How to scale your business with ethical pricing strategies

It’s true – equitable pricing without financial strain is achievable

The team and I are almost recovered from what we are lovingly calling the “NATS Hangover.” 

Being part of The National Association of Teachers of Singing National Conference in Chicago was more than just showing up. It was a whole team effort – from those who stayed home to hold down the SECO fort, to those dedicated to being physically present, all of us presenting break outs and pre-conference workshops, hosting several wonderful businesses at The SpeakEasy Cooperative booth, meeting new people, making new friends, onboarding new clients, doing mini-coachings…. It was a lot.

One of the things I was grateful to do was give a presentation on pricing.

It brought up a question I was delighted to answer – “How do I incorporate ethical pricing strategies that can be equitable without putting myself in financial strain?”

“How do I incorporate ethical pricing strategies that can be equitable without putting myself in financial strain?”

It’s surprisingly simple, actually, once we get our heads around a few key underlying concepts:

1. Service based businesses use units of time as the tool they use to provide their service. Therefore, from a purely economic perspective, one can only sell units of time. Time is a fixed/static data point.
2. Selling time (i.e. $100 for 60 minutes) to clients is not a beneficial way to communicate value – it implies that time and value are equal. It makes the sales process a transaction that does not take into account the transformations that take place within that unit of time. Transformation is a moveable/dynamic data point.
3. We must acknowledge and understand that we are in the business of selling time as units (static), and transformation as value (dynamic).
4. Value can be delivered in multiple “containers” and discovering those “containers” allows us to scale. Scaling allows for increased equity in price points.
5. Think of “containers” instead of “offers” (even though, yes, technically, they are the same thing)… Containers are the different ways we can package and deliver our awesomeness for different types of clients with different needs. Having an ecosystem of containers is a wonderful way to create and encourage agency in your business! Offers are us deciding what the market needs. Containers are the market telling us what it needs, so that we can present it in multiple ways to serve multiple subsets of our ideal client.

Why does this matter?

Here’s the deal – we can only really pull three levers when money generating, because math:

Three options for money generation

1. How often we are selling units of something
2. How many units we are selling of something
3. How much each unit of something is priced at

If the only thing we sell to generate revenue is delivered in units of time, let’s say in 60-minute 1:1 increments, we limit the “how often you are selling” and “how many units you are selling” levers. After all, there are only 168 60-minute units in a week. At the most, we can only sell one hour at a time to deliver value to one person.

If we need to make a certain amount of money in this business model of 60-minute 1:1 sessions, then as soon as we offer a sliding scale/scholarship, etc., we risk not earning enough to run our life and business.

The dilemma of ethical pricing

Unfortunately, this means that if one attempts to charge less for that unit of time – out of some sense of ethics or morality – this requires that one either supplement the price of that unit of time, or lose revenue. And let’s face it – it’s usually the latter. Which isn’t ethical or moral toward oneself. Which opens a whole other can of worms around how our behavior teaches our clients how to behave.

To my mind, the most ethical way to address pricing is not in pricing but in the containers (offers-ish!) we create to deliver our awesomeness in. We need to learn to scale.

Increase profit margins by scaling your business

Scaling a business (contrary to what Online Coach Island will tell you) isn’t always about volume. Technically, to scale a business, all one needs to do is increase profit margin.

In a service based business, the simplest way to increase profit margin is to raise the cost of each unit sold (i.e., charge more per billable hour/lesson.)

The next simplest way to increase profit margin is to reduce costs. I.e., get rid of unnecessary expenditures. (I give a hard eye roll at this one and do not promote this tactic. I mention it here because, well, math. And while it’s permissible, it’s not always profitable.)

The next NEXT simplest way is to add volume to the unit – which can add volume in several ways –

1:few, 1:many, 1:masses

For example:

Small group classes like siblings classes or 20 minute round robins are the 1:few.

Coaching programs and high touch membership groups are 1:many.

Evergreen offers and medium to low touch membership groups are 1:masses.

Which brings us to the next NEXT NEXT simplest way to scale: Pull all three levers at once – create something that you can make one time, sell all the time, at unlimited units, and offer multiple price points for it. This is an evergreen offer. It’s more like a product than a service. See why I’d put this in the category of 1:masses?

To my mind, it is in this last way to scale (the evergreen) that equitable and ethical pricing can really strut its stuff.

It’s where one can allow the buyer to determine for themselves the value of what they are getting, according to their own good sense, their own budget needs, and their own level of engagement with the creator of the container, while honoring the needs of the business.

FaithCultureKiss LLC and The SpeakEasy Cooperative has been experimenting with equitable/ethical pricing for about a year.

So far, so good! We’ve done this mostly through saving a ton of capital from our top revenue streams so that we can accommodate extended payment plans – not necessarily by reducing pricing points.

We’ve aged the company’s money to the point where our cash flow can sustain a lower overall monthly revenue while still meeting annual revenue goals.

And yes, I AM 100% LIVING MY BEST LIFE WITH THIS. IT’S FINALLY HAPPENING!

WHAT’S MORE: I’ve decided to implement this concept in a value-based way with The Art of the Inquiry eBook that I wrote and we are launching now – the book is a container that will allow us to share our amazingness around sales and the inquiry process for voice teacher-micro-business-owners.

This “pick your price” model will allow two things:

• Those who aren’t in a position to invest in our other containers yet can get solid support in a way that fits their cash flow
• or Those who are already invested in our containers can say an extra thank you (by paying more) or not spend too much at one time if they are invested in other containers of ours that are impacting their cash flow.

We are offering multiple price points – and trusting folx to choose what works best for them.

I’m pretty proud to have the business be in a position where we can do this, and I’d be so honored if you checked out our sales page for the eBook, here, and see what we have to say about it! (And if you want to grab a copy, that too would be much appreciated! I think it’s a super helpful book and we are really proud to have it out in the world – also, if you see a typo or something, let us know so we can fix it in version 2!)

In short…

To bring equitable pricing to fruition, create ways for your billable hour to be met via various revenue streams.

Be sure that you establish your billable hour and annual revenue using the correct data points (check out the NATS presentation on their learning library, or this FB live I did on pricing a while back)

After all, we can’t be truly equitable without creating truly sustainable revenue in the first place – as I heard several times on the airplane these past weeks – put on your own oxygen mask before helping others.

Keep it simple and intentional with these steps. No need to rush. Let it build naturally.

Step One: Figure out what you want/need to earn.

Step Two: Decide which “container” you want to focus on to earn that baseline, factoring in the cost of your future equitable pricing model.

Step Three: Develop different “containers” for your amazingness that can be priced in a more differentiated way.

Step Four: Go back to your main “container” and revisit how people pay for it. Leave it be or create a new container that supports your cash flow and revenue needs.

Step Five: Tweak and Repeat!

Want to know more?

Reach out to me! Book a session, join The SpeakEasy Cooperative, write me an email. We will do our best to get you in a direction that allows for your equitable pricing goals WITHOUT putting your business under financial strain!

All My BeastyBoss,