Over the last few weeks I've noticed a lot of buzz on our networks of people frustrated by their competitors' prices. Mostly the conversations have discussed how tough it can be to compete in a crowded industry when some are charging a fraction of your fees. And the truth is.. I can totally see where the frustration comes from because it's something that bothered me earlier in my career.
When I first got started in the social media industry the concept of using Facebook and Twitter to market your business was new (yes Instagram and Pinterest didn't even exist then). So proving it was important was the first step of the struggle and then explaining to someone that they should pay you for said services became the second. Their logic? College kids and young professionals knew how to use the platforms, surely they could just hire interns or pay next to nothing for those services, right? Several years later even though the industry has changed quite a bit, a lot of people are still using that logic. It's not just the social media industry either. This issue pops up in both service and product based businesses. Some of it comes from a lack of understanding of the work involved, but a lot of it comes from the fact that there are still a lot of people who are willing to work for free or very little.
So why is this? Cue supply and demand. When there's a market for something people will come a running. Isn't that bad for business though? And wouldn't it be great if some could see the value in their work and raise their prices just a bit to even out the playing field? Well yes, but there's a lot more to this issue. So today we're talking about some of the factors involved and why the issue shouldn't freak you out.
Different Level of Services or Experience
Remember my earlier example about hiring interns or paying low rates for young professionals? Well, the truth is we all have varying levels of experience and we all have to start somewhere! That being said, I wouldn't expect someone just starting out to have the same prices as someone who has been in the industry for a decade. While they may have some really effective new strategies and ideas, someone who is just getting going is probably pricing their services to reflect that. Not only because they don't have a ton of experience but also because they're trying to attract their first batch of clients to build their portfolio.
When people hire you, they are paying not only for your ability to do a service but even more so your experience in the field. Two people could be doing a similar service but when faced with bumps or twists in the road, a veteran may have a better idea of how to handle a situation. So when you hire someone with more experience you're tapping into all of their past experiences in hopes that their successes will benefit your brand. That being said, generally speaking the longer you're in an industry the more skilled you become and as a result the easier it is to justify premium pricing.
Not only will your competitors' levels of experience vary, but the level of services being offered will too. Chances are, while someone may be offering the same services they might not be providing the same level or same amount of time that you are. For example, the social media services we provide include an audit, full platform strategy, weekly content calendars, posting, custom graphic creation, product photography/photo sourcing, community management, active networking and follower strategy, Facebook ad management, influencer marketing and more! Holy mouthful. A lot of people offering social media management may market their services similarly but how much time are they really dedicating to each task? Who knows! What we do know though is how much work we put into each account and our expertise level which we have reflected in our prices.
Different Parts of Your Business Journey
Another factor that may affect your competitors' prices is where they're at in their business journey. Similar to the levels of experience, branching out on your own is a whole different ballgame. When we started our own business, even though we were seasoned professionals we decided to take on projects at lower rates for a couple of different reasons:
- We were building up our portfolio: As I mentioned, when Mallory and I ventured out on our own we had both been in the industry for several years, but when we started our own biz we were starting from a fresh slate. So we rolled our sleeves up and took on a number of projects at lower rates so that we could quickly build our portfolio.
- We were still getting a handle on our business processes: While our skills and experiences certainly overlapped, we built all of our business processes from scratch. While we were super excited to customize our procedures based on our experience, the way things pan out in your head vs how they actually happen can vary. By lowering our prices at the beginning, we were able to fine-tune everything at a faster rate.
While this system worked out really well for us and allowed us to get our prices back up to where they should have been for our experience levels, it wouldn't have been sustainable in the long-run. In fact, when we actually did the math after taxes on some of the projects we realized we were working for pennies (literally). My point is, you just don't know where others are in their journey. Maybe they're just starting out or maybe they are side-hustling. There are so many factors that come into play that can affect their pricing.
Different Markets and Target Audiences
But what about those people who have similar levels of experience and have been in business for several years and are still charging a lot less?! The reality is, in the world of business there is always going to be someone who will offer products or services for a price less than yours. This happens in everyyy industry and the fact is we all have different audiences. While this may seem mildly annoying on the surface and feel like it's also devaluing your work -- in the wide scheme of things it won't.
Consider this, you can buy a basic t-shirt at Walmart or at Nordstrom. At Walmart you might spend $5 whereas for a similar shirt at Nordstrom you could spend $50. There may be many factors for the pricing difference, but at the end of the day each store is serving different markets and that's okay! It turns out Walmart and Nordstrom have both found success and part of that is because they've each found their niche and figured out a business model that works for them.
This is similar in that some businesses will always offer low-cost services no matter the level of success they find. At the end of the day it is up to you to figure out where your business fits into the industry and how you can best serve your target audience. So now that we've talked about some of the reasons why you shouldn't let the issue get you down I'm going to leave you with some final tips on what you should focus on:
- Knowing Your Worth: When it comes to the pricing conversation "knowing your worth" comes up a lot. Which I 100% agree is a valid and super important fact. Based on my reasoning from above though I don't necessarily think the topic always goes hand-and-hand with this conversation. While it can certainly be an issue the reality is it is just one of many factors. That being said, take the time to understand your worth! Do an audit of your skills, experience level and evaluate the amount of time it takes you to do your work. By looking at all of these factors you can better understand if your business pricing is sustainable and if you are being compensated fairly. Not sure where to start? Competitive pricing research can certainly be helpful as well, just make sure you're taking a look at a wide range of businesses and try and find those who align with your experience level and target market.
- Showing Your Value: Beyond knowing your worth, part of your job is to show your worth. In an oversaturated market, one of your most powerful marketing tactics is to showcase your expertise and show potential clients and customers why they should work with you. Invest your time in providing valuable content that will appeal to your target audience and show that, heck yes you don't just understand the topics but you know them front to back. Share valuable blog posts, highlight the quality of your products and the work that goes into each, or showcase your successes as examples! This is your chance to communicate why your biz stands out amongst the masses so make it count.
I hope you've found this post helpful and I've given you a little push to stop worrying about what other businesses are doing! While the biz world is crowded, there's more than enough room for all of us to succeed and that's because we all have different ideal clients! So instead of worrying about what other businesses are doing.. free up your time and spots on your client roster to work on your biz to attract your ideal clients. By focusing your energy inward you will be able to spend more time attracting your target market who will not only want to work with you because of your expertise but who won't question your pricing because they'll understand your services are worth every penny.