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The 3 Signs You Should Be Using Value Based Pricing

How do you know if you should be using Value-Based Pricing to price up your services?

Value-Based Pricing is the most powerful of The Four Key Pricing Methods For Service Based Businesses.

However it's not always easy to tell if it’s the right move for your business.

Or why you should bother using it.

Well, there are actually a number of signs that indicate Value-Based Pricing is something you want to incorporate into your pricing methods.

Here are the big 3:

#1. You’re maxed out, but not earning what you expected

The first sign is where you’re maxed out, you're already operating at capacity and can't take on any more clients.

And yet you're not earning the mega bucks you thought you would be.

You’ve tried just working harder, maybe even smarter, but you just can’t work any more hours without burning out. You’ve plateaued.

#2. You know you’re underselling yourself but just don’t feel comfortable charging more

Alternatively, you may know you're underselling yourself but you just don't yet have that courage to put a higher price on the table.

Perhaps you're in the helping industries and it feels bad or wrong to “make money” off helping people - especially when it comes so naturally to you and you love doing it.

So you end up over compensating, and giving so much of your time, energy and expertise away for free, to the point where you’re exhausted.

#3. You find having pricing conversations really awkward and uncomfortable.

As women, we’re often not encouraged or rewarded for putting our hand up and saying “We’re worth ‘x’”. Or that we're really valuable, or really good at what we do.

Historically we’ve also been excluded from “money conversations”, so we’re not as familiar or comfortable about talking about how much things cost and why.

When we then get into business this can lead us to feel uncomfortable and awkward having pricing conversations.

So we either avoid having them (Quote procrastination anyone??), or duck and dive when asked how much something is, and feel apologetic if it sounds like “too much”.

This can lead you to feeling burnt out (because you have to work even harder to make ends meet), resentment (because you KNOW you’re not being properly rewarded) and ultimately feeling like a failure because the business didn’t turn out as you expected.

So, did you identify with any of those three scenarios?

Well if you did then it’s time to add Value-Based Pricing to your pricing toolbelt!


Because Value-Based Pricing is where it's no longer about how much it costs you, or how many hours it takes you to deliver something.

Instead it's about the change or experience you help your clients to achieve and how valuable that is to them.

It takes you out of the equation and it puts the emphasis and the focus back on your clients and what they're able to achieve and how valuable that is to them.

So what does this help YOU to achieve?

Well for one, it lifts the lid on your profitability.

Let’s take for instance where you mainly use an hourly rate - either simply charging by the hour, or pricing up packages but only based on how long you think it will take you.

You will quickly get to a point where there are no more hours you can work (in fact by the time you’re reading this, you’re probably over that point already!).

Many business owners will also quickly reach the point where you feel you can’t increase your hourly rate any more as well.

At this stage you end up plateauing in terms of your revenue, and therefore your salary.

You’ve maxed out on how much you can earn without burning out and damaging yourself and your business.

In comparison, when you use Value-Based Pricing, it’s not about your hourly rate, or how many hours it takes you. Instead it’s about the value you provide your clients. And at that point, the sky's the limit!

You’re no longer restricted to simply having to work more hours in order to “make more money”.

So you can see, applying a value-based approach to your pricing lifts the lid, or this “cap” that you've put on yourself, in terms of what you can earn.

Secondly, Value-Based Pricing also rewards you for being more efficient.

When you work on an hourly rate basis, what ends up happening as you get more experienced and more efficient is you end up earning less.

That’s because you become quicker and more effective at what you do.

And while, yes, you can (and should!) increase your hourly rate to reflect your experience, very rarely does this increase reflect just how efficient you are!

Here’s an example:

Let’s say you work twice as quickly as someone with less experience, so a job that might take them 8 hours, you can do in 4 hours.

Now to keep things simple let’s say the “standard” hourly rate is $100 an hour.

Your less experienced counterpart earns $800, however you only earn $400 because you did it in half the time.

Doesn’t seem right does it?

The client got it quicker, and probably at a better quality, but you only got paid HALF as much??

Now, as i mentioned, you can (and should) increase your rates to reflect your experience and ability.

But very rarely does anyone increase their rates enough to properly make up for the difference!

For example, let’s say you increase your hourly rate by 50%, so $150 per hour. For a 4 hour job, you’d still only be earning $650, compared to the $800 your client would pay someone else.

In comparison, when you move to a value-based approach - where it’s not about how long it takes you, but instead about how much it is worth - you are being rewarded when you are able to make your delivery more efficient, more effective, more streamlined.

The client benefits because they get what they want sooner, and you benefit because you’re being rewarded for working smarter, not harder.

And thirdly, it helps you feel more confident to charge what you’re worth.

It takes you, and your emotions (including your fears and insecurities) out of the equation.

It's no longer about how much you think you are worth.

Instead it puts the focus back on your clients, on the change you help them achieve, and how much that is worth to them.

It helps you not just understand the value you bring to your clients, but truly believe it as well.

And that makes having pricing conversations a whole lot less awkward, and gives you the confidence to charge what you're worth 'cause you truly believe it.


Now, Value-Based Pricing is incredibly powerful as a pricing method, but it can be a challenge to work out because “value” is subjective.

There isn't a formula like there is for the other methods.

There’s no calculator for working out exactly how much something is worth to somebody else.

But while there aren’t any formulas for working it out, there ARE calculations you can do to make sure that whatever you end up charging will get you to your goal salary, only working the hours that you want.

Plus there are tips and tricks that you can apply that will help you pull out and determine what that value is to people, so that you've got context,

This means when you are pricing up your services, you understand the context of what your service will help the client achieve and how valuable that is to them. This enables you to view your prices in light of that, rather than how much you think you’re worth!

And I know for so many of my clients, having gone through this process of not just understanding their value, but truly believing in it, that gives them the confidence and the courage to actually start charging it.

As one client so elegantly put it:

So there you have it, the 3 signs that you need to move to Value-Based Pricing:

  1. You're maxed out and can't take on any more clients but you're still you're not earning what you want to.

  2. You know you’re underselling yourself but don't have the confidence to charge what you're really worth.

  3. You find having pricing conversations awkward and uncomfortable.

Value-based pricing takes a pressure off yourself.

It puts the focus back on your clients and how much they are worth, giving you the confidence to charge what you're worth 'cause you truly believe it.

And it lifts the lid on your profitability.

This is what I teach my clients how to do.

If you want to find out more book in a time to chat. It's free.

I would love to help you grow your profitability, pay yourself what you're worth only working the hours you have available.

Because you, my friend, are worth it.

Talk soon.


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