Recently, I asked the members of the Wedpreneur Facebook Group how they determined their current pricing. The results weren’t surprising; the vast majority of those who responded cited two major factors: the pricing of the competitors in their market, and their own level of experience.
Those are two useful ways to go about determining your pricing, but they are only a small piece of a much bigger pie. Today I want to talk a little about market research, positioning, and the 6 Value Factors that you need to apply to your pricing before you make a huge mistake and undervalue yourself!
As part of any pricing strategy, doing market research is a critical step. It’s important to know what the “going rate” is of your services are in your specific market. There are is a right way and a wrong way to go about this research – and I’m just going to say straight up that pretending to be a prospective client and inquiring with your competitors as such is the wrong way. (Pssst… any experienced business owner can sense when they are being “shopped” by their competitors in a heartbeat, so you aren’t fooling anyone.) Instead, gather what information is publicly available (i.e. via their website), and start building relationships in the industry. I’m not sure why in some markets pricing is such a big secret – it really shouldn’t be – but there is no harm in reaching out and asking directly, as long as you do it respectfully. You may or may not get an answer, and you need to be ok with that. I go much deeper into market research strategies in my Pricing Lab course, so if you’re interested, check it out!
Here’s the thing though – market research will help you with making decisions on positioning, but it shouldn’t be the be all to end all determination of your pricing.
Say what, Mary? Hang on – I’ll explain.
Basing your pricing on what your competitors are charging is short sighted. It doesn’t take into consideration what YOUR situation is or what YOUR sales goals are. If Joe Smith Wedding Photography is charging $2000 in your market, you don’t know how he came to that number. Maybe he has a full time job and this is just a hobby for him. Maybe his turnaround time to provide photos is really slow because of his full time job, so he’s adjusted his pricing accordingly. And Jill Roberts Photography, well, she’s charging $6000, but guess what? She’s got 2 kids and a mortgage, and her photography business needs to net her a minimum of $50,000/yr, so she’s priced herself – and positioned herself – how she needs to in order to meet her sales goals.
My point is – knowing what your competitive market is charging isn’t enough information to make an educated decision about where to set your pricing. So let’s talk a little about positioning.
I want you to ask yourself some simple questions: What kind of clients do you want to work with? What kind of weddings do you want to be a part of? For the sake of simplicity, let’s assume that there are four levels of weddings out there. Keep in mind, these levels are based on budget; there are many, many other ways to drill down further into targeting, but for today we’ll focus on budget-based targeting. They are:
- The low-end or “budget” weddings (under $400/guest)
- Mid-range ($400 – $800/guest)
- High-end ($800 – $2500/guest)
- Luxury ($2500+/guest)
(Disclaimer! These figures are approximate and truly do depend on where you live. A $50,000 wedding will get you something totally different in a small town vs a major metropolitan city, but I wanted to give you an idea of ranges just for this example.)
My guess is, you have a pretty good idea of which level above you want to focus on. This is one of the first steps when it comes to deciding your positioning within your market.
But here’s the kicker – your PRICING needs to be aligned with your POSITIONING. If you’re trying to position yourself as a Wedding Planner for the High End market, for example, but you’ve decided to price yourself based only on a) what other wedding planners in your market are charging and b) your experience, you’re going to price yourself so low that you are actually positioning yourself in the mid-range or even low-end levels.
And it gets worse, I’m afraid. Because if you’ve created your brand with the focus on attracting high-end clients, but your pricing has got you positioned for mid-range or low-end clients, you’re going to end up with only one kind of clients: confused clients.
6 Value Factors
In addition to market research and positioning, there are 6 “Value Factors” that you can filter your prices through to determine whether or not you need to adjust your pricing (up or down!). Experience is one, of course, but it’s not the ONLY one, which surprises people. Here are all six:
- Client Experience
- Scope of Work
ALL of these need to be taken into consideration before you settle on a final pricing strategy for your wedding business.
The bottom line is that your pricing has to reflect not only your market and your experience, but it MUST align with your positioning and take into consideration the 6 value factors as well.
If you want to learn more, or if this sounds like greek to you and you really want someone to help walk you through this concept, I’ll be covering all of this in great detail in the Pricing Lab course, and you can sign up until April 1st! Having a solid pricing strategy that takes ALL of the above (and more!) into consideration is absolutely critical in building a successful and sustainable wedding business.
In the meantime, I’m happy to answer any of your questions in the comments below – bring it! xo