Workbook. Welcome to the Pricing Masterclass I m so glad you re joining me!

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Hugh Flowers
5 years ago
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1 Pricing Workbook Masterclass Welcome to the Pricing Masterclass I m so glad you re joining me! My job with this series is to get you from feeling like you ve got NO IDEA what the heck you re doing, to a place where you ve got some great ways to immediately get your pricing more under control. If you ve ever wanted to make a living out of baking and decorating, you re probably wondered if there s any money in it. You might have heard other bakers and decorators complain that customers only care about price. You might even personally know people who tried to start a business, only to crash and burn a few months later. Maybe you re already in business and making a bit of money but you have some doubts about whether or not you can turn it into enough money to be worth the effort. I m here to show you that not only is it possible, it s possible for YOU to do it. For most of those people who have struggled to make money out of their talent, their biggest issue was getting their pricing right. Most of the time, we undercharge or have no real idea how to figure out what we should charge in the first place. Some of us are just plucking numbers out of the air and hoping for the best and I ll admit, I started out that way too! Some of us figure out the numbers but then struggle to ask people for those prices because we lack the confidence that they will pay. Over these three videos, we re going to talk about why pricing is so hard, what to do about it, and finally how to move your business forward so you spend a lot less time quoting and a lot more time filling your order book. In the following workbook, I ve given you some of the information you ll find in the videos as well as some exercises to help you get even further along the path to getting a handle on your pricing. Please feel free to share your answers in this workbook with me via michelle@ and I look forward to seeing you in class! Michelle Green Page 1 Copyright: The Business of Baking 2018

2 Pricing Masterclass Video #1: Why Pricing Is So Hard...It s Not Just You! There are a whole lot of reasons why pricing is so hard, including: We re not numbers people we like making stuff, we don t like looking at spreadsheets! Fear of rejection we worry we we won t get the sale, or by saying no, they are really saying we are not good enough, or we assume they can t afford us. We have no idea how to calculate prices for custom made work (especially if we ve never made it before!) What s the fourth reason pricing is so hard? How do we deal with this? After all when you are in business you cannot really avoid dealing with pricing issues day in and day out. The easiest way to confidently price is to have a clear and defined financial purpose for your business. Take some time to consider these questions and answer them for yourself: 1) Why does my business exist in the first place? Is the reason for starting it the same reason as for why you carried on with it? Are you hoping to achieve something specific? 2) Now that I ve been doing it a while, is the reasons for starting it the same reason for continuing with it? Or has my purpose for having a business changed at all? 3) Businesses have several purposes money is usually only one of the considerations, but knowing the specific money purpose our business has makes pricing that much easier. When you consider Page 2 Copyright: The Business of Baking 2018

3 that the money you earn goes to a specific purpose (a vacation, to charity, to feed your children, to help others), asking for the price you need and want becomes a lot easier. Thinking about your own business, what s the purpose of the money it earns? I would like my business to earn money because: 4) Now that I know WHY I want to earn money in my business, HOW MUCH money do I want (and need!) it to earn? There s nobody looking at and judging this number. It s NOT impossible but you DO have to get real about it in order to have a destination in mind that you are heading towards. My business earning goal is: I picked that number because: Once you ve worked out WHY your business needs to earn money and HOW MUCH, take the time to write it down somewhere you ll see it often. Sometimes we just need a visual reminder of our goals! (Bonus tip: If you re very visual, turn it into a vision board what things will you do/have with that money? Cut out images of what you d like to afford and post those in one place.) Page 3 Copyright: The Business of Baking 2018

4 Video #2: Easy to Implement Pricing Strategies: Method One: Whatever number is in your head, double it before you say it. This one is SUPER scary to do but that s exactly the point we want to get used to saying numbers that scare us, so that the fear goes away. Why did my business mentor tell me to double it? Do you think she was right about that? Method Two: Give potential customers a price range, don t waste time on crazy detailed quotes in the first instance, that s not what they need! Thinking about your own products, what would your price ranges for these items be? I ve given you a few product options plus space to add in your own! Item Single tier birthday cake Dozen cupcakes Dozen simple decorated cookies Price Range Method Three: It s not personal (it really isn t!) Think about the last time you decided not to buy something? Was price the ONLY reason, or did you have other reasons for saying no? I didn t buy it because... (it was too small, didn t like the colour, didn t need it...) Page 4 Copyright: The Business of Baking 2018

5 Method Four: Pricing is a PROCESS, not a project This one is hard for people to understand, because we all so much want there to be a simple, magic formula that you can plug in the other and out comes the price! Use this section as an opportunity to think about how far you ve come since you started in your business. I ve given you a couple of examples to get started this is a chance to look at how much you ve improved already! It does not need to be perfect, we re using this to celebrate your progress! When I started I... Only charged for ingredients Had soft edges to all my cakes And now I can... Charge enough to make money on top of just ingredient costs Make the edges super sharp! Page 5 Copyright: The Business of Baking 2018

6 Video #3: How To Know If Your Pricing Is Right: Thinking back over your last 10 enquiries that you quoted, ONLY of those who replied to you how many said: That s great, I ll take it! (no comment on price): Sorry, you re too expensive for me: I ll take it, I was expecting it to be more! LISTENING to our clients is the best way to gauge what is happening with our prices - but you need to remember what I said earlier about taking it personally. The customer saying no thank you, or disappearing, does NOT always mean that it s about price! If you are getting THE MAJORITY of people commenting that your work is too expensive, ask yourself this: Am I conveying the worth of my products? Do they LOOK worth what I am asking for them? Does my marketing (website etc) tell the story of my prices? Am I taking the time to educate customers about the VALUE of my products? (Remember, that YOU are not your customer you KNOW what goes into it. So ask this question through the eyes of a customer.) Customers who order cake generally have NO idea what kind of time, effort or skill goes into our works of art they see only that it s going to get admired then eaten. To them, it s not like an artwork on their walls they will keep for a long time, or a wedding dress they will store for their own children to wear. It s a very temporary thing. So if we re asking them to spend a reasonable amount of money on it, they ve got to SEE/FEEL/UNDERSTAND the value of what it is we re selling to them! If they are someone with no real concept of WHY YOUR PRODUCT IS BETTER OR DIFFERENT to what they can find cheaper elsewhere, they why would they choose to spend more with you? Think about the last time you made a big purchase for which you had many choices if you picked a more expensive item, WHY did you pick it? (Colour? Convenience? Features?) I bought the more expensive one because... How did the store convey to you that this item was better than a cheaper version? (eg was there a list of features? Did they offer better customer service? Is the brand known for being better quality?) I decided it was worth it because... Currently, how do customers know what price range your business is in? Are there other places you could have this information freely available? Page 6 Copyright: The Business of Baking 2018

7 I let them know my prices by... If you don t have one already, think about setting a minimum order policy for your business. This could be minimum in terms of money OR in terms of quantity, whichever you are more comfortable with. My minimum order is currently: (you might not have one!) The truth is, I really don t want to do orders less than: Remember this: PRICING IS A PROCESS, NOT A PROJECT. This is about looking at where you are now, and getting you to where you want to be: a calendar filled with more orders at the price you both need and want. Page 7 Copyright: The Business of Baking 2018 Bonus: Getting More Orders To Meet Your Financial Goals In the first video, I said that your business needed to have a financial purpose. It can be really scary to have a big hairy financial goal like that, especially when you re just trying to make money in the first place. Let s look closer at how to figure out how much money we want and need to earn. This is SUPER important, so don t skip this step (even if it scares you!) In the next 12 months, my financial goal is to earn this much money: Currently, most of my orders are selling for (on average) this price: Take your year long goal, and divide it by what you currently sell our cakes for. What number do you get: (this is the number of cakes you ll need to make to achieve that goal...and that s before we ve even considered cost to make these.) (Example: I want to bring in $10,000 this year. My cakes sell for an average of $200. So $10,0000 divided by $200 = 50 cakes this year at minimum.) (Hint: We have not even begun to think about costs to make these cakes, so in reality the number is far more than cakes is 1 cake a week.) That final number is the minimum amount of cakes you ll need to sell in the next 12 months to meet that goal. If that number looks scary and huge to you, you ve got two choices here: 1) Adjust your goal down (I don t recommend that...after all, that s not the point of your business. We want to get you to EXACTLY where you want to be!)

8 or 2) Increase your prices significantly. If you looked at that final number and thought...but I m getting nowhere near that amount of enquiries let alone orders, please join me for my upcoming online class. In it I m going to be talking about communication because for a lot of us, we d rather hide behind the cake or cookies than talk to actual humans. It can be really intimidating to have to talk to people in person, on the phone or even via , so I m going to teach you some ways to make communication a whole lot easier (even if you are an introvert.) The link will be in your inbox shortly it s another super useful and fun class, so keep an eye out! Here s why learning to communicate is so important: Better communication leads to ==> more orders, which leads to ==> earning more money, which leads to ==> financial and business goals met! (Which leads to feeling great about ourselves!) Together, let s get your business on the road to success! See you in the webinar! Page 8 Copyright: The Business of Baking 2018

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