9. The Hidden Cost of Being the Cheapest in Your Market

Being the cheapest option feels like a safe strategy. Fewer objections, more bookings, right? Claire breaks down what you're actually trading when you price low - and why the real cost has very little to do with money.

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Transcript

SPEAKER_01 0:35

Welcome to the Girls Mean Business Podcast, where we share business and marketing tips, advice and trade secrets to help you raise your game and build your brilliant business. Get more clarity, more customers, and more sales. Here to show you how.

SPEAKER_00 0:56

Hello, it's Claire from the Girls Meme Business. So the other day I was having a chat with somebody who was telling me she was absolutely run off her feet. She had more bookings than she'd ever had. She was definitely busier than she'd wanted to be, but somehow the money still wasn't stacking up. She didn't have very much, she was broke. And I had a suspicion that I knew what was wrong before she even got to the numbers. She was a photographer, really talented, and she built up a solid business. She had bookings most weekends, a regular client base, the whole thing. And on paper it looked like it was working. But when I asked her how she was actually finding it, she said she was exhausted, like properly exhausted. And she was sort of dreading another inquiry because she just felt like she was going to burn out if she wasn't careful. So I asked her to walk me through what she charged, and she said, right,£250 for a family shoot, and that included the session, which could take a few hours, all the editing, the digital files, a couple of prints, and then I asked her to walk me through the time. So the drive to the location, which could be pretty much anywhere within a 50-mile radius, the session itself, like I said, could be a couple of hours or more, the drive back, then loading everything onto the computer, editing, which she said took her about three hours on average. Sometimes more if it was like a tricky light situation, then sending the files over, the emails beforehand, planning and sorting out all the details, then the follow-up messages afterwards. And we got to about five hours pretty quickly, probably closer to six actually. So that's£250 for approximately six hours of work, which is just over£40 an hour. And that's before anything else comes off. And then you start taking things off like the equipment. So cameras, lenses, memory cards. Even though she'd already bought it, it was already paid for, she wasn't factoring in the fact that she was going to need to replace it eventually. So she still needed to factor those costs in insurance, because she have to have it, the editing software that she was paying for every month, petrol for the car, and once she'd done that properly, she was probably earning somewhere closer to£25 or£30 an hour for something she was absolutely brilliant at, that she'd spent years getting good at, that people loved when they got the results back. And the thing is, you might still think, well,£30 an hour is not bad, but the thing about earning£30 an hour in your own business, you need a lot of hours to make your life work, which meant she couldn't really turn anything down because that£30 an hour she still needed to pay tax on that. You know, it wasn't all hers to keep. So she wasn't turning things down every weekend, every school holiday, every last-minute booking that came in on the Thursday for a Saturday because somebody else had let them down, which happens so often. Um, because she needed to keep the volume flowing through, and the volume was what was killing her. So the thing that most people don't realize when they talk about keeping prices accessible is it's not just that you earn less per job, it's that you have to do so many more jobs to compensate, and that affects everything. It affects your time, your energy, your weekends, the way you feel about work that you used to love, and you start to begrudge, it makes you regret doing the thing that you love, and that's an awful position to be in. And there's something else that happens as well, and I don't know whether you know this, but when you are the cheapest option in your market, you tend to attract the clients who chose you because you were the cheapest. They're usually the people who do the most back and forward or back and forth before the booking is even confirmed. They ask the most questions, they take the Mickey really, then push the timelines, the most requests for changes, the most emails that start with oh, just a quickie. So you end up in this position where you're doing the most work for the most difficult clients for the least money, and that's not the dream that you had, honestly. And I'm not saying this to make anybody feel bad, and I get people are budget conscious, but everybody has a choice about who they target as their ideal customers, and you and I need to target people who value what we do and who will pay accordingly. We don't want to attract people who can't afford us, that's not a good business model. There are other people with lower prices who can help those people, but we want people who are prepared to pay more because that's what we're worth, isn't it? So if you have been on this cheapest person in the market journey, then you're not alone. Lots of people do it because you just need to get the money in, and I get that, and there are lots of very good reasons why you know being the cheapest feels like the sensible thing to do, especially when you're starting out or when things feel a bit wobbly. But I do think it's worth sitting with the numbers, properly looking at the numbers and thinking, what is this actually costing me with everything, rather than just guessing or sticking your finger in the air? So here's what I think you need to do today: work out your actual hourly rate, not the number that you quote, but what you actually earn per hour once you've accounted for everything, every hour you spend on a client from the first email to final delivery, every cost that comes off before the money goes into your bank or before you actually get the money that you keep, sit down and do it. Most people don't, most people avoid it. You know, what it costs you per hour and what you actually make, that helps you see that it's not sustainable, it helps you make that decision that then feels obvious. Because once you've seen it, it's very hard to look at your prices the same way again. And once you've seen it, you realize that you need to put your prices up and you will keep the right people, you will attract the right people, and your bank balance will be bigger and your life will feel so much easier. See you next time. Lots of love, bye for now.

SPEAKER_01 7:36

That's it from the Girls Mean Business Podcast. Join us for even more fab tips, advice, interviews, and trade secrets to help you get more confidence, more clarity, more customers, and more sales. Connect with us on Facebook and Facebook.com or slash the girls mean business, and check out our website at www.thegirlsmean business.com. See you next time.