Breaking Down Pricing: The Three Factors to Always Keep In Mind

There are a few things we must always think about and factor into our pricing. Those things include our overhead, our cost of goods sold, and our inherent values throughout our business. So, let’s dive into each one.

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Overhead

When we think about our overhead we should be thinking about every single thing that we have to pay for to run our businesses. That is everything from our rent to our electricity to our phone bill… everything. And when we look at integrating this into our pricing strategy we should be thinking of recouping a very small portion per sale. Let’s break down some of the things we can categorize as overhead.

Your space or your home office rent is 100% an overhead expense we should keep in mind. To find the portion of your space rent you should be covering you can use this formula. First, you need to know the complete square footage of your home and the square footage of your office. Then divide your office square footage by your total home square footage. This gives you the percentage of the space you use for your home office. For example, I use 12% of my home. Multiply that percentage by your rent. That is how much of your rent you spend every month to run your business.

Your wifi is absolutely an overhead expense. Find your device usage for your devices in your settings. On my Android phone, I found it in settings and data usage. Then estimate what percent of that is used for your business. I estimated mine at a solid 50% of my overall home wifi usage.

Consider your utilities such as electricity and water. To find the percentage of your utilities you use monthly we use that same percentage you found above. Simply multiply that percentage by your monthly utility bill. Following the example above, I would multiply 12% by my electric bill to find what I need to recoup as overhead.

And I don’t know if this one is as big for you guys as it is for me, but your subscriptions! Think your editing software, your storage platforms, your premium subscriptions anything and everything that you pay for to help maintain the business digitally should be factored into your overhead costs. I know I personally spend around $300 a month only on subscriptions.

Another utility to keep in mind is your phone bill. Figure out the percentage of your phone usage you spend maintaining your business. Then multiply that percentage by your phone bill and that is how much your phone is costing you monthly to run your business.

How much did your props cost? You’re lighting? Your lingerie? These are all overhead.

The last thing we’re going to touch on that is a little bit more wishy-washy is your persona upkeep. This would be your hair your nails your makeup your waxing and all of those personal upkeep things you need to do to maintain your persona. Keep in mind that of all the things on this list, these are usually not tax deductible. An example of this is I sell foot content so I receive regular pedicures.

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Cost Of Goods Sold

The next thing to discuss would be the cost of goods sold. This was touched on briefly in our last pricing episode but we’re going to go a little bit more in-depth on this. The cost of goods sold is more often looked at on a sale-by-sale basis rather than breaking it up into portions per sale. Examples of these would be requested props that you need to purchase for a custom or disposable goods that you used for a custom. An example of that I experienced was somebody had requested that I do a 15-minute mukbang. That required that I order food and have that delivered. That food and delivery rate needed to be a part of my cost of goods sold.

The cost of goods sold definitely comes into play when we are discussing physical content. In physical content, you have a huge list of costs of goods sold. You have the item you’re selling itself, the shipping cost, the mileage to get to the post office, the packaging costs, the stationary if you send notes, and any extras that you send with.

An aspect of our cost of goods sold that not everybody really thinks of would be that payment platform fee. So for example Many Vids is one of my payment platforms and they take 20% from me. To offset this I require buyers to pay that 20% on top. Speaking of people taking our money from us, taxes need to go into our cost of goods sold as well. Know what your tax rate is, and have it calculated and tracked.

Your cost of goods sold needs to be recouped every single sale or you are going into a deficit on that sale. So if you are selling a $150 pair of panties, and you’re only selling it for $50 you’re in the hole $100.

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Inherent Value

Now we need to go really in-depth on determining our inherent value. This was also really briefly touched on in our last episode but this time I want to really break it down. There are quite a few things that we need to ask ourselves. And just like last time I’m going to make you mad at me and I’m going to tell you I have no answers for you. I’m going to have a lot of questions for you to consider, but I can’t answer them for you.

When determining our inherent value we need to determine what our labor as an artist and a professional is worth. In that, we need to take into account what artistry, experience, knowledge, and the physical act of providing the content is worth. Even if you are at the very beginning and you are just starting, this still has value. Because you will still be providing the labor which has value, and you are still providing your artistry which has value. Just because you don’t have extensive experience or knowledge does not mean your inherent labor does not have value.

The next thing you need to decide on is what is your time as a professional worth. You are logging into your job every day when you do this. When you go online to start speaking with clients or doing content you are at your job. You deserve to be compensated as such.

Now something not everybody really likes to do, but is important. Look really hard at your content. What is that content worth? Take into account the quality of your creativity, the resolution and sound as well. Is it high resolution with great sound quality? Then that should lend to higher prices and higher value. And then while we are looking at our content’s worth, we also need to discuss what its inherent worth is. When we’re looking at what our content’s inherent worth is we need to take into account your cost to entry to your body your sexuality your sensuality your privacy in general.

And finally, what is the inherent value of access to you. You are a commodity in this industry and you need to be capitalizing off every one of your commodities, which means you need to be capitalizing off the access to you. Your subscribers are getting exclusive access to not just your content but your personality and who you are overall and you deserve to be compensated for that.

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Putting It Together

To set your prices you must factor all of these expenses that you incur. Not each sale is going to cover an expense, but the cumulative of them should. If for some reason that is not the case, look at what you can do to re strategize.

For a real life application of these concepts When pricing a menu, click here.

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