuss the “market” for a minute. People are constantly worried that the markets will not sustain the price they want to offer. First of all, if your market won’t sustain prices that make you profitable, then why the heck are you in business in the first place? If you think no one is going to pay the prices you need to charge, then it’s probably best to find a new business idea. However I actually think that excuse is a cop-out.
The market will pay for what it values. If you are solving a big enough problem for people, and you are doing it in a way that is unique and is totally your own, then people will pay whatever you charge. The key is to be unique! If you really want to stand out on something other than price, you have to offer something that people NEED and that people cannot get from anyone else. Moreover, there is money everywhere. I know business owners making plenty of money and charging high prices for the offerings in very oversaturated markets and even in smaller, more rural markets. It’s totally doable; but yes, you’re going to have to put in the work to stand out.
When people start worrying about the market, it often that goes hand in hand with undercutting. Now if you’re unfamiliar with price undercutting, this is when businesses come along and charge LESS than what is sustainable in order to get market share and then plan to raise its prices later. Yet as I mentioned before, it usually does not work well unless you’ve got something truly unique to offer, other than the low price. Undercutting is bad practice and a pain because when too many people are undercutting in any given market, it drives the overall price average down, and it makes it difficult for anyone to be profitable.
However worrying about undercutting is a waste of your time and energy. Every industry and every market will always have those people who undercut on price. No matter how big or awesome your business gets, there will always be someone charging less than you. But if you’re not competing on price (which you shouldn't be!) it does not matter. There will always be people that don’t care about quality or good service; they just care about getting the cheapest price. Those people aren’t your ideal clients. Instead put your energy into figuring out how to offer something so amazing to your ideal client that they can’t resist it and they pay whatever you ask. Once again, how can you stand out? How can you be different?