3 Pricing Tips with Natalie Coombe
Branding with Friends | Episode 18
Featuring Expert Guest: Founder @ NatalieCoombe.com, Natalie Coombe
Watch or listen to the video interview below or scroll down to read the transcription.
Meet Natalie Coombe, Founder @ NatalieCoombe.com
Annie: Today, I am so excited to introduce you to yet another friend of mine in the business world. If you have been wondering about pricing, how can you charge what you are worth, how can you price yourself strategically so you can actually grow your practice as a coach or a consultant. You are going to love today's guests and today's episode.
My guest today is of course the incredible Natalie Coombe. Natalie empowers women entrepreneurs running client-serving businesses to nail their pricing so they can pay themselves what they're worth only working the hours they want. That sounds great! I know we all want to do that. For 20 years Natalie has delivered results to everyone to solopreneurs, through the top international companies in London and Europe, including M&Z Saatchi, Lita and Mindshare Worldwide, as well as working on brands such as Unilever, Dyson, American Express, and Nike. I think we've heard of a few of those. As a single mom by choice running her own online business, Natalie understands firsthand the challenges women face when setting up and scaling their businesses. Today, Natalie works one to one and runs an online program on how to nail your pricing where she teaches business owners how to pay themselves what they're worth doing what they love, only working hours they want. You are so awesome. I should also mention you're based in New Zealand. So welcome New Zealand to the show. Welcome, Natalie, I'm so glad you're here.
Natalie: It's so exciting to be here. I love what you do. It's awesome to be here and talk about such an important topic that is really connected with branding in ways that I don't think people fully understand. But it's great to be here.
Annie: Absolutely, I'm really glad that to have this here. It's not necessarily a topic you might expect for Branding with Friends. But as you said, it is a perfect marriage, branding and pricing really do go hand in hand.
I know you're going to illustrate that with your amazing three tips today. If this is your first episode of Branding with Friends, I'll remind you that we have three tips from Natalie today. So, we're going to go through the first two, then now he's got a special gift for you. Then at the very end, we'll hold that third tip. So, make sure to listen all the way to the episode to get the most value from the valuable Natalie, who's here with us. Natalie, tell us how did you settle on pricing? How did this become your sort of core expertise?
Natalie: I've been doing business transformation, which is just a fancy word for troubleshooting for 20 years, and predominately working with small businesses and large corporate companies. What I found was, whenever there's a problem in a business, whether it's the clients aren't happy, the staff aren't happy, they're not able to do what they want, people are burning out, whatever the problem is, generally it comes back to pricing. There's not enough money in the business to be able to invest in all the things you need to run it smoothly. When I became a single mom by choice and when I was in London, I came back to New Zealand to raise my daughter with my family. When I went to work, back to earning some money I thought of putting her in daycare. Ten hours a day to work back in the corporate field. When I needed a different solution, I decided to teach people what I spent twenty years learning and teach other business owners how to set up pricing, so the business is profitable. Really, it was like if I can help you solve your pricing, so your business is making money, then you're able to do everything else.
Annie: It's this huge key that unlocks everything you've ever said.
Natalie: Once you've got your pricing, you can afford to work with experts like yourself, you can afford to pay for a VA, you can afford to do training, you can afford to do marketing, and you can afford to do all of the things that grows your business and actually still be paying yourself at the same time. So, once you've got the pricing piece in place, it really unlocks everything else. For me, it was like there's one thing I can help particularly woman entrepreneurs do, because we have our own set of challenges, and that is to actually be able to have a profitable business. They can pay themselves every month, not having to work stupid hours in order to do so. That is the best gift I can give people.
Annie: I love that gift and I think that's such a great passion and great reason, the why behind your business. I think that's a perfect lead into our first tip today. What's the first thing you want to tell us as fellow coaches, consultants, and service business owners about pricing.
#1 Action TIP
Paying yourself doesn't need to be a “reward" - that's a myth!
Natalie: What I found, I've been doing this for a while now working with hundreds of different women in business, but don't mean service, lots of coaches, lots of consultants, there’s this one misbelief, this one myth that they must all have when it comes to running their business. That's this idea that their salary is a reward for doing a good job. You hear people say all the time, I waited five years before I paid myself kind of like it's a badge of honor that you waited so long before you paid yourself. We have this idea that eventually, at some point, if you've worked hard enough, if you're successful enough, and you've done it for long enough, eventually you'll be able to pay yourself a salary. But the truth is that your salary is not a reward for doing a good job. It is a fixed business cost that you have to plan for. Because if you don't plan to make your salary in your business, you simply won’t.
I think particularly for what we call sole traders or solopreneurs, where you are predominantly that face and the door of your business, your salary is going to be two to three times more than your running costs. If you're only making a plan to generate enough revenue to cover your running costs, and a little bit extra, you can't bridge that gap, no matter if you work harder, getting more clients is going to bridge the two to three delays. In order to consistently be able to pay yourself what you're worth every single month, you need to incorporate your salary into your pricing. So that when you're making your goals and you're doing all the actions to generate the revenue, that revenue actually generates you salary, not just your bills.
Annie: I think that, that's so important to be aware of at every stage because a big part of being in business is to pay yourself. You wouldn't go work for someone else without getting paid. You are your best boss. I think keeping that in mind and building a sustainable business, because it's not useful if you spend all your money on marketing and then make nothing from it. There's a time to invest and there's also a time to pay yourself and they have to coexist if you're going to have a successful business, a business that won't burn you out.
Natalie: Not all my clients are women or mothers and more and more mothers are moving toward running their own businesses. If you don't pay yourself enough, what's going to happen is you work more hours, you work the evenings, you work the weekends, just to try and get enough money to justify what you're doing. That affects your relationships with your kids, affects relationships with partners, and affects your mental health Pricing is intrinsically linked to all of that. My goal is always to get clients to be able to generate enough money to pay themselves a decent salary only working the hours that they have available, which is usually school hours. It was a different math than we would traditionally go into, which is just work harder, work more hours.
Annie: Many of us hate math, we know that many of us hate math. Watch Branding with Friends, we've had multiple experts on who have talked about how important the numbers are. I know Natalie is just one of many. I'm going to always tell you that too, when you pay attention to numbers, you see where your time is. Not just the money you're making, but where your time goes. Especially if you're the sole trader, I love that term. I have never heard that before. If you're somebody like that, like me you have to be really mindful of where your time goes and what is a wise investment of your time and what is not such a wise investment. I love that myth of it's this reward and that we should delay it. One of the things I love about my business is that it supports myself and my family. That's a beautiful gift. But I know not everyone can say that. Sometimes not everyone can say that because it's psychological. They don't realize it's a psychological mindset. Which I love is your world so on that note, I know you've brought this other great tip I'm really excited to hear about it. If we miss that first piece, what is the second thing we need to keep in mind?
#2 ACTION TIP
Learn the 4 models of pricing: market-based, goals-based, cost-based, and value-based.
Natalie: So, the second thing is, a lot of people don't know there's actually tried and tested methods for figuring out what you need to be charging. When I talk to people I say, how do you currently price? Most of them are kind of finger in the air I guess. I'm guessing what number feels right. My favorite one I charge what I think the client can afford. So those are kind of really the most common, which makes sense. No one teaches you another way. We work with what we’ve got. But there are actually four key pricing methods specifically for service-based, or service-based businesses. I've got an article I can share later if you want to go into more detail. Here is a quick whistle stop for those that exist. You can find which one is going to work best for you. They are market-based pricing number one, goal-based pricing is number two, cost-based pricing is number three, and value-based pricing is number four. Each one of those is more powerful than the last. Most people start and stop on market-based pricing, you can probably guess from the name what that is. That's where we look at our competitors, we go, am I more or less experienced than them? Can I charge more or less on market rate? The problem with market rate and market-based pricing is that you have no idea if your competitors are making any money.
Annie: Or no, just because they could be making $500,000 and spending $499,000 on their marketing.
Natalie: Exactly, you're probably sitting there thinking, I wish I could charge more, but I can't charge more because my competitors are on board I or lose my clients. So, they're also sitting there thinking, this is not really working for me and feeling trapped within this kind of market. The other thing is, even if they are making some money, their business is a black box to you, to us. We don't know what's been going on behind closed doors. They may have invested heavily in automating systems. That means that they're streamlining their processes so they can deliver more for less. They use really cheap resources offshore that you might not want to be using in order to be able to deliver it. They may be prepared to work 50 hours a week in order to make a salary and you've only got 20. So, basing your pricing on their pricing and hoping that it's going to work for you is really unreliable.
Annie: I love the black box analogy. I think that's a really good point you don't know, with many people what their situation is, what their story is, or even if their pricing is accurate. But I'm curious, tell me about the other three.
Natalie: One thing before we move on from market based. It's not very good as a pricing method. But it's really good for context. This is particularly where branding comes in. Because once you've done the math and use ideally one of the other methods to work out what you personally need to be charging for your business works for you. Market based pricing helps you figure out where you are in context. Are you cheap and cheerful? Which means the volume equation, which is a different kind of advertising, marketing mechanics, are you middle of the road with your pricing? In which case, how do you stand out in a crowded marketplace? That's where everyone kind of lives. Do you need to position yourself at the premium end of the pricing scale? That's going to particularly affect how you need to position yourself in the market, your branding, your tone of voice who you go after. So, market-based pricing is unreliable as a pricing method that’s really good for context.
Annie: I think context is the name of the game. While you may be brand new to listening or watching Branding with Friends today, something I don't think a lot of my clients realize or folks that are thinking about branding realize, but branding can help you charge more for what you do.
If you look the part and you sound the part, people are going to justify paying a higher price because you're going to look like an expert. I think he out the cheap and cheerful versus the middle of the road versus the premium option. That can help you if you're going to anchor yourself at a certain place. You need to look the part and if you are I think we all know that you are a valuable person. If you're watching this, I'm sure you're great at what you do. But the question to be asking is how you're branding yourself, how you're marketing yourself, and what your r marketing and website look like. Are they clear? Are they consistent? Do they convey that you are a valuable expert because even if you are but you're not putting that story out there, that's where you're going to get.
We all worry about the price shock but the more you look like the premium expert, the more you can charge like one too. It's not going to be a sticker shock. I think that's a great example with the market-based piece.
Natalie: If you're going to buy a toaster, for example, if you have to replace it next year, whatever. You're going to go to the cheapest place to buy a toaster like here, we would go to Kmart. You have Kmart over there. You go to the cheapest place to get the cheapest thing. When you're talking about something that's going to change your business and change your life, something that is really important to you, I think pretty much all of the people listening to this will fall under that category, the work you do will change people's businesses or will change their lives. We don't want the cheapest version that might break down. We want to invest in something that we can trust is going to actually help us achieve our goals. At that point, pricing becomes how we perceive how good someone is. If they become cheap they can't be that good. But there is a science, there's an art towards pricing. Sometimes people think, if I put my price up, then I would scare people off. Well, actually, as long as your results are in line with what you're charging, clients are getting value for their money which is always super important. There is a perceived value in a higher price point than there is another one.
Natalie: The second one is what I call goal-based pricing. This is where you really work out a ballpark of where you need to position yourself in order to be able to pay all your bills, and pay yourself a salary over the next year. We can work out from where we want to get to and you work on the average that you need to be earning per client. It's really good if you want to do a quick sense check of where you need to be positioning, or if you are just starting out and you really want your business to make money.
Where do I need to position myself so I can kind of start on the right track? Or if you have a really simple business model, goal-based pricing isn't so helpful for you like if you have multiple services, you have a value ladder with your offers, if you outsource and you get contractors to do part of it, or if you have multiple different services.
All of these are different because you get an average goal basis, one number and most of us think, that's nice but I have three offers. How do I divide that one number by three different offers? Which is something you can do but that's where the second two and the last two, cost based and value based are the most powerful of the pricing methods. These are the two that I recommend people use and are the two that I teach.
Cost based pricing is where you work out exactly based on how you deliver all the activities, how you want to work, how you want to run your business, what kind of lifestyle you want to have. We work out the minimum you need to be charging for your services, to pay bills, pay yourself, and only working the hours that you want. Once you know the minimum, then you can charge more. I could choose to charge less, but I know the minimum that works for me. For us woman who tend to always downplay our value, it's so empowering. Once you know it's not worth doing it for less.
Yes,It helps you maintain your boundaries when you haven't done the math and you don't understand the impact charging less has on your bank balance and how many hours you have to work. Of course, you're going to reduce it to get the sale because it's easier, it doesn't feel sticky. So, understanding the minimum, it's really important for creating a viable business that you can keep going on. You're able to make investments in your business to get the VA and to get the branding expert help and to get all that really cool stuff, but it also empowers you to stick to your guns with what your minimum pricing needs to be. That's really powerful.
I recommend people partner that with value-based pricing. So, value-based pricing is my favorite one. It's the most powerful because value-based pricing is not about how long it took you to deliver it, how many hours you spent, how much it costs you, or even how much you're worth, because we all suck at that. But it's about the change you help your clients to achieve, and how valuable that is to them. Value based pricing is where it's no longer about how much you're worth, or how big.
Annie That's got to feel like freedom to some people I know.
Natalie: It's no longer about us, it's about our clients. What do we enable them to achieve or experience that they couldn't do before? How much is that worth to them? So, value-based pricing unlocks your profitability because you are no longer tied to how many hours a day or how many hours a week you can work. It's not about that, it's about the value. But it also makes pricing conversations a whole lot less awkward and uncomfortable because you're not saying I'm worth a lot of money. You're just saying this is what you'll be able to achieve afterwards. This is how valuable it is to you.
Annie: It won't be what the solution is, if this is your problem, here is the valuable solution. So, it's going to solve your big problem.
Natalie: This is what you do, your client will be able to achieve, feel, or experience afterwards. So as long as the client is getting value for money, right, then it's a no brainer. Once you know those two numbers, the minimum you need to charge, just cost base, and you know that maximum you can charge for the clients, you're getting value for money. Which is value based, you can charge whatever you like, whatever you feel comfortable, wherever you feel confident charging between those two.
A lot of my clients go on a journey from charging the minimum, just slowly as their confidence grows, to increasing their pricing to charging the max. Quite a few go from not charging the minimum, to just getting to a point where every month they're paying themselves a decent salary.
Annie This is so much permission. I'm big on permission. I wrote a whole book called Permission to Try, which is all about giving yourself permission to do crazy things like brace yourself. But I think you did a great job of explaining these four different modes of pricing and how they work together. I think I have found in my experience -- when I first started I think we have all these mindsets we bring in from how we were raised around money, worth, and jobs and you think well, I just need to be affordable. What I adopted many years ago is I realized I wasn't striving to be affordable so much as I was striving to be valuable. That’s a huge difference, l a huge shift of how you present yourself and what you offer. You can always support people.
A lot of the pushback I get with pricing, and maybe you hear this too, not on my personal pricing, but just about, I shouldn't raise my prices. But I want to help as many people as possible. There’re wonderful ways including sliding scale pricing to do that. To give out a certain number of projects a year pro bono to offer free resources, or lower cost trainings. There’re all these wonderful ways to do that. We, especially the women that are listening need to hear this message, which is it's okay. Also, it's really necessary to price yourself well, for you to have a great business. I know that folks are going to want to talk to you after this and connect with you. I think you brought something along to Branding with Friends. So, what is it that folks can get if they want to learn a little bit more about you, Natalie?
Don’t miss this special opportunity for “Branding with Friends” fans…
Grab Natalie’s Guide: 5 Steps to Double Your Salary
Natalie: I have a tool that a lot of people find really helpful. It's five steps to double your salary. People have doubled their salary, doing these steps. It's a way of helping you uncover areas in your services that you can actually make quick wins, little changes that will significantly increase how much profit and how much money you make for every job that you do. It's really easy to use. It starts you on that journey for understanding how much you're currently making. We can start to improve, to start to make more money for every job that you do. It’s a really important first step in that journey. You have the link for it. So, download that and then start that journey to stop paying themselves what they're worth.
Annie: Love to hear any stories of folks who do that and I will definitely check it out. But it sounds like an awesome resource. Thank you for sharing that with us and whether you're listening or watching Branding with friends, it is going to be here in the notes for you to check that out with Natalie and of course connect with her.
We do have one more tip, which I believe is like three tips and one. I'm so glad you're here. We talked about releasing ourselves from the myth. The big myth that you’re not paying yourself as a badge of honor. Screw that, we've decided that now we know the four different types of pricing. I think I'm going to try this as my quiz. Okay, so we've got market-based pricing, we've got both based pricing, but those are not as exciting, or as useful as what you teach. They're helpful for positioning, which we've talked about with branding today. And how you want to present yourself as an expert, especially that market-based piece, where you need to be visually and from a messaging point. But then we've got this awesome cost-based pricing and value-based pricing that considers your expenses, and what the value of your transformation is, and marries them together. So that you can be priced in a confident way that your time will be very much valued when you work with clients.
So, what's next? What's the last thing we want to leave Branding with Friends folks with? What is that last thing we want to keep in mind?
#3 Action Tip
Use these 3 steps to know your value: ideal clients, what they achieve, and the value of those results
Natalie: I want to give you three steps you can take to start you on your journey to value based pricing, right? I know for a lot of women, anything we do easily, that comes naturally, we think isn't that valuable. I don't know why we think that but we do. So, this is a way of trying to make that shift in your own mindset to understand how valuable what you do is. So, three steps to know your value.
Number one, I want you to think about who your ideal client is. No doubt you guys have talked about ideal client avatars. My one is the people you enjoy working with, no point building a business with people you don't enjoy working with. Some people enjoy working with people who get the best results with and then those who are in a position to value what you do enough to pay you what you're worth. So, think about everything about who that ideal client is for each of your services.
Step number two, I want you to write down what your client is able to achieve after working with you. So not what you do, not what your processes are, what they get. But what they will be able to do, feel achievement after they are finished working with you. That's step number two.
Step number three, I want you to start thinking about not you, but those results, like what they will be able to do and actually start thinking about how valuable that is to your client. Generally, value falls into two categories for those that work with businesses. So kind of b2b, then it's quite possible, you're going to help them either make more money, sell more products, save time, save cost, reduce stress, and or add expertise. It's going to be somewhere in there and you're usually able to, with a bit of creative thinking, tie that back to a value like $1 figure.
So that's the exercise. My clients and I go through a lot of this process. This is a whistle stop version. And we're going to know a lot of people out there listening to this will be in what we call, the passion industries to helping industries social change, working with individuals and consumers. It's harder to say, I help you make more money. You might help them with how they feel about their body or with their relationships, or anything along those lines. So, in those types of industries, what's super helpful is to think about other areas in their life that your clients spend money on. Yes, I can guarantee you every single one of your potential clients is spending way more money than your cost of your service on something else.
Annie: You're so right and I was talking with a friend and she said, no are you kidding? I'm spending $500 to have an interior decorator come to my house once a month. Why are you stressing about this? I think that's such an eye-opening point. I'm so glad you included it.
Natalie: People pay $1000’s for iPhones every year, every time they come out. What do they pay for their cars, their couches, their clothes, and their holidays? There’re always more things in life that people will invest their money on because people pay for what they value. Your job as a CEO of your business is to understand your value and communicate it so your potential clients understand that it is worth the investment.
So, that process is starting to really understand your value is super important. Because if we don't understand it and believe in ourselves, it’s that much harder for our clients.
Annie: I think that, that's a challenge. I know that's something that when I work with clients through the branding process, it's a lot of capturing value. It's a lot of giving yourself credit. I think that's a lot of what the pricing and branding comes down to, is being at an inflection point in your business where you're stuck. You need to make more money, you need to position yourself as the expert but you can't do that without help like a Natalie or an Annie. What is the thing that whether it's pricing branding, or both? How is it that you can move forward until you capture that value? Sometimes we plateau, I know, I get that. I've started to adapt this psychology of, I need to invest in hiring experts on areas where I get stuck, because that's the only way I'm going to get unstuck.
Natalie shared some amazing, very valuable tips today. The three I wrote down were your ideal clients. Yes, that comes up in almost every episode of Branding with Annie, but I love how you talked about it. It's exactly how I talk about it, which is, I don't actually really talk about avatars or creating people I talk about who's been your favorite people to work with that were easy yes’s. What did you get great results to? You do have to work with lots of different people to figure that out, but that's okay. The ideal clients, you want to focus on, what did they achieve through the process of working with you? What are those results worth?
I think it couldn't marry more better with branding. So, if you've uncovered or started, this is about new thinking about what are all these questions around pricing. Natalie is your girl to talk about this. If it's gotten you thinking, I know I’m invaluable, but how I'm talking about myself and how my website looks, is not communicating that, I'm happy to talk with you. As always, I have a link on my website, it's a big red button says free consultation, you can actually have a private chat with me right after you finish watching this episode. So, hop on our calendars if you want to talk to either of us. We'll be glad to have a conversation with you. Natalie, thank you so much for joining us and sharing your incredible pricing wisdom with us.
Natalie: My pleasure, thank you for the opportunity. It's always great talking with people like yourself, who just totally get it and are passionate about helping other woman and business just be as successful as they want to be. And so is the wonderful, thank you.
Annie: I'm so glad you were here and I hope you enjoyed yet another episode of Branding with Friends. So many thanks to my special guest Natalie Coombe of New Zealand and the world at large. Until next time when we're going to tackle yet another topic in the business world where branding interacts with this amazing world. Until then, I'm Annie Franceschi of Greatest Story Creative. You can find all our episodes, branding resources, and a link to hop on my calendar if you want to chat at my website, greateststorycreative.com. Stay awesome and here's to your next chapter.
“Branding with Friends” Episode 18
Show Notes + Resources
Here are 3 key tips for pricing for your service business:
Paying yourself doesn't need to be a “reward" - that's a myth!
Learn the 4 models of pricing: market-based, goals-based, cost-based, and value-based.
Use these 3 steps to know your value: ideal clients, what they achieve, and the value of those results.
Dive deeper into branding and growing your greatest business with Annie Franceschi:
• Subscribe to the Greatest Story Creative newsletter to have new episodes of “Branding with Friends” sent right to your inbox the day they premiere!
• Find past episodes at BrandingwithFriends.com
• Connect with Annie for consultations, resources, and more here on greateststorycreative.com
• Follow Annie & Greatest Story Creative online:
--- Facebook - facebook.com/greateststorycreative
--- LinkedIn - linkedin.com/in/anniefranceschi
--- Instagram - @annie.franceschi
To learn more about pricing or to seek Natalie’s help:
• Visit Natalie at nataliecoombe.com
• Email her directly for a free consultation at Natalie@NatalieCoombe.com
• Follow Natalie on LinkedIn, Facebook, and Instagram
• The 4 Key Pricing Methods You Need To Know For Service Based Businesses
