SFR 216: How Much Should You Charge...
How Much Should You Charge?
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Q: How many of you guys get stuck on the pricing?
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I totally get it. It\u2019s always like, \u201cMan, what do I charge? I\u2019ve got this sweet core offer, what do I charge? Look at all this value\u2026 what do I charge for it?\u201d
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As I'm Funnel Hacking the message and the offer, I'm also looking at price points.
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I'm looking to see:
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- What\u2019s everybody else charging?
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- What price points have the successful sellers proved?
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Because\u2026
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The path is already paved. \xa0You've just gotta follow it!
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FOLLOW THE YELLOW BRICK ROAD
It\u2019s like Dorothy and The Yellow Brick Road. You just follow the proven price points that people already buying and then... (I\u2019ll tell you in a moment\u2026 keep reading).
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It's great\u2026 \xa0because a lot of the decisions are NOT even up to you.
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You just have to know your Red Ocean:
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- Talk to sellers
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- Get really intimate with the buyers
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... And then, BAM! 80% of your decision making comes from other people.
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MY FRAMEWORK
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I look to see historical price points.
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I might see:
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- $97
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- $147
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- Someone at $127
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- A cheapo who's afraid to charge money and has a lot of internal hangups... they only sell for $47
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I had money hang-ups for a long time too. That's why my first product was $127. I was afraid to charge more money.
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You might find someone's who\u2019s like, \u201cOh, I'm gonna be the $297 person.
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BUT... most people will be kinda in the mid-range, between $97-$127.
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I'm like, \u201cHmm... If I\u2019m really cheap I won\u2019t be able to spend much on ads and still cover my cost of goods.\u201d
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You look at all the historical price points, and then if you can't be super cheap... *Be Really Expensive*
You need to figure out: \u201cHow can to be premium?\u201d
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For example:
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If there's only one guy selling at $297, then I want to go that little bit higher, \u201cHmm, what if I sell at $347?\u201d
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...Then I justify the premium price point by creating an offer
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If I can't be really cheap, I need to figure out how can over-deliver and out-deliver everybody else inside of that market
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WHY PREMIUM PRICE POINTS WORK\u2026
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Not all industries are gonna have a mid-tier $1,000 offer, but that's very common in the info product model. There\u2019ll be multiple price areas in different industries\u2026 so you need to check yours out.
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If you see a house for $1000 you probably shouldn't buy it, right? You know what I mean\u2026
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There\u2019s probably something wrong with it, right?
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So you need to see what the price categories are in your Red Ocean.
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What are the:
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- Really high price point
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- Medium price point
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- Low price point
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- Historical price points
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... And then you can look to see how you can be just a little bit premium.
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For my business, I want the name. I want the reputation.
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I don\u2019t want people saying, \u201c It's like only like $4 for the house. There\u2019s gotta be a catch!\u201d
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Because there's an interesting thing that happens with price, let me explain...
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THE $5,000 LAMBO
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Do you own a Lamborghini?
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I keep making fun of Lamborghini\u2019s. I think they're super awesome. But... if it's NOT yours don't go take a picture and act like it is... that's all ;-)
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If you do own a Lamborghini, I think you're cool. \xa0I'm not making fun of them.
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Anyway, let's say that you want a super cool car. \xa0Say a Lamborghini. Or a Ferrari. \xa0I'm bad at cars. What's a cool car? A Batmobile, *Definitely*
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I'm NOT a car or a sports person at all.
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So let's say you go to a Lamborghini store and you're like, \u201cI\u2019ve been saving up for this Lamborghini forever. It is my dream!\u201d
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You walk in, and the salesman is awesome and you go for a test drive:
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\xa0\u201cImagine what it'll be like taking your spouse out in this car\u2026\u201d
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The salesman is putting you into an emotional state of anticipation:
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- What will it be like?
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- How will people look at you?
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They\u2019re playing with your identity.
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You start thinking, \u201cOh man, this is gonna be so cool. I can\u2019t wait. This car is soooo me!\u201d
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Subconsciously, that\u2019s the game that\u2019s going on...
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Just as you\u2019re getting out your wallet to buy, the salesman comes over and says, \u201cDude, I got something so special for you. It's so awesome. We\u2019ve decided that we will give this new Lamborghini to you for only $5,000.\u201d
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What\u2019s Your Reaction?
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Yeah. EXACTLY! \u201cWhat's wrong with it?\u201d
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Suddenly you start to feel different about the car. You're like, \u201cIs this crappy? Is there an engine? What's wrong with this car? Am I just buying tires and a frame\u2026 What's going on?\u201d
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BUYING AN \xa0EXPERIENCE
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I'm trying to help you understand that you do the same thing to your customers when you go too cheap on price.
Stop going cheap, a lot of 'em don't want cheap.
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I don't want cheap when I buy certain things now. I'm like, \u201cGive me *REAL* expensive. I want the best experience that I can get.\u201d
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Your customer is buying an experience
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So when I look at different price ranges, if it's NOT the super obvious low thing, almost always I'm gonna go as expensive as possible and just add experiences into the offer.
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So as far as pricing models go, Man, beware of selling the $5,000 Lambo. l look at the price point and think, \u201cOkay, I'm a little bit premium... great!\u201d I don't wanna be the $5,000 Lambo.
There's no identity status increase when someone buys a $5,000 Lambo.
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Everyone's gonna look at you and be like, \u201cYou're an idiot! What\u2019s wrong with it?\u201d
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A lot of people buy brands just so they can say, \u201cUh yeah, I bought this really cool car. It\u2019s a Lambo.\u201d
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It's not cool that you bought a car. It's cool that you bought a Lambo.
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People wanna be able to do that when they buy your products as part of reselling themselves post-purchase and selling others; so don't rob 'em of the experience.
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Price can actually be a BIG part of that status experience, but most people run to discounting price.
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SEE YOUR VALUE
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Because you\u2019re an expert at what you do, you probably DON\u2019T see the value of what you offer, and then you discount, discount, discount\u2026 *STOP*
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A guy came to do some work on our house. He said, \u201cMan, I'm sorry we gotta fix this electrical outlet. It's gonna be $100.\u201d
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I was like, \u201cThat's totally worth it to me. I have no idea how to do electrical work and will not die over $100, fix it for 100 bucks. You want $200? Sweet\u201d
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You have to understand that your perception of price is NOT their perception of the value.
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That's a good one. Bam! Lemme say it again so it sinks in:
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Your perception of the price is NOT their perception of the value.
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That's the whole point.
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...And when your natural knee-jerk reaction is to discount price because you're afraid, you're in your own head.
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You're valuing it from your side. That's NOT how your customer values it.
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I have no idea how to do a lot of handyman work. So I'll pay a lot of money so I don't even have to think about it. So charge MORE money.
STATUS INCREASE
Have you ever bought something that you're NOT really proud of buying?
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A lot of times it's because there wasn't a status increase included with the purchase\u2026
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Maybe it was really cheap and you're like, \u201cYeah, I just went the cheapest option... I know\u2026\u201d \xa0You try and save face that way, (which is actually a way to increase your status too).
You get MORE status increase when a person\u2019s like, \u201cI bought my dream car! Let me post pictures all over the place.\u201d They want that status increase.
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Understand that that's how the game's actually played.
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What's the value to the other person?
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Value does not mean dollars. It doesn't.
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It means:
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- Solved Problems
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- Identity
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- New Beliefs.
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...It means buying the Lamborghini *full price* ;-)
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Boom! If you're just starting out, you're probably studying a lot. That's good! You're probably geeking out on all the strategies also, right? That's also good.
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But the hardest part is figuring out what the market wants to buy and how you should sell it to them, right? That's also what I struggled with for a while until I learned the formula.
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So I created a special mastermind called an OfferMind to get you on track with the right offer, and more importantly, the right sales script to get it off the ground and sell it.
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Wanna come?
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They\u2019re small groups on purpose so I can answer your direct questions in person for two straight days.
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You can hold your spot by going to offermind.com. Again, that's offermind.com.
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