Today we're covering one of my favorite topics, and that is cash and money. One of the things that I teach my clients is how to get a handle on their cash flow.
So, how do you price your packages correctly?
and what is cash flow exactly? Cash flow is not – this is very important – what you have in your bank account. Cash flow is what you have available after all your future expenses are already accounted for in your bank account. Very often, cash flow is actually just a fraction of what your bank account reflects.
The reason this is so important is that it will help you tremendously in knowing how much money you need to earn. I find it is the click in your brain that you need to take this seriously in order to say, “Okay, this is actually my full-time job. This is my business. This is what I need to pay my bills, to pay my rent, to pay for my kids’ school, to pay for birthday gifts, vacations, a new car, insurance, all of that stuff.”
I go through exercises where we calculate how much we need in business and in our private life. We do an intake, and then I also do the same thing with calculating profit margin because you want to have a profit margin straight from the beginning. This is based on the method called Profit First. Then based on that we know, “Okay, this is what I need,” and then we can create/ price our packages.
Here is a little goodie that I'm giving you straightaway:
- One of the things we do in order to build our packages is to build a method. When you're working with someone, we want you to have a method, and based on that method, we're going to create packages. Here's a little tip for you that I find is one of the most important things that has changed my business: you should have tiers in your packages, and the most important one, or the most expensive one, the VIP, the intensive, whatever you want to call it, should ideally cover one month of your expenses.
That would mean that you only need one client a month, even if it's a VIP. True, not everyone is going to go for that option, but that should be your target in the end, to be able to say, “I only need one client a month in order to pay all of my expenses and even have the future covered.” That is a benchmark that I find is super, super helpful. For me personally, it's $8,000, and my VIP is $10,000. So I even have a bit of extra in Sleep Like a Boss.
That is why I want you to really crunch your numbers. I do have tools for that in my masterclass, or when you work with me, I'll give them all to you so you can calculate this super easily and it's all done for you, and then you can create your numbers and your packages based on your method, and start with that.
Know what you need, and make it realistic because, in the beginning especially, you will not have a waitlist of clients, even if you read everywhere, “After this program, you will have a list of clients waiting for you.” It takes traction. It just takes a little bit of time to get the whole thing going. So you want to be super focused and super clear, and to know that, “If I have this one client I want to focus on this month, this is my goal”, you'll know that you'll be covered. It's the best feeling in the world, because if you have three, that's three months of work done for you and you don't need to stress. (Well, other than undercharging and needing to get 10 new clients a month, which is super, super stressful.)