In many respects, this is a missing chapter from my book Premium!: How Experts Just Like You Are Charging Premium Rates For What They Know And You Can Too! I say that because I’m about to give you the secret to naming your price and charging whatever you want for your products and services.
Yes, you read that right.
So read on.
A couple of days ago I had an uncomfortable conversation with a client. It was about the price of his offer. Or rather, the value of it.
He’d told me what he wanted to charge for his new programme – $997 – and asked if the price was right.
“I don’t know,” I said. “It’s high for this niche.” I hated myself for saying it. Deep down, I know that in any niche you can name your price and get it. AS LONG as you’re offering value that exceeds the price you’re asking. It’s as simple as this: if I offered you a jewel worth $1000m what is the mostI could ask you to pay, and still feel good about myself? $1000. And the further BELOW that price I go, the better you will feel about the deal too.
It’s a fine balance: the more you pay, the happier I feel and the unhappier you feel. The less you pay, the happier YOU feel, and the unhappier I feel. The secret is to find the point at which we both feel we have done well out of the transaction and neither of us feels cheated.
And I just wasn’t getting it.
He pointed out how other people are charging $997 for similar programmes: the same amount of group contact time, the same number of truing modules. I pointed out the flaw in that argument: they were in different niches. Niches where it’s easy to show value. Sales and marketing niches. Not his niche.
We discussed how he could add more value to the offer. More videos. More worksheets. Even more contact time.
But in my mind I kept coming back to one thing: the most expensive products I’ve seen in that niche tend to be around $297, and programmes tend to be sold on a week-by-week or a subscription basis. Buyers may end up paying more than $997, but they do it $20 at a time.
NOT the best of news for me to have to give a high-end client.
At the back of my mind, though, was the niggling thought that I was missing something. Something important.
Suddenly it clicked. The reason I was fixated on $297 was because that’s what I was comparing my client’s programme to. So that’s what a potential buyer would compare it to.
Any time you’re struggling to see whether something is good value, you have to ask yourself one simple question: “compared to what?”
The stupid thing is, I’ve known that for years. I remember one of my mentors telling me about his early days in business. A potential client rang up and asked his business consulting fees. He answered and the line went quiet. After a moment, the caller said “that’s rather expensive.” “Compared to what?” asked my mentor. Another pause. “Well, compared to piano lessons, I suppose” came the answer , and the caller started to laugh. Once they realised they’d been comparing business consulting to piano lessons they saw what a ridiculous comparison it was. And of course, they bought.
Now, that’s a very extreme example, but your prospects are making comparisons like that all the time.
The solution? You have to tell them what to compare your price to.
For this client the problem was simple: they had nothing to compare the $997 to. So we created it. And–think about the logic of this–what we wanted it compared to was a product at $297. So we created one.
The result? I was happy, because I could now see the value in the $997 programme, and the client was excited because he was building a product that he believed in and would bring him a whole crowd of new buyer who might not have been able or willing to buy the $997 programme.
Which brings me to a major point of this post.
A lot of marketers obsess about product funnels from a single point of view. They’re all trained to think like internet marketers: sell someone a $5 product, then upsell them to $20, then to $100, then… And so it goes on.
But look at car companies. Every major marque (that’s car-speak for brand ;-)) has a range of models at different prices. But Ford isn’t expecting you to buy a Fiesta, then a Focus, then a Fusion…
What they are doing is making sure that, whatever price point you are looking at, they have something to meet your needs.
More importantly, though, when you walk into a Ford dealership and you start comparing, you are comparing the Focus to a Fiesta and they can tell you why it costs more. You are not comparing it to a GM Malibu–even though you may have walked in making exactly that comparison.
They’re giving you something to compare their prices to. They’re telling you the yardstick. They are bringing you into their microeconomy.
That’s what you need to do with your prospective clients: tell them what to compare each of your prices to. Create your own micro economy and keep them there until they decide.