Pricing is a touchy subject. Price too high and you not only risk losing business, you may exclude people you want to serve. Price too low, and you can’t earn enough to thrive.
The dilemma is complicated when your heart and mind conflict. This article will show you how to resolve that conflict so you can arrive at the right price, a price that is wise, compassionate, and profitable.
The myth of logic over emotion
It’s a myth that you have to choose between your heart and mind when setting a price.
The myth originates in the belief that feelings are irrational. That only the cognitive mind can reliably process multiple sources of information and arrive at a smart decision. But the reverse is true. Without emotion, the cognitive mind is incapable of acting quickly and accurately in a complex situation.
You don’t fly a plane on logic alone
If you’re piloting a plane when an engine fails, you don’t have time to parse every option. If you wait until you’ve consciously considered the best thing to do, gravity will make your decision for you.
Instead, a trained pilot is guided by input from the emotions. This is not to say that it’s only feeling at work here. What happens is that choices are rapidly considered outside of conscious awareness. The result of this nearly instant process is a surge of positive or negative emotion that tells the pilot what to do.
The more you’ve trained as a pilot, the more accurate this combination of mind and emotion will be. But no matter how much you train, you need emotion to cut through the endless possibilities.
Neuroscience proves this. People who lose the use of the part of the brain responsible for connecting thought and emotion cannot make decisions. Without feeling, they are lost in an endless series of deliberations. The best decisions are made as the result of a finely tuned blend of reason and feeling.
But what about the conflict?
If it takes logic and emotion, mind and heart, to set the right price, why do you feel conflicted, especially when someone says your price is too high or low?
The reason is that you don’t (yet) have enough experience for your heart and mind to work together reliably. Like a pilot, you need training before logic and emotion automatically provide the best solution.
Training your mind and emotions
For your logical mind to contribute to wise and compassionate pricing, you need three things:
- Accurate data about what you need to live comfortably.
- Accurate data about what resources will be used in your offer (time, money, energy, intellectual property).
- Accurate data about the opportunities you will sacrifice if you take this work.
For your emotions to contribute to wise and compassionate pricing, you need:
- Clarity about what you want to create with what you earn.
- Honesty about what you are willing to give in return for what you charge.
- Knowledge of what lights you up.
It takes all of this in concert for you to arrive at the right price.
Reading the signals
Pilots undergo judgment training. That is, they practice making decisions under pressure based on the combined input of logic and emotion. Similarly, you need to practice making choices about pricing.
At first, reading the signals your emotions send can be confusing. It can be difficult to interpret what a positive or negative emotion is trying to tell you.
Here are some commonly confused signals. How would your pricing decisions evolve if you understood the differences clearly?
Enthusiasm versus excitement
Enthusiasm is an emotion that says, “This is something good. It feels right. And I sense that the longer I do it, the more right it will feel.” Enthusiasm ramps up gently, lasts a long time, and tapers off without drama. This emotion is saying, “Go ahead. This choice will serve both of you.”
Excitement, on the other hand, ramps up quickly, lasts a short time, and often ends in drama. Excitement happens when you are highly stimulated by the idea of working with someone but haven’t thought through what it will mean over the long term. It can be a setup for burnout. When you are tempted to lower your prices because you are excited about the work, pause and evaluate. Excitement doesn’t mean stop, but it does mean slow down.
Compassion versus pity
Compassion is the ability to appreciate and acknowledge someone else’s pain without buying into their story. Compassion can be a good basis for adjusting your prices.
But watch out for pity. Pity says, “This person needs me. They will be lost without my services.” Pity sees the other as a victim. It sets up a power imbalance that sours relationships. It is a set up for ingratitude.
Responsibility versus guilt
Sometimes you may want to lower your price because you feel responsible (response-able). You are in a position to lend a hand, and you assess that the other person is in a position to be a full partner in creating the desired results. It’s a declaration that you care and that you have the resources to make a contribution.
Guilt is a reflex that says you should be responsible. It signifies pressure rather than awareness that you are willing and able to help. It can be a wake-up call that lowering your prices will be conferring a favor to avoid an uncomfortable feeling rather than to create a favorable outcome.
The more you practice consciously examining both rational and emotional bases for your pricing decisions, the easier it will be to trust yourself to make them wisely. A finely tuned blend of logic and emotion will lead you to wise, compassionate, and profitable choices.
How do you know when you are charging the right price? Share your successes and challenges in the comments.
You can do this thing
The longer I’m in business, the more convinced I am that Accidental Entrepreneurs can make a consistent profit. They can do it precisely because they can combine heart and mind. But you need a map to make the journey to profitability.
Profit Alchemy lays out that map in detail. I act as your personal trail guide, showing you each step of the way what to do, when to do it, and how to integrate it with your deepest longings. Click here for details.
Photo credit: Steve Snodgrass via Flickr
Under a Creative Commons License
