Let’s talk about price.
In the business world, there are 2 fundamental types of pricing: “commodity” pricing and “value” pricing.
In a commodity business, you’re selling a product that’s similar to what’s already on the market. There’s no unique competitive edge, so you focus on qualities like cheaper, bigger, faster…in a bid to rise above the rest.
In reality, you’re running a race to the bottom, since there’s always a way to make something cheaper, faster, etc.
All anyone has to do is add a new feature to something you’ve put your heart and soul into.
Unfortunately, far too many information products are turned into commodities in today’s world.
But when you add “value,” you create a one of a kind experience that no one else can offer. This is your entry into the value market.
The world of value marketing is a fun, exciting place to be. While being different than everyone else can be a bit scary, it’s also much more enjoyable. Once you get over your initial fear, it’s easier to be “different,” than it is to be a cheaper, faster, and more flashy version of everyone else.
In a value market, you’re not relying on the same boring factors like price and product features.
Instead, you’re competing for the emotional space in your customers’ hearts and minds. They’re working with you because you make them feel a certain way. It’s not about what your product does, but the unique experience you’re providing through your product.
Think about it. There are a lot of ways to achieve a specific goal. But how to get there? That’s where you can excite and engage your audience with your own perspective. In a way that rings true with their acknowledged values.
Over the next few weeks, our Masterclass will be helping you discover and share your unique value…
Let’s switch gears for a moment and talk about experience products. When you offer an “experience” product, the sky is the limit for your price point.
Take Shannon Graham, a millennial who earns over $100K a year for executive coaching. Why do his clients pay these top rates for his services? Because he sees himself as a trainer of top athletes…a coach who pushes each member of his team to overcome their challenges and reach their next level of potential.
Shannon was recently featured in Forbes Magazine for his distinctive coaching model. This is what we’re talking about when we refer to a “high-value 1:1 experience program.”
Now, it takes a while to work up to this level. You won’t be able to charge Top Dollar the first time you offer your product — not without a record of proven results. Without a solid reputation, people won’t believe you can deliver the promised returns on their investment.
But even with testimonials and case studies… you may still lack the confidence to charge such high-ticket prices.
That brings us to a basic, yet essential point: it’s not about what you think you’re worth. Pricing is about the value you can offer your clients.
We’ve all been there — psyching ourselves out and thinking, “I need more training/ education/ experience before I can charge more money.” The truth? It’s not about you, or your fears and insecurities. It’s about the results you can deliver, based on the experiences that only you can provide.
So here’s something that may be hard to digest at first: Only when you take yourself (and sense of self-worth) out of the equation, can you start to charge premium prices.
Remember, pricing is not about you. It’s about your customer’s perception. It’s about what they believe you, and only you, can offer them.
Let me know in the comments if I’m being clear enough, because it’s critical to understand the difference between these two.
Once again, value-based pricing has nothing to do with what you think you’re worth. It’s about how much your product is worth — in the eyes of your customers.
For now though, let’s focus on how to set your beta pricing…
Beta pricing is more about introducing a new product or entering a new market than it is about making big profits. You want to make sales, of course, but your main goal is to get experience. It’s here that you’ll learn how to deliver your product to your target audience.
It’s important to ask for feedback during this stage so you know exactly what your customers want. By giving them what they want – not what you think they want – you create happy customers who are more than willing to spread the word…
If you’re a new entrepreneur, going from zero to making your first sale will be the biggest step you’ll ever take. Believe it or not, it’s actually harder than going from $10K to $100K, or even $500K to over $1M.
In my business, for example, the hardest part was attracting that initial group of paying clients. Once we gained the momentum of happy customers, our business doubled almost every year after that. That’s what momentum can do for you.
Before you can gain momentum, though, you have to get past inertia. As science has proven, it takes more fuel to start a parked car than it does to accelerate one that’s already in motion.
I’ll say it again — it’s about how you can help someone get what they want, not how you feel about yourself and your abilities.
As personal development and marketing expert Zig Ziglar once said, “You can have everything in life you want, if you will just help other people get what they want.”
The takeaway? Your pricing should be based on how your product can help people get what they want.
For example, let’s talk about how you can make $2000 in the next few weeks…
On the screen, you’ll see price points ranging from $47 to $1997. As a general rule, I recommend pricing your product in the $197-$997 range. Some of you may go lower or higher, depending on your best judgment.
Keep in mind that all the prices here end in 7, which is a critical marketing strategy for products that are over $100. Instead of saying something’s $100, most companies will advertise it for $95, $97, or $99.
Why is this effective? Well, it’s based on the science of price thresholds, and how specific thresholds lessen the likelihood of someone saying yes. For instance, most people can agree to buy something that’s less than $100, like $95 or $97. They’ll need a bit of motivation, but they don’t need a hard-sell with tons of information.
Of course, it has to look and sound like something that will help them get the results they want. But something under $100 seems like a small risk for something that offers life-changing results.
The next big price threshold is $200, followed by $500, $1000 and finally, $2000.
What’s really intriguing, though, is that “in-between” prices like $397 and $697 don’t seem to have much of an impact on potential customers.
So if the product has value and they’re already willing to invest $397, they’d also be okay with investing $497. Even more significant, customers willing to invest $697 would probably be willing to invest $997, as well.
People tend to pick one of the in-between prices because they lack the confidence to go any higher. I feel you. It can be scary to ask for $497, especially if you’re new to online business. That’s why people low ball their price and choose $397, instead.
But there’s no real difference between $397 and $497 — as long as the value is there.
With that in mind, I recommend choosing one of the bolded price points in this slide: $97, $197, $297, $497 or $997. But remember that you can charge more for 1:1 and 1:Few experiences, which are more intimate, than you can for 1:Many services.
To be specific, if you’re offering a private coaching or consulting service that provides strong, tangible results, you could probably go with a $497, $997, or $1997 price point, maybe even higher.
On the other hand, a small group coaching or training package should probably be priced at the $297, $497 or $997 price point. If it’s less personal and customized than that, you want to stick to the $197-297 range.
Mind you, these are just suggestions. Your actual pricing is always based on the value of what you can provide your students and customers.
And remember, these price points are just a place to start. Right now, you’re choosing a beta price so that you can prove you have something that’s worth paying for. Your immediate goal is asking for and using the feedback you receive from your customers.
That way, you can make your product even more relevant and useful on your next launch. Right now is not the time to focus on dollar signs. It’s about creating something that will become more and more valuable with each product launch.
Even though you won’t make a whole lot of money the first time, you’ll make more money the second time you offer the same product. And you’ll make even more the third time, and so on…
I want to balance out the above statement by saying you should never give away anything for free. But getting people to try your product and working off their feedback is much more important than charging top dollar — at least, for now.
Let’s pause here and take a minute to choose your price point. Just go with your gut; you can always change this later. For now, think about a number that’s in line with the value you’re offering to your ideal customer. Then, think about how you’re going to deliver that value: 1:1, 1:Few or 1:Many.
If you’re still unsure, just go ahead and pick a number you feel good about. Remember, you can always go lower or higher later on.
Congratulations! You’ve just made what I like to call a “get started” choice. Unlike a “forever” choice, a “get started” choice allows you to move forward. Once you start getting feedback, you’ll have a better sense of what you want to charge.
Believe me, I know how easy it is to get stuck when you try to pick a price point. But that won’t help you, or your customers. That won’t get you one step closer to impacting their lives with your special brand of expertise.
By taking the leap and making a “get started” choice, you’re no longer obsessed by the “right” choice. Instead, you allow yourself to make the best possible choice at this moment in time. As your product grows and improves, so will your price point…
Don’t forget, it’s impossible to be right all the time. You can’t predict what will happen tomorrow, so all you can do is make the choice that feels right today. But if you don’t make any choice at all, you’ll never “get started” with the new chapter of your life.
As the saying goes, “No plan survives contact with the enemy.”
So let’s take a deep breath and let go of trying to control everything. Let’s just pick and answer and allow things to happen… 🙂
If you’re still scared by this free-fall approach to pricing, I promise you this: even if you make the wrong choice, there are way more benefits to moving forward than dragging your feet, trying to make the best educated guess. Because at the end of the day, you still have to take a guess.
And you’ll never know for sure if you’ve picked the right price point unless you test it out. So let’s settle on that number, right this moment, and move on.