It’s another Expert Briefs, where I ask really smart business owners to answer your burning questions.
This week I asked our panel of experts a question that I get asked often from Virtual Assistants, Coaches, Authors, and Infoproduct Sellers…
“How do you decide how to price your products and coaching and what
if any struggle did you come through to charge what you're worth?”
I think you will like the responses.
Terry Dean of My Marketing Coach says:
I have to admit that pricing is one of the toughest issues we face in marketing.
Here's why. Price too low and you devalue what you offer. Some of your potential best clients might not even take a second look at the offer because the low price denotes low quality. In addition, you might not be able to pay for the advertising (both “free” and paid advertising have a cost of either time or money).
You can also price yourself out of the market you're serving. If you're delivering Walmart services, you can't expect to receive Saks or Nordstrom prices.
And the lowest price doesn't even mean you get the maximum sales. For example, I've tested products at $47, $67, and $97 several times. In all 3 tests where I ran these price points, $67 performed best for me…both in quantity of sales and profits from those sales. Yes, more people purchased at $67 than at $47.
Does that mean you should run out and price your product at $67? Of course not. That was for my audience and offer. It simply means you need to keep your eyes open to pricing. Lower is not immediately better for sales, profits, or the results your customers receive.
When I started out, my tendency was to undervalue and underprice what I was offering. It wasn't until I started networking with others who asked a fair price for the value they produced that I realized the mistake I had been making. I consistently undervalued what I offered…and honestly I still make this mistake regularly today with my products.
Here's an exercise everyone reading this should practice today. Buy a Robb Report magazine (or get one at the library).
Read it cover to cover. Look at all the ads. How does someone advertise a cooler for $1,200? What do they say about it? What benefits do they share? How is it unique?
Then look at the ads for the $25,000 watch, the $47,000 German Shepherd, or the $350,000 car.
What words do they use to describe them? What do the company logos look like? What about the other photos they feature?
Program your mind for real value, instead of just cheapest price.
What customers really want is for you to provide them with the benefits they're seeking. Sure, price factors in, but a product that can't fulfill their desires isn't worth it no matter how low the price.
Also think about which customers you most want to attract. For example, I would never do “cheap” coaching. One-on-one coaching with me is a minimum of $500 per month. That's not anywhere near the highest. In fact, it's the lowest I know of for someone with my experience and client base.
It's not cheap though. I know the value of what I offer…and what it can do for someone's business.
I also know the clients I'm trying to attract for direct coaching. They either already own an online business and want to increase their profits from it. It's simply an ROI purchase for them. Or they have previous experience owning or managing a offline business (such as a middle level executive). They know the value of coaches and consultants.
I'm not trying to attract brand new beginners for one-on-one coaching with me. That's not as entertaining and thought provoking for me as working in all these different businesses and maximizing their profits.
Now onto specifics for your product or service. The best way to judge where to start your pricing is looking at competitors who are paying for advertising. Don't base your prices on companies which only use affiliates or social media. They often don't do the numbers like a PPC advertiser on Adwords would do.
What are the competitors on Adwords charging for an equal product to what you offer? What about those in industry magazines?
You can use sites like Alexa.com, Compete.com, and others to judge the demographics of their website and make sure it's the same audience you want to attract.
Their prices give you the starting point to work from.
If you want to learn from Terry, but can't afford his $500/month coaching prices, be sure to check out Terry's Mentoring Club which is pretty awesome.
Kelly McCausey of Solo Smarts says:
The issue of pricing hasn't left my mind once since it was brought up late one recent night at NAMS 9. I was confronted with the truth that I haven't been charging what I should for a long time. It's not even like it was the first time I've heard it, but this time, I was ready for it. Ready to accept it and ready to act.
I worried some clients might panic, or worse yet – think I was getting too big for my britches. This fear turns out to be unfounded.
As one gal put it, “I've been dining on steak but paying for a burger.”
It is great being appreciated and the input has helped get my head straight.
My homework this week has been to develop a repricing plan. I had to choose my new prices and decide which products will go through an increase first. It will be a two month process rather than a one time price jump. This gives my community a chance to act on old prices, gives my affiliates a chance to promote special bundle offers and through it all my business will gain a boost from all of the buzz and activity.
Pricing isn't a science. What we have to sell isn't measurable by hourly rates or physical weight. We can under price ourselves by underestimating the value of our products and we can overprice ourselves my overestimating our market's willingness to spend. Ultimately for me, I'm listening to what my people say and making decisions that take it all into consideration. I won't be the most expensive steak on the block, but I won't be mistaken for a fast food burger either.
That said, now would be a great moment to tell you that my One on One Coaching prices are heading for a significant increase in just a couple of weeks 😉
Learn More from Kelly at Solo Smarts.
Bob Jenkins of Power Profits Mentoring says:
Pricing is the #1 problem barely-making-it coaches have in their business right now. Here's how I've learned to handle it.
First, I hired mentors along the way who have helped me “see straight” in regards to pricing. Specifically, the mentors who helped my mindset over the last few years have been Nancy Marmolejo, Adam Urbanski, Kevin Nations, and Therese Sparby. Today, one of my favorite areas to coach people around is their own sense of value in determining their prices.
Through their help and the feedback I got from my coaching clients I realized a number of ah-has.
Pricing by the hour discounts the amount of experience and expertise I'm bringing to the table. Instead, by focusing on the value of the benefits I provide to my clients, and the results they get through working with me, I can set a fair price that both of us can get excited about. I think of this as basing my prices on output instead of input.
Next, being the “low-cost leader” doesn't help build a reputation for quality. In fact, people's expectations of the work I do is impacted by their first impressions – i.e., how much does it cost.
Another problem with having the lowest (or lower) prices is it typically brings in clients and customers that don't value my experience and expertise, but more importantly, they don't value their own experience or expertise. When I charge higher prices than my competition, I'm typically attracting clients and customers who recognize that THEY are worth the extra investment. They are also more committed to their success and seeing a return on their investment at a quick pace.
The biggest challenge I had to overcome in my mindset was realizing my customers are completely different than me. For the first few years in business I priced my products and programs based on my history as a teacher, and subconsciously believing that all my prospective clients were living on a “teacher's budget.” That shift helped me approach sales conversations with more respect for my client's vision and goals, and less focus on their current circumstances.
Final note – I encourage my clients and anyone who is struggling with pricing to take action and revise later. Whatever your price is now, increase it by 25% immediately. Make a few sales. Then bump it up another 25%. Make a few more sales. Bump it up another 25%, etc. Do this until your conversions drop. This focus on price elasticity (cool economics term) will give you the freedom to raise your prices according to value and market response.
Want to learn more from Bob? Check out: Power Profits Mentoring
Melissa Ingold of Special Reports PLR says:
I think this is one of the biggest struggles that people have in business, and it all goes back to fear. They’re afraid no one will buy, or their existing customers or clients will complain or leave them, they’re afraid of getting too big, and they’re afraid people will find out they really don’t know what they’re doing. So they price their products and services so low they barely make a profit.
But what I’ve seen time and time again, is that if you charge what your products and services are worth, it increases the value of them in the eyes of your market. See, if your prices are too low, people will wonder why, and they’ll think that maybe you’re not very good at what you do, or your products aren’t very good.
I recently opened a 3 month coaching program to just a few people, and originally I was going to price it at $397 because I figured I hadn’t done one-to-one coaching in a while. But then I was like, no way, that’s too low for the value I’m giving. So I charged a $1000 and filled all the openings in just a few days.
The same with my PLR. Some people might think it’s outrageous to charge $47 for a package of PLR when so many people are practically giving it away these days. But what happens is (and I know this because customers have told me), those people go and look for cheaper PLR places, and that’s cool because we all want to save money where we can, but then they come right back to me because they just couldn’t find the same quality elsewhere.
When it comes to products, people are willing to pay more money for quality. Just like the shoes and clothes they buy for their kids, they’ll spend the extra money to buy the brand name quality items they know are going to last the entire school year.
So you have to show your potential customers and clients the quality they’re going to get. And that goes right down to the graphics you use on your sales page – don’t create this awesome ebook and then skimp on the ecover. If the ecover looks like crap, then people automatically think the product will be crap too – it’s just the way it is.
If you want to offer coaching, show them the value they’re going to get for their investment. Take the time to create a package(s) that outline everything they’re going to get, the benefits for them, and what they’re going to walk away with at the end of the program. Then when they see the price tag, they won’t run away, instead they’ll feel like they’re getting an amazing deal. People need to know exactly what they’re going to get for their money, so make it easy for them to say yes.
The same goes for services. You can’t just say, “Oh, I do writing, and transcriptions, and this and that”, you have to create packages that tell them exactly what they’re going to get for their money and how the package will benefit them. Will they get more traffic? Will they be able to release info products faster? Then tell them that! When you can show high value, you’ll be confident in your decision to charge higher prices.
Check out Melissa's Available PLR here: Special Reports PLR
Ronnie Nijmeh of PLR.me (< -click for a special free offer from Ronnie) says:
Instead of asking of “how much can I charge?”… I reframe that question to become: “how much value can I add?” and it changes the whole game.
$1,000 for a hamburger might seem ridiculous, but $1,000 for a new model second hand car might be a steal.
My #1 tip for you:
Don't compete on price. Compete on value.
Don't be the bargain basement seller. It cheapens your products and brand… and causes a flurry of doubts in the mind of your clients.
That's why I find pricing to be as much an art as it is a science. It's about balancing expectations with finances.
Another piece of the pricing puzzle is to have several price points for your funnel. The best way to explain this is to give you my Funnel Mapping Worksheet that's from my Expert Publishing System course. Sample price points are inside, which will be very helpful for those who want to see specific prices.
Long story short… I always have products at the low ticket tier… $4.95, $7, $17. This is to lower the barrier to entry and get clients to say “yes”. Once you get that “yes”, it's a lot easier to get to another “yes,” which is where you get into one-time-offers (OTOs), mid-ticket products, upsells/cross-sells, high-ticket offers, and membership options.
I know that there is always – ALWAYS – a loyal audience who's willing to invest in themselves and their business at the high ticket. For me, that means $500+… It's not unusual for me to offer $2,000 and $3,000 price points for a very select few who are a great fit. They happily invest because the value I offer for the price is so astounding.
But again, the number itself doesn't matter. You always have to angle your pitch on value, not price.
Ask yourself: “Is the value greater than the cost?” Because if so, then you've priced it just right.
If not, then stack more value. Here's my shortcut to add value:
1. Add additional mediums to the offer – audio, video, checklists, worksheets, mindmaps, presentations, etc
2. Add additional access to you – individual coaching, group coaching, live event tickets, etc.
3. Add services – done-for-you, installations, etc.
So those are my pricing tricks. Simple, but very effective.
Nicole Dean of .. here! .. says:
Wow. Once again, I am amazed by my smart friends.
Pricing can be a huge issue, so I really enjoyed reading their insight. Between self-esteem/confidence issues, not understanding what your market wants, and basically knowing how to write copy that sells – there are definitely a lot of factors at play.
Because we're selling digital products and the info in our heads, I feel that setting your pricing is something to me that can feel so arbitrary. It's not like selling a house where you can clearly see the area comps and add up things like 4 bedrooms, granite countertops, cul de sac, good schools, and a pool. Digital stuff is harder. At least it is to me.
For instance, should I charge 99 cents or $9.99 for my Kindle book?
Well that depends on a few factors.
- What are my goals with this book?
- Am I using that Kindle book to generate leads for my business and get exposure? Or is its primary purpose income generation?
- Is it information that naturally leads people to transition into a program of mine?
- What's that market look like as far as what is selling and what's not?
- Does pricing cheaply reflect poorly in this instance or make me seem more accessible?
These are definitely things to know and understand.
My friends pointed out a lot of issues that I had planned to talk about, so I'll summarize a few of their points.
Product A & Product B – Same Product, Different Price
We see this all the time in the PLR products that we sell.
We can have two customers buy the exact same PLR product.
The two customers have the same content. Yet one sells it for $15 and struggles to make sales while the other sells it for $500 over and over again.
Why? The only difference is in how it is being presented on the sales page.
The hook, the value, the results, your credibility, the proof.
If you have all of those things in place, your product's perceived value starts to increase to potential clients.
Heck, even the title of your product or the cover can make the difference between whether you can charge $5 and get nobody to buy verses charging $47 while making sales hand over fist.
I have one more thought that I'll share before I turn this over to you.
One area where I've had success is in scaling up my membership site prices slowly. For instance, when Melissa and I launched PLR Toolkits, we offered it as a low price for 24 hours to fill in spaces quickly. This works well for me, for a few reasons.
1. We can get members quickly – so all expenses are paid and were immediately in the black. We see a profit from day one.
2. Member retention increases. Because those first members got in at a low price, they know if they quit, they have to rejoin at a higher price. So by scaling, it makes people think twice before letting their spot go.
3. We normally raise prices several times. This gives us the opportunity to mail several times to let people who missed out know that they can still get in before the NEXT price increase. So, there is a built-in reason to promote regularly as the membership numbers are building.
That's something that I've done on a few membership sites and it works really well for me and for my clients that have used this method, too.
Share your Thoughts, Please.
As a person who sells products online – and buys them, too – I'd like to know your experiences.
Thank you so much for stopping by.