Business Wealth Academy
The Academy is opening it's doors again this coming July 12th and 13th. Sign up to receive an update from our team.
The Pareto Principle
In this article, we will be discussion on three pricing secrets that will transform your bottom line. We all know the 80-20 rule, also known as the Pareto Principle. In business, this means that 80% of your profit will come from 20% of your time. However, that means that 80% of your time is spent on non-profitable activities which need to be priced into your programs, services, and products to create the income level that you desire.
Let’s take an example:
20% of your 40 working hours per week = 8 hours
These 8 hours should comprise of the time that you spend providing service and delivery to clients and customers.
You need to charge more for each of those 8 hours to compensate for your actual 40 working hours, lest you burn out. Failure to do this will result in needing more clients while having less time to run your business properly due to the sacrifice you will need to make to accommodate said, additional clients. This will possibly result in a loop just to keep your business floating.
You might end up in this big roller coaster where you begin with lots of clients. You do the work, yet stop doing everything else it takes to market the business. By the time you finish doing the work, the sales completely dry up.
The key to resolving this is to reverse engineer this process. Determine how many hours of delivery you will have in a week. You also need to listen to your audience and create an appropriate price point based on it while ensuring that your programs support said price point.
Packages, Recurring Revenue and Positioning
You need cash to keep a business alive. The easiest way to do that is with packages and recurring revenue, making sure that you position yourself within that so that those who have money are the ones who would want to work with you. Once you have these, then you can have certainty of income. You can be strategic in the future of your business. You can set yourself up for a sustainable financial future. You can plan out your profit and your take-home because you have this certainty of packages and recurring revenue to fall back on. That is a much more comfortable place than the roller coaster revenue that you may be experiencing just now.
You can’t help people when you’re broke. Your business will go bust if you don’t charge at the right level, at the level that you need to support yourself. You would have to get a job and end up not being able to help anyone. You need to make sure that you are charging high enough so that it doesn’t happen.
Here’s a guide on how to improve your Price:
1. Quantify your value to your customers
2. Calibrate your products and services
3. Raise your prices accordingly
4. Attract your ideal audience
By following these, you will be able to start growing and scaling your business the way you want to. It is important to make sure that your pricing is at a level where it supports you so that you, in return, can support others.
And if you want more practical business ideas such as this one, make sure you go around our website, and connect with us on social media. We are on Facebook, Instagram, iTunes and Youtube. See you there!