So, the internet shared with me that Kim Kardashian paid celebrity hair stylist Kim Kimble $2500 to teach her how to braid her daughter's hair in a recent episode of Keeping Up With the Kardashians. The entrepreneur in me rejoiced, because this is exactly the kind of thing I've been working with my clients on recently.
- a full range hair care line,
- a line of professional hair care products, and
- the Kimble Academy, where she apparently teaches people how to both do hair and run the business of hair styling.
The recent KUWTK episode illustrates how entrepreneurs must be versatile and recognize additional streams of income. Most people would hear $2500 and holler, because they know someone down the street or around the corner who could have taught Mrs. Kardashian West for maybe $25 (or free!), had she asked. Kimble, however, stepped right up to the plate and stated the price for her expertise. And GOT IT (not to mention the press from the show). She looked at the opportunity, knew her worth, and took it in a way that provided an additional income stream into her business. In doing this, Kimble is teaching entrepreneurs an incredibly important lesson about the art of the hustle.
This story reminds me of a mantra that has stuck with me for years after I initially heard the wise philosopher Cadillac Kimberly (the third Kim of this post, wow!) say it on YouTube:
So many entrepreneurs are uncomfortable asking for the money they are worth. So many entrepreneurs lower their prices because they don't think anyone will pay whatever it is they really want to charge. So many entrepreneurs just flat out don't know their value.
What I've learned through my own companies and through working with other entrepreneurs is that many people just aren't ready to ask for, and hence, make, money. And frankly, that is okay. As an entrepreneur, you have to charge whatever you are comfortable with for your services. If your company is going to be a reflection and extension of you, you have to be open to receiving whatever compensation you deem is appropriate. A lot of people have never really thought about how much money their expertise is worth and so they start with the figure that they believe accurately reflects themselves. We all have to start somewhere. If you are out working in your business and selling stuff every day, though, and still not making money, perhaps your low prices are a reflection of how you value yourself.
I subscribe to a principle I've heard a thousand times -- if you aren't making money, you don't really have a business -- you have a hobby. A business is defined as "the practice of making one's living by engaging in commerce." I don't know about you, but living, for me, requires cash. It is literally impossible for me to operate in the world without the income I need to support myself and my family.
Until you're comfortable with who you are and how to create your own value proposition, you do not have a business (unless, I suppose you can live on zero income).
This is why Kim Kimble's approach is brilliant. Maybe she COULD teach Mrs. Kardashian West how to braid for less money or free. But just because you can doesn't mean you should. Oftentimes the payment you receive for your work is less related to the impact on you and more related to the value to the purchaser. It is also a way to recognize that the knowledge, expertise, and product development you've honed over time is valuable.
Anytime a prospective client balks at my fee and/or asks for a deep discount, I know immediately they are not going to be my future client. Not because they won't hire me, but because I won't hire them. I've set a value for my services and time that works for my business, myself, and my family. Anything less will negatively impact one or more of these three things. And that isn't worth it for me.
So how can you figure out how much you should be charging for your products or services? Here are a couple of guidelines:
#1 What is your point?
In your business, what is the ultimate goal? What do you want your company to look like the long term? Is this the only product/service you'll ever offer? Or will your customers/clients be able to come back to you for other things? If this it the biggest, best product you'll ever offer, that should dictate one set of considerations. If this is the first buy in a (hopefully) longer relationship, that should give you a different set of considerations.
#2 What is your position in the market?
Do you want to be more like Payless, the discount footwear retailer, who sells inexpensive products but massive amounts of them, or like the Adidas Yeezy line, which often releases a limited number of shoes that cost hundreds of dollars and sell out in minutes? Or are you somewhere in the middle? There's nothing wrong with any of these approaches, it just requires you to think about where you want to be among your market.
It also requires you to do your research. Figure out who your competitors are in the market and how they are pricing themselves. You could also research/talk to your ideal customer group and figure out what they want and how much they are paying for things. That may provide you with some guidance.
#3 What is your product worth?
As I mentioned above, there are really two values to your product: the value to you in creating it, and the value to the purchaser. These numbers could be wildly different. I imagine it doesn't cost $645 to make each pair of Yeezy military boots, but that is what buyers are willing to pay for the value of owning/wearing a pair of them. Similarly, just because it may only take you a few minutes to create your product, that shouldn't be the only consideration in determining your price. In terms of figuring out what your product/service is worth, consider:
- How much time/energy/money did you spend creating it, including training classes, purchasing supplies, driving to/from the store, etc.?
- What does it take for you to convert a prospective purchaser into a customer/client - do you have to talk to the person multiple times, buy social media ads, travel to/from specific locations, etc.?
- How drained are you mentally and physically after developing your product or service? (this IS costing you something regarding your health, mental state, and energy level)
- What is your customer's/client's alternative? If they don't get your help or product, what happens to them? Do they lose money and/or peace of mind? Do they end up sick and in a doctor's office? Will their business fail and cause them to lose all of the investment they've already put in to it? Will they never get organized? Will their kid's birthday party suck?
These things are worth considering. In Kim Kimble's case, the however many hours it took to work with Mrs. Kardashian West may not have required much prep work on her part because she does hair for a living (or maybe it did - we oftentimes assume that people can jump to their expertise quickly, but that isn't always the case either). But, the value of learning how to braid a little girl's hair, to this client, was enormous. In addition, Kim Kimble realized that $2500 for one client certainly beats $25 for 100 clients.
In the words of Cadillac Kimberly, there's nothing wrong with knowing your value. In the words of me, there's also nothing wrong with charging for it.