Pricing continues to be a hot topic in the wedding industry. It seems that there is constant discussion about professionals being priced too low, under-cutting their colleagues. Often people in the “lower” end of the pricing spectrum see their pricing as a means of survival – thinking that it is the only way they can compete. They may be new or less experienced and feel that they aren’t experienced enough to charge a premium. And, when you’re new, you also aren’t quite sure how long things actually take to do. (I know. I was there many moons ago.) You price low as a means of entering the market… to get experience, see what it’s like.
Here are some of the thoughts behind the low pricing and my counterpoints…
Note: These statements are purely to educate and not make judgment. I’ve been guilty of some of these thoughts early on in my business.
“When I got married, I couldn’t find anyone offering affordable options. I started my business to give this to people.”
I applaud these noble efforts. But, there are few people who are doing this well. One example of someone who is offering affordable yet value-filled wedding options is The Broke Ass Bride. Dana’s website and blog is full of lifestyle tips on having the wedding to FIT a very specific niche. It is well-thought out and planned. And, she is satisfying a niche in the industry. But many people with low pricing aren’t strategically trying to fill a niche, but solely trying to compete based on price.
A few things to consider:
- Do you offer a service or product that TRULY fits into the budget category, or are you under-pricing?
- Does the cost of materials (or the cost of your time) get covered by your pricing?
- What is your profit margin? Is this sustainable for your business?
- Have you done the math? What does it take to break-even? To earn a living?
“I’m New. It’s OK if I lose money for a couple years.”
Why, oh why, do new business owners set the bar so low for themselves? Start your business with the GOAL of being profitable. Create a business model that is self-sustaining and allows you to earn a living. It’s much harder to reconstruct your business model after you’ve been operating on “broke” for the initial start-up years.
“How could I possibly charge what XYZ company does? They’ve been doing this for 15 years!”
Yes, it’s true. Matching pricing with another business in your market with much more experience would be foolish. And, quite honestly, you’re not there yet. Your pricing has to reflect the value of your experience and expertise. But, you must keep in mind what the range of pricing is in your market. And, take into consideration the experience you bring from your “past life”. These job experiences are highly valuable in getting your job done in your new business. While over-valuing your services is a no-no, you want to get close to what the market demand is in your region.
“I can adjust my pricing, once I have more experience.”
It is nearly impossible to do this. You will be able to raise prices every year by a certain percentage, but you won’t be able to jump pricepoint categories (from low to middle or luxury). Once you have identified yourself as the “low-price leader”, people will continue to come to you for this. And, it’s very challenging to adjust this reputation. (You have been typecast!) Start your business on the right foot. Offer valuable products and services and charge accordingly.
Tomorrow… let’s chat about what is RIGHT pricing!