12. Pricing: Packages
Defining Your Goals and Metrics27:10 3
Goals and Metrics Q&A36:50 4
Assembling a Team and Insourcing vs. Outsourcing21:43 5
Creating a Company Manual14:00 6
Jared's Business History33:51 7
Print, Online, SEO and Social Media Marketing43:23
Vendor and Client Referrals35:23 9
Specialism with Guest Jeff Jochum29:18 10
Defining Yourself in Three Words54:54 11
Homework Review with Guest Jeff Jochum34:11 12
Pricing: Packages56:49 13
Pricing: A La Carte36:20 14
Rebuilding a Pricing Sheet Part One21:33 15
Pricing: Extras List46:56 16
Rebuilding a Pricing Sheet Part Two35:05 17
Natural Upsell and Presentation50:03 18
Critiques of Students' Pricing Presentation18:48 19
Three Phases of a Consultation1:02:52 21
Consultation Q&A11:18 22
Sales Strategies with Jason Aten1:10:18 23
Sales: Out of Town Clients Q&A25:07 24
Six Figure Plan30:18 25
Profit Goals with Student20:55 26
Thanks + Credits04:40 27
Building Your Team42:29 28
Business Roadmap Challenge18:00
It's it's fun for me. I think I see them is all connected. I see what we talked about yesterday defining your purpose. I see that totally connected to what we're about to talk about pricing in packaging a lot of people don't people don't get the connection, but all of these things that we're doing our business setting up our systems coming up with good marketing techniques are pricing everything goes back to the core again. Like I said yesterday. There's no boilerplate pricing there's no set way to do this there's no defined start your first package at this price got your second packages. It is all based on you, it's based on what you attract it's based on your client and your client is based on you and what you attract and what your purpose is. So it it is all connected, and it is all connected to building a successful business that makes you happier. And now we're diving into the pricing component. Now pricing is something that I've been talking about for years and years and years. A...
nd let me give you a little bit of an outline for the way the rest of the day looks pricing seems to be. I don't know about for you guys here in the audience, but for the people that I talked to the last five six years pricing is the big one it's the number one question that I always talk to people about and that was before I became known as the pricing guy the president expert and pricing pricing price and it was always the questions and I would get ask these questions and so before I could answer them, I thought, you know, I need to do some more research on this and I didn't want to give just the border plate pricing talk I want to talk about pricing from the standpoint of what it really looks like, and so I started studying pricing I started studying what pricing looks like it's a theory? Yes, there is a pricing theory you have people in the audience or laughing and probably rolling their eyes, but there's a theory behind pricing and fortune five hundred companies use it every single day and we're going to go through all of that. But if there's only one thing you remember from the rest of today if that's the only thing you remember it's this right here is really what we're trying to do with pricing is create clarity through your pricing you have an opportunity to create clarity or confusion it's one or the other and good pricing is all about clarity good pricing is all about clarity, something I like to say a lot because I really truly believe it is that good pricing just gets out of the way of a booking that was already supposed to happen. Good pricing. People always, you know, come to me for a consultation. They hired me to help them with our pricing and we have to cut through. Sometimes I have to remind them that price is not going to get you more clients. Great packages. It's not going to get you more clients. No one's going to call you because your price list was awesome. It was going to call you because you were super clear about your pricing. But what it will do is get out of the way of a book and it was already supposed to happen. We've all been there. We've all been in that consultation with a bride with a client, a family and everything was hunky dorey. Everything was going really well. We were connecting. You were just one on one with them and it was intensive, leaning forward in their chair. You were talking about all the different things you had in common. He went to the same school, you dated the same person. Everything was great, you know? It was just like wow, we have so much in common you start talking about what their wedding is going to look like or what they envisioned for their family portrait or whatever it is you're shooting you start talking about that and it's like yeah that's exactly I want and good that's exact what offering oh my gosh you know look at this product it looks amazing yes, all of a sudden the pricing comes out it's kind of quiet you're kind of wondering what I what I say I want to keep this conversation going how do I keep going with them? How do I say something like oh, I shouldn't said that way to say it that way he's dumb you stated him so do you want to think about it some more or call me and call me? They say yeah, I'll call you yeah, we're just we're going we're going to go home and think about it right? And then they leave and you never hear from again and that was when pricing got in the way of a book and it was supposed to happen you were supposed to book the client but the price and got in the way of it if I did have been the way you put your packages together, it might not have been the how much he charged it usually isn't believe or not that's the thing we all go back try charge too much you get a little my prices are just it's usually not in charge it's usually that you confused them confusion is the number one reason why people don't book now you probably are now that we're on day two here you've seen that when I say confusion I mean confusion about everything confusion about who you are, what you stand for, what your what your ideal client is but also confusion about pricing so prices just a reflection of you and if this is another thing that I like to tell people what I think it helps shed some light is pricing is just a way for people to buy what you d'oh without pricing they can't buy it, they can't buy you and they can't buy your service pricing is just a way for them to purchase what you do and so it's not that complicated and yet it is but the concept is that complicated, which is why we have to make our pricing clear we can't confuse a very simple concept people price is just a way to transact what they really want, so I hope that kind of helps shed some light on where we're going today we're going to be talking about pricing and I'm going to going through the two most common types of pricing available to photographers, the package method and the ala carte method I'm gonna go through each of those and I'm gonna break down for you guys the keys to setting up each one. Now if you're on the fence about where about which direction you should go that's not something. We're going to have time to talk about it that's a huge discussion, but everyone who purchases the course and I know all of you have already been through it gets a copy of the price and guide, and the pricing guide is a pdf that I go through. I identify for you how to decide which direction is best for your business. Well, you should go packages or whether you should go on a cart, so we're not going to touch on that today because that's a pretty big topic, but what I am going to do is present to you. The keys is of package model and ala carte model then we're going to go through each one. I'm going to show you what we've done. Obama's star was with packages, I'm going to show you what we did. Obama stars at all a car I'm gonna give you a real life examples and talk about it they want to go through and build that extras list that list that sits are alongside your package or your ala carte list there's so much strategy that goes into that we're going to talk about that. You're having trouble up selling, you're having trouble selling extra products, ring like that that's the session for you, and then the fourth segment of the days when we talking about the presentation of your pricing. Yes, we're going to do an entire segment on how you present the pricing, the way it looks and all the different theories cognitive, the cognitive theories of psychological theories, all the behavior, economic theories that go into it's designing a pricing sheet that is dialed in ultra clear and ready to be booked. So I am fired up pricing is definitely what gets me up out of bed morning, but I hope you guys are also fight about it let's dive into packages here and we'll get started on our day. So here the four keys to successful packages number one we ever starting price and the starting price is the price of the first package that you have that entry level package, it says everything about who you are and what you want to be. It says everything it says so much more than you think number two is the price differentiation, so the second key we're looking at here in packages is the price differentiation. You see, people are like what differentiation mean, I kind of get it, but really what we're looking at here is the difference in the price points between your packages there's a science to how closely and how distance they should be in price points. I'm going to show you guys that science and how to give you guys a little bit of a tool of a number that you can use to how far apart your pride your packages should be priced number three is this concept of the must haves now those of you who have friends there in an mba program are deep in business don't go talking about the must haves, they're gonna look at you like you're crazy it's not an mba terms what it is though, is it is a way that we can get our minds around. What is what is a common business concept and it's this concept that we all go toe by things with certain requirements? Oliver when you go buy a car, you've got certain requirements, some of them are conscious, some of them are subconscious, some of them you probably don't even know you have some of them you do know you have maybe you like a fast car, maybe like a luxury car if you're more of a, you know, miles per gallon kind of guy, I don't really know but you have certain requirements you can probably voice, then you probably have things that you don't voice as easily, but they're deep down in there and they're very influential is matter fact, they're probably more influential cause they sit in your subconscious. Those are your must haves you have must haves for every single product in every single service that you buy, and what we need to understand is your clients must have we have to understand their conscious must have, which is the ones they tell you all the time. You probably hear that a lot more important, you have to understand their subconscious must haves the ones that the things they have to have that they don't tell you they don't have words for yet, and so we're going to figure those out. But it's, so important in setting up successful packages and number four is this concept of the middle probably the most basic and fundamental concept in pricing theory is that we, as consumers, love the middle, we love the middle and we love to be in the middle and, you know, the middle is something that we find ourselves comfortable and we don't want you know what? It's not we're not buying the smallest package think about what that looks like for us, we don't want the cheap one, obviously, nobody buys the cheapest thing. We don't want to buy the most expensive thing you know most of us don't consider ourselves to be indulgent we don't want to be that person we don't want to buy the most expensive thing how does that look? Not not I mean I'm not saying how's it looked others just how does it look to us internally? Why are we indulging so much? No we like the middle love them we're going to going through all of the concepts that middle and I'll be sharing with you a lot of those different concepts but we love the middle and so that's the fourth constantly have to embrace the middle one percent of our packages we have to embrace that people love the middle and want to end up in the middle so those are the four keys again just to summarize the starting price the starting price of your very first package number two price differentiation the difference in the price is between the packages number three the must haves what your clients consciously and subconsciously must have one time I said unconsciously not gonna make that mistake here in front of the billions that are watching must as what's your clients it must consciously and subconsciously what they must have and number four the concept of the middle that we love the middle is consumers it feels like home to us and we have to embrace these four things okay, so I'm gonna take you guys on a little tour of bombing photographers pricing from last year. This is bronson's pricing bronson last year booked out on a package package model and since he shoots probably the most amount of weddings at our studio out of the three of us I thought I would showcase his pricing and we're going to go through his packages. We're going to go through the packages that he offers to his clients and break down all those four keys and I figure it's one thing to talk about the concepts but I just I want to show you guys examples of those. And so what better way to do that than to take you through our pricing data studio? So starting package twenty six hundred dollars number how much I told you how important told you the starting price is that starting price in this example is twenty six hundred dollars. We'll talk more about that here in second what does that come with complimentary engagement session? Yes, that were complimentary is very important. We will talk more about that and six hours with one photographer in this case, if you're meeting with bronson that's going to bronson that's all it's, all the entry level price point comes with that's all that first package comes with one of the biggest and I would venture to say the biggest sting when I consult with photographers on prices the biggest problem is that they're starting package has way too much in it you're giving away the farm with the first package and then people wonder why nobody actually ever upgrades to the higher packages you really don't want to be booking more than twenty percent of your clients in your first package anything more than twenty percent and there's too much in there people don't want to book the first package and if you're making them book the first package if you're making the book the first package by making it too attractive then you're robbing yourself from giving them the comfort of being where they want to be. So one of the keys here about this starting package let's first go to the numbers actually so the numbers here are the revenue which is the amount that we charges twenty six hundred dollars and the costs associated with this are about two hundred dollars now a couple things to note your first off I am definitely making some generalizations and the reason is because we're talking about the concepts and the theories here and so I'm generalizing a lot I understand that and so really what we're looking at here is the net profit and the net profit is a prophet associate with a shoot before we kind of pull out all the things it's just required for us to be in business you know we don't want to worry about factoring in how much it costs your studio and how much it cost you to buy equipment those are all very important things I'm not taking away from it what I'm trying to do though is just show you the concepts of pricing and by doing that I am going to make some simplifications and so really if we look at that six hours one photographer there wasn't any prints or product that was a social this package there wasn't any second shooter there wasn't even really an assistant associate this package so the only hard costs that our social this package are you know in this case outsourcing the files toe have color corrected by shoot dot edit and so for the average number of images that we provide to our clients from a wedding six hundred fifty that would be about two hundred fifty dollars and so really what you're left with on this is a net profit of twenty three fifty and that's reflected over here the teal graff is the revenue and the prophet the net profit is the where were purple today you have a very nice monitor so it's actually purple that's good sometimes blue sometimes it's aqua the purple is a net profit and what I want to point out here is how close those graphs the to the to bar graphs are to each other you're first package it needs to be mostly profit because you're not making a high amount of prophet the prophet percentage it needs to be very high so the percentage of profit to revenue which is twenty three fifty divided by twenty, six hundred years to be a very high number of number very close toe one we want a prophet percentage to be very high off of that first package and that's important and we'll see why it's so important here is we go okay scoring the next slide here and let's kind of look at the starting package keys so we look at the keys here first off I talked about that starting price I talked about how important that is what does twenty six hundred represent in our market down in san diego? It's hard to say I mean I'm just making some guesses here I don't spend all day pouring over other photographers pricing, but I'd say a starting price in the san diego area of twenty six hundred says we're probably right in the middle there you could argue a little higher the middle you know as a starting price in san diego twenty six hundred probably in line in the middle of the fold with the rest of starting prices as a whole and so that that communicates to our clients what to expect it communicates what they can expect for the package they actually want to book they don't really want to book the basic package we none of us want to book the basic package we walk in and buy something at a restaurant we don't want to order the most basic thing we don't want to order the smallest thing we want or something right in the middle we want order something in the middle and so this starting price it isn't so much that it's about being a book it's about telling them what they can expect a book that's the subconscious that's a psychological effect of a starting price and why it's so important if you start and have your first package in two thousand and then you're middle package it for, you know, fifty, five hundred six thousand you're telling your client when you say two thousand you're telling them not to expect the next pack mi six thousand and that's why there's a disconnect that's why you see a disconnect and it likewise if you tell your client you know, eight thousand dollars for your first packaging, you're next package is eighty five hundred you scared a lot of people away because when they saw eight thousand they didn't expect the next one to only be eighty five hundred they expect the next one to twelve thousand or something like that, so you're telling your clients what to expect by that starting price the second key here to this first packages starting package is that it's a terrible deal you're only getting six hours was one photographer and you're getting a compliment. Her engagement session that's really? All that you're getting now. How do they know it's? A terrible deal like we talked about yesterday and prices rose value consistency is actually style. The only way they know that this is a bad deal is when they compared up against other things, other packages that you offer and they see how great of a deal that isthe that's, how they know it's a bad deal on its own. If I just posted this package you have no knowledge about whether this is a good deal or not. It might be a bad deal. Might be a good deal. I have no clue. But then when I see it next to what's offered in the next package job now I can look back retrospectively and say that's a bad deal. And so I'm not inclined to book this package and these air keys. You want to make the first package, the worst deal deal being the deal that your client gets out of it. You want to make that something that's. I hate to say it, but a little bit unattractive. You don't want to make it a great deal, okay, so let's, look at the middle package now. You know you guys know by now that the middle package is something that I believe is what we should be booking most of I think that sixty percent is a good number to shoot for sixty percent of your packages should be booked in the middle if it's a little bit higher great even better if it's falling below fifty percent in that middle package isn't using all the different theories that go into into this what's including the middle package well, first off that thirty seven hundred dollars price point let's look at that before we get to what included thirty seven hundred dollars doesn't really remember what the last package is priced at twenty six hundred so this is a price increase of eleven hundred dollars we'll talk about the price differentiation this is where it comes into play but eleven her dollar increase when you're thinking about twenty six hundred that's doable right eleven dollars we'll talk more about that here in the next slide where does it come with well it comes with a complimentary engage in session just like the last package it comes with seven hours of coverage last package had six and now we added a second photographer it also comes with the high resolution files the disk of negatives whatever you want to call it so this package added eleven dollars in pricing and for that you got an extra hour of coverage a second photographer and the high rest files they don't. Daryn delivered. Yes. You know, there's. No book, there's? No, but there's nothing to say what they don't that they go online. They presented online for them to use. Yeah. And we're gonna get into the psychology the way you talk about that. Because most of time I usually get a dirty look from someone like you are such a cheater. You do not give your clients with what they ordered, it's. Not about that at all. It's not about that. We'll get into the psychology of the presentation of that first package because that's a big one for tyrus stars when they when we consult, we work with this. They're like, uh, can I say one thing? Of course, I don't know how to talk about that first package. I feel like it's, you know, I feel like I'm robbing them. I'm like you're not. Let me tell you why you're not and if you if you don't believe it, of course we're not going to do it. But tell me if you believe in what I'm gonna tell you, we'll get to that is a great question because it's a very important question a lot of photographers have. So again for eleven dollars you get a seventh hour or an extra hour of coverage you get two daughters and you get the high resolution files where the disk of negatives whatever you want to call them I wish the bridal books would update their terminology and not call it negatives anymore because that's from the film days anyway we'll probably at the right place for that okay, so what is the revenue here thirty, seven hundred hours revenue is what we charge when we go out with costs here are six hundred dollars or costs have gone up in the last package they were about two hundred fifty dollars in this package there six hundred hours we still have the shoot out at it to ninety dollars color correction aa lot of people do ask me this point well, I wait a second how you spend the same amount of money for your color correction when you have an extra hour of coverage and you have a second shooter doesn't mean more files and honestly no matter how many hours of coverage we shoot no matter how many hours we have, I've shot fourteen hours with three photographers and I've shot two hours on my own a cz long as I'm there for about five six hours you know it no matter how many photographers there are no matter how long I end up being there we typically return between six hundred seven hundred images you know, the the you know, the ideas behind that probably in a different conversation but so know that the cost really for color correction doesn't really change at all in this case we get a second photographer that we have to pay for those seven hours and you know, you khun just in this case assume a rate of about fifty dollars an hour, so and so we end up with a net profit of thirty, one hundred and what I really want to show you guys is the graph because the graph is really what us visuals like, you know, we're visual people, oliver you probably like the numbers in the right cause an engineer, the rest of us in the room are like I didn't go to engineering school, I'll take the graph on the left that the graph is cool here's life first off, the first thing you look at there's two keys about that graph and I'd encourage you to make this graph if you can you just draw it out. It's fine, you know to make some fancy computer graph. First key about the graph is the purple bar didn't go up from package one to package too seems pretty basic, right? I can't tell you how many photography I've worked with over the years where they're making less off their second or third package and they are their first or second and it just happens you don't really realize you're like oh, I didn't realize that product costs so much of something. So the first thing to note is, did that second package? Is it making us more at profit? And it is? It is. That graph is higher. The second thing that we're looking at is did the gap between the teal and the purple bars? Did the gap increase? It did. If you look at the second, you know, to their obviously second package to you see, the gap is larger between the tea on the perp that's important? Because that means your client is getting a better deal. The second package, they're doing a better deal because as a percentage, your profit isn't as high. Yes, we're making some generalizations there, but again, for the sake of understanding the pricing theories, I want you guys to understand that the package, the second package, has to be a better deal for them in the first package. Now we know this to be true because we did the number, you know, eleven hundred gets you. What does it get you get you next hour coverage. Gets a second photographer. It gets you the high resolution files we know this to be true, but we can also see in the numbers that it's true. You know, and that's, how we use the numbers to support what we have is a hunch and and vice versa. Sometimes the numbers will tell us something that we thought and we were actually wrong about. And so this is the two keys to look for in this graph number one. Are we making mohr? Is that purple graph going up from package to package and number two is the gap between the two on the purples that getting larger? If it is, that means that the client is get a better deal, which means they're more apt to feel empowered to upgrade. I talk about creating natural upgrade natural upsell, not having to get behind and slap your stuff, not having a cell. This is the way to create natural upgrade. They will talk themselves into your better packages because that's where they want to be. And again, I'm going to go through it all at the end here. But you guys let me just just give you a quick window into why this is so important. Remember, the psychology of all of this is you are trying to give your clients the right package, the package that has everything that they want, you're trying to give that to them in the clearest and simplest way possible. That's why we're putting what they want in the middle that's why we're pricing it to point them to the middle that's why all these strategies? It's to give them what they actually want it's to give them what they want so don't want you got to think we're playing games here. I am not advocating that she create packages all. They're just based on what you want to sell them. I'm advocating that you create packages that are based on what they want to buy and that you make it simple and easy for them. Using pricing theory to buy the package that they already want, they could easy for them to buy what they want. Remember something I don't even know they wanted that's your job to figure out. So what were the keys here about the middle package? Well, number one, we had correct price differentiation and how do we figure out price differentiation? You'll see a number up there, that's a forty two percent increase. Oliver is probably okay. I got that figure that door, but he had that figured out. Is that what you call these day? Price differentiation. So here's how you figure it out it's an important number to know I'm not trying to put to me numbers down down on you guys here but forty two percent it's important coming to know the way you figure it out as you take the difference in the packages and you divide it by the bottom of the two packages only two eyes rolled okay that's good so you take the difference in the factors which is eleven hundred dollars thirty, seven hundred twenty six hundred difference eleven hundred dollars and you divide that by the bottom twenty six hundred and you're going to get a point that that that that you're going to get actually appoint for two and that means forty two percent that means that your price from the bottom package to the middle package went up by forty two percent now why does that matter? Because the correct again generally speaking a good rule of thumb for us as portrait and wedding photographers is a twenty five to fifty percent increase from package to package anything in that range you're good anything out of that range you better another rule you're breaking and you better know why you're breaking it products fine art the rules aren't quite a simple there isn't quite as easy of a number to get our minds around so you're going to want to understand the concepts of you're out doing this and I'm pricing myself a fine art photographer I'm pricing myself how do I do this for albums? How do I do this for you know, my fine art prints are all the different things that you're shooting if you're outside the wedding important realm, that twenty five to fifty percent number isn't quite as accurate for you if you're inside weddings and you're inside portrait's that number really does apply as you go from package to package don't worry, I think what you'll understand that the end of all this is theories behind a proper price differentiation, and so you'll be going apply that to your niche and that's my goal for you is I'm not just going to tell you a number not getting some boilerplate what to do? I would explain to you why probably amused at why word a lot I mean explain to you why we're doing this so you could go out there and do it on your own forty two percent it's worth it's whether there are twenty five to fifty percent and what that really means is that people feel comfortable I can go from twenty, six hundred thirty, seven hundred I can do that I might be out of my budget, but it's not it's, never out of my budget so much that I can't make it happen could make a phone call if I need tio we can pull money from the florist don't tell him I told him that way conduce something with that budget to get up eleven hundred dollars order raise our budget by forty two percent but if you go from twenty six to sixty five we'll shop come that's come I can't do that that's the definition of sticker shock you know, like I just can't do that so that ranges there because it's acceptable to us now anything over fifty percent I just gave you the example it's just too far it's just too much people can't go from that to that from twenty six to sixty five anything less than twenty five percent is just confusing why are there even to different packages? You're only raising the price by ten percent now I have to dig in I have to go way the price on lee went from twenty six to three thousand well why ok well let's, look here this one has six hours that one seven hours how much is an extra hour? Why is that? And they're confused on what I said about confusion number one reason why people don't book so between twenty five and fifty percent that's a great number two stick between the second key point is that this package is a better deal, is it not and how we know it's a better deal because with twenty six hundred dollars I get six hours and one photographer well, thirty seven hundred gets seven hours I get to photography I get engaged in session and I get my files it's that's a better deal. The middle package has to be a better deal member the starting package if you make it too good of a deal and it gets book too much it's just confusing it's like why is the best deal down at the bottom? We all know the best deal shouldn't be at the bottom. We all know the best deals should be in the middle of the top and so this package is a much better deal which means people are more apt to buy it and we saw that it's a better deal in the graph and the third most important thing about the third most the third important thing about the middle packages we introduced a must have and we actually readies to must has now at bombing photographers I know are must haves let me tell you something right off the bat I'm gonna sharing with you they probably have nothing to do with your mustache and your clients must have are probably totally different than mine. Julie, your clients must have are probably toid event in hanna's your clients must have are going to be toyed with oliver's whose are totally different than trina's and genevieve your clients must have they're going to be totally different than all of ours actually, maybe one or two of us might have similar ones that be a coincidence, but the point is, is that there's no bother plate to figuring out must haves? Figuring out must have is the single most difficult thing in pricing it's kind of like figuring out your three words you have to drill into the subconscious you really do you have to understand what is going on your client's minds you have to pick up on their subtleties, you can't ask them because it's they don't know how to answer it don't think you can just go ask your clients what there must have been a little tell you they can't tell you that's your job to figure out that bombing photographers the high rez files are our clients number one must have the second photographer is our clients number three must have they're number two must have is an album so obama daughters are must haves are in order number one, the high rez files or the digital negatives number two, the album and number three, the second photographer there's a lot of things that could've been there must haves that aren't an engagement session all day coverage, you know we could start going through all of these I've seen companion a parent albums I've seen a canvas print no a wall hanger printer printing improve on their wall we all attract clients that want different things and that's really based on what we attract and who we work with. You know I could get in the psychology of all that, but let's, just keep it at the idea that we all attract different types of clients and the better you do in defining yourself and broadcasting your purpose that mohr and mohr assured you khun b about your must have and they were confident you could be about your pricing that's how this all relates top packages a complimentary engagement session so we kept that complement to engage in session throughout the whole thing will talk about why that's important now instead of seven hours and two photographers, we have eight hours and two photographer we added an extra hour with both photographers. We haven't. We've introduced now for the first time, an album we have not done before. This is an eight by eight thirty page album. So this is the first time of introducing elements in our top package. And it's, an eight by eight sized album is thirty pages that will also be important, and we still have just like the last package of the high risk files, and this is priced at forty, eight hundred. So we went up by another eleven hundred dollars and we went up by eleven dollars the revenue is forty eight hundred and eleven dollars from thirty, seven hundred two forty, eight hundred way have costs that break down to about a thousand dollars sort of thousand dollars we have shootout at it for the two fifty for the color correction of the files in the second photographer at four hundred dollars we have in the four hundred because another there for eight hours album design print bind was another three hundred fifty dollars for this eight by eight album again depends on the company used again to paint on your process there that number can vary a lot I've seen with all the stars that work of that number very a lot so those are the numbers that I pulled from what we do this is by no means a reflection on how much it should cost so I'm not trying to advocate that that's what your cost to be this this segment is not a cost not a class on how much things should cost it's a class on analyzing packaging and pricing theories so our net profit how much we made often this package is thirty eight hundred dollars and again let's look at the graphs here what was the first thing we had to look for? Yep the profit went up thinking and did the profit growth of the purple bar go up from two to three? Yes, it did. Ok, go. We're making more money. I would hate for us to work all this extra money time have to produce an album this time around, you're actually not making more money. That's a bad thing. And it really gets frustrating when you book a few those by accident in your fulfilling them. Let me tell you the second important thing that we're looking for. Anyone? Yes, relating the revenue back to the prophet and relating the price back the profit. And so we look at the difference between the teal and purple and is the difference larger and three? That wasn't too that it wasn't one. Yeah. It's a lot larger looking how much larger the gap is. And that means that our client is getting a better deal in package three than they are in package, too. And that's natural upsell, that's up sell that does its work for us. You want to figure out how not to have to sell to your clients? You hate that cause you're an artist. Well, first off, we're talking tomorrow with jason a thing about it, but second off, if you want to just solve that problem right now, you can take a big step by creating natural up cell in your pepper in your price and packaging. And I have a question do you mind going back? Yeah sure okay, so is they're kind of ah do you have a recommended number for your revenue to profit for senators? So I'm looking at the first graph and I think that was about a ninety percent profit yeah what's your right and then by three read about like, what eighty percent? Eighty seventy eighty yes do you have kind of a number of is that something that in business terms is good to shoot for? Is there kind of a bottom out number like you should really try to make sure that revenue your your pride your profit is that like about seventy five percent that's a great question totally makes sense you're top of the profit percentage really and that's a great question no no I'm just giving giving you a term to use you can kind of embrace your question there and it's a great question when people talk about a lot how much should I be making off of these packages? You know, like jared, you're charging five thousand ish you know, forty eight hundred year net profits thirty, eight hundred mines twenty, five hundred you know you definitely want to see margins that are seventy to ninety percent if you can and in the three package model you don't want to really drop below seventy percent ish if you can you know, seventy percent kind of the bottom of the barrel of what you're taking in you know you want to be keeping seventy percent of what you're charging in a package in the three package model now the theory is if you have a five package model you have to create more more values you go up I don't advocate a five package model I advocated three package model what sounds simple five or three three so what you think I'm gonna recommend three I don't I don't really like five packages but we've set up five packages for some studios who have some you know, some particular circumstances seventy to ninety percent is probably a good number of state between if you're really shooting for it and again it's going to differ a little bit for those you're selling fine arts selling something outside of the boudoir portrait family portrait wedding engagement that's fear it's going differently but that that recommendation the key though is with any type of photography you just want to keep an eye on that and keep your profit percentage is high as possible because in the type of industry that we're in in the type of business we're in we're not a low margin product we're a service based industry we make most of our money on the service we provide and that's that's why we got percentages so high wal mart's percentage you know wal mart's percent is like two percent you know, ours is very high because we're in a high price. Ah, service based industry. Great question. Love that question. Ok, with sort of the keys by the top pack. Correct price differentiation. I'm gonna go over that again because usually the second time I said it kind of stinks a little bit more how do we figure out price differentiation? Well, we take the difference in package prices thirty, seven hundred forty, eight hundred. The differences eleven hundred again and we divided by the bottom of the two packages. Thirty, seven hundred. So eleven hundred divided by thirty, seven hundred gets your number of about point three. Actually. It's point two nine seven I've given an example enough. I think I remember being a little bit below but I rounded, you know, rounding out no problem there. So thirty percent price increase that's between our twenty five to fifty percent target. And really, what that's saying is going to cost you thirty percent more to go for the middle package to the top package. That's doable, it's very doable. The better deal not going. Spend a lot of time on this, but we know it's a better deal on. We're going to see why it's such a better deal when we look at our extras list our extras list supports the fact that album in the package is a fantastic deal and last to introduce an album we introduce an album for the first time and that was that final must have that was at number two must have so you're probably picking up that I think it's important to introduce must haves as you go you're probably also picking up there wasn't a must have in the first package we'll talk about that very very important okay let's review guys those four tenants of proper packaging you're starting package is so important and the price of your starting package is what's most important member to review if it's too low your clients will upgrade if you're telling your clients I charge fifteen hundred dollars they're not going expect to ever pay six eight ten twelve fourteen thousand dollars they just aren't you set those expectations about doing walking into a restaurant and seeing something very low price and then seeing something very high price and you're going to be thrown off when you see a wide array there's a story I like to tell tell very quickly and it's the story of of the argentinean cow and the ground beef with any of you heard this story before hannah has all right good well I've told the story a few times I apologize you hear before imagine walking into a restaurant and it's a very nice restaurant they have, you know, very nice nap could get seated there posters with very polite very nice and she sat you and it's just everything's really fancy that chairs or fancy that whole experience and menus fans and you open it up and the several oxygen says sir tonight we have three options for you all right, first off we have a pile of ground beef and all we do is we just take ground beef we saute it in a pan we sprinkle some ground pepper on it we'll bring it out in a pile that's eight dollars special time our second special this evening is seared new york strip steak we take a nice piece of new york strip steak aged we throw it on the grill first we steer it then we throw in the grill and z got a light bearnaise sauce to it we bring that out to you steaming hot as twenty eight dollars tonight so again we had pilot ground beef for eight dollars. Our second special is the new york strip steak for twenty eight dollars final special tonight is what we call the argentinean cow our chef has actually flown down to argentina and picked out his favorite cow for you he flew it back in a plane live still alive on the plane was natural grass we had laid down to the cow could still feed on natural grass we landed the plane right out in the back of our restaurant and there the cow is slaughtered for you live just this morning so you have the freshest of meats and he's as prepared to you we'll bring that out to you for one hundred eighty five dollars tonight the point of story is first off how weird it would be to have that happen, but what is really getting at is you would never go to a restaurant and expect to be served ground beef and high priced, incredible, incredibly customized steak and you'd never expect to pay eight dollars, one hundred eighty five dollars now if you went into a restaurant and all their stakes for around one hundred to two hundred dollars, you'd you know that you're in a very expensive restaurant, but you'd also feel like it's a nice restaurant the stakes are expensive I understand what I'm doing here and then it's just a decision about whether you can afford or not and if you go into a restaurant it's just serving very cheap, you know very cheap meals and they have price point of eight, eight, ten, twelve, fourteen, sixteen maybe even twenty dollars you understand it you can afford it is probably not the best, most amazing thing ever, but you there's clarity on both sides there's clarity, there's not clarity when it tries to encompass all things we talk his photographers about how we don't like to hedge we don't have that starting price to get that bride that just, you know we want to book that offseason weddings we have a nice cheap price we have that middle package that's our breadwinner that's someone wanna book nine nine out of ten times but of course we have to have that whopper package what if some high and bride comes along and wants to spend twelve thousand dollars? We have to have a package in there for that and we make a mistake when we do that when we try to be all things to all people be very careful about your starting price and let it tio indicate what you really want to charge number two is a price differentiation too little in clients won't book if it's too close together they won't book because there's confusion there it's too much it's too much then we end up becoming something they can't jump too and that's where you have that natural up still that goes away imagine if you are looking for a new car and you you don't know much about cars, so you called her friend and you say, you know, hey hey sounds a lot oliver wright he's usually a car example, oliver I know you know a lot about cars I'm looking for a different car and need some help I don't know a lot let me you all over you say to me well where were you looking for you know, give me give me a few clues that well, you know I'm not really into sports cars I just want something that's efficient you know that gets me around is very reliable good miles per gallon I love a sun roof if possible I'm just coming to those and you know, what do you think I have about ten thousand are spent okay, cool yeah no, I don't do any research she's going back and say I found a great car for you it's kind of anyone's got good miles per gallon is very reliable it's very efficient it's good looking and it has a sun roof in his thirty thousand dollars what you think wait a second, just a thirty thousand dollars yeah, I did what it has everything you wanted. Well, this thirty thousand dollars you have security has been it's awesome card has everything you want it why no, but I said ten thousand well it's a little bit more than ten thousand you know you're like well, no it's a lot more than ten thousand it's a lot more than ten thousand and you know you're you're thinking yourself well, oliver, can you find that for me for fifteen thousand you know, you really start going on that maybe I could afford fifteen thousand but thirty is out of question and that's what price differentiation speaks about when we go in thinking something ten and you give us everything we wanted you meet us with everything that we wanted yeah, maybe if you got a fifteen thousand only make a phone call maybe sixteen thousand I mean twenty thousands really pushing it but you want thirties forget this I'm not I'm out of here proper price differentiation that's what we're dealing with you put it too far apart people can upgrade you put it too close and people are confused must follow those rules of price differentiation must have do you know how to confidently ascertain your clients must have now we're going to go through with one of you in the audience here in the next segment we're going to start going through your price list live here on on air and one of the things we're going to talk about his must have and this is a very complicated topic it would take all day for us to go through it in my pricing course video that you can you can get online, we go through all of that, we go through how to ascertain your must have it's just such a big topic that I didn't think we could really get through it all today we go through in the video that we do online but we don't go through here today but correctly ascertaining your clients must have that's the most fundamental thing you can do, you have to be able constantly ascertain your clients must have you have to be able to and so I want you guys to do is think about that at the break think about that throughout the day do you know them and do you know the conscience ones and the subconscious ones? We're going to talk a little about it here in the next couple of segments, so if you're having trouble with that, if you don't feel a hundred percent confident, stick around for the next couple segment where we do talk about it. But what's why it's so important is because if if you think your clients must have an album and you stick that in all of your packages and you, you use all the theories that pricing theory gives us all the different advantages and you think that that's what they want and they don't actually want that they're not going to book you because you're not giving them what they want they're like. I don't know now what you know and they might be a little voice that to you, but they don't want an album and you thought that that's what they must have and you gave it to them and it wasn't something they actually wanted that's, why it's so important and we have it all the time to have this to you but you'll get a client that I look at the prices in the girl oh what the middle package that's exactly yeah that's that's exactly we're talking about honey that's what we want of course I know but they're like those ship that was easy good what we have to do now you're right that was easy and that's when you know you have your must haves correct the middle of the fourth concept is the middle you have to embrace the middle bad price and leads to confusion and less bookings as a result bad pricing his price that doesn't embrace pricing theories and the middle is the most important pricing theory of all um you know the middle I like to tell a story here briefly about starbucks I love that you guys get perfect I love starbucks even if I didn't love their coffee I still would love their business model but it's cricket I love their coffee too I travel so much and I just love the fact that no matter where I am really the world I know exactly what kind of coffee what exactly? The taste and flavor and everything's the exact same wherever I go and it's kind of comforting to me as I travel on with all over the world you know all the time but as a business model house full of starbucks so did you know in a number of the exact numbers but the majority of people get the grand a size and it starbucks the grand days, the middle the majority of people walk in and they get a grand day and this is this is published by them and their reports and I am the dennard who reads through, you know, report company reports have picked up on pricing stuff that's why you have me teaching this stuff because you never want to read through all that stuff, but starbucks sells the majority there drinks in the grand a size and the grand a size is what most of all by but did you know that in an informal exit serving you know, so most people by I think it's like three and four people by a grand a size in an informal exit survey when they were walking on starbuck, they were asked, do you know how many ounces of coffee are in the beverage you just bought pretty some question how many ounces are in there and over half the people didn't know how many ounces of coffee were in the cup the bomb now you gotta keep my guys this is just coffee you walk into starbucks it's the same drink when it's a small, medium large it's not like when you go from a small to medium you get better coffee it's not like you get stronger coffee it's not more caffeinated it's not hotter or colder does in common a souvenir mug it's the exact same cup of coffee just more of it you would think that we walk into starbucks we looked at the menu we say well there's a small medium large what size do I want? What I know how much I want so let me look at the ounces twelve ounces sixteen ounces twenty ounces sixteen ounces sounds good that's why I'm gonna buy you think we will walk in to make this decision right? We're rational human beings no, not at all. We walk in and most don't even know how many ounces are in the drink that they ordered. How do you expect them to know the difference in all these technical nuances of photography? Chances are they've never been married before and here we are throwing things like signature album and we're throwing these big definitions like high resolution files were like uh I just got engaged and I just know I need to book a wedding photographer I like you. I don't know what to do when we take an example is simple is the one at starbucks and see that people don't even know how much coffee they're buying how much more is that apply to a complicated process like booking a wedding photographer like booking a photographer period like we said yesterday, we are we are selling a sophisticated product to an unsophisticated client when we say unsophisticated, we just mean that they are not experienced in this, we're so in a sophisticated product, unsophisticated client, we have to be clear, simple. We cannot confuse them again through your pricing, you have the opportunity to create clarity or confusion, and this is the number one reason why people don't book confusion. You have to be clear and simple, all right way probably have a little bit of time for some questions. If there's any from from online, I'm guessing they're probably I'm really glad you're opening this up to questions because there's some great ones out there from online. All right, so do you have one lined up? Yes, cool, so we have one from tina when you create the next package. Did each subsequent package always include everything the lower one had, plus more must haves? Or should you ever change the package is entirely to be different animals all together? Great question love that question and yes, the next package up should always include at least everything that you started with in the previous package. It is confusing when you go from one packages and next to find something disappearing or going down in value or changing to the point of not being able to understand it it's confusing and we don't want to confuse them. We want to be clear and simple now you can go up because that makes sense, you know, I get more of it that makes us I'm spending more I should be able to get more of it, but we never want to reduce how much we give them or take it out, so I wouldn't want to throw in that confident to engage in session the first package and then have it be gone and expect does that make sense? What if I wanted that that would encourage me not to book the middle package if it's not there anymore, and so I want to keep it in there and every subsequent package. So it sounds like you have one package than you build on and just keep adding to it. Yeah, we don't want to penalize them for spending more money that's what you're doing when you pull it out, you're penalizing them for spending more money. Okay, so the question kind of that follows up in that same linus from steph eighteen eleven do inclusive list excuse me, do you include a list of add ons and upgrades to these basic packages? Or do you have advance packages that you would introduce later if your client showed interest? You always included extras list and that's exactly what we talked about in segment three after lunch. You have for that. You have. It was a perfect set up. It was like a little lob ball to me. No, you have to have extras list that supports your packages. How else will they know that? And this is actually a good deal. No way. They know that the album is a good deal to buy the packages because the extras list supports that. And we're gonna go through all the concepts of how to build an extra. This is an entire hour, half segment, right after lunch. Awesome. And we have a couple of questions, this one's from kell and really confused about what is being offered for packages. I know that people tend to purchase the middle, but what did you want them? Tio, wouldn't you want them to want the top package? So if you give high rez for middle package, why would they upgrade? Wouldn't you included something amazing for the top package? Yes, it includes another must have, which in this case, was an album. So people who and most of my clients come to us wanting an album, must having an album, if you will take the term literally, and so many of them most of them, I would say, are inclined to add that on whether it be in the package or perhaps in an all acc art fashion later on, if they do it now in the package, it is a better deal. And so I think, going back to the original point in the question, which was, wouldn't you want them to always book the top package? And the answer? There is no because people don't feel comfortable always booking the top package, so what you want to do is give them what they want and price of how much you would that you want to make on it, because we're always confused by the top package and thinking we have to book that because it's the most amount of money, don't worry about that, pricing is not, you know, the way you price your packages is nothing more than a tool to point them and guide them to where you want them to be, which is where they want to be. They want to be in the middle. The predominant majority of people want to book the middle package it's rooted in psychology, and so you don't want to push them towards your top package because most people don't feel comfortable buying in the top package every time the middle I just think of piano lessons from the fourth grade and middle c that's, where you always want tio like that one e o like, you know, like just drained and me and it's. So fighting. All right, cool. So, next question from c seventy photo and then right after this one, we'll throw it to you guys in the in studio audience. But they want to know how will you present the packages on your brochure? Do you present them the you know, the lowest package to the top package, or vice versa. Yeah, well, first off another law ball for me sessions segment for is all about presentation. I pushed the entire rest that it's good it's, good everyone's asking the questions that we're going to cover that's really good, because that means that everyone is totally in tune with what we're about to talk about. In general, I don't actually have a preference on whether you put your highest price package first or your lowest price package. First, I could ask that a lot and honestly, there's arguments for either side. So with that being said, it's, really, you could adopt either argument and it's more of a personal and brand preference, I think a personal opinion, something that's not really redid necessarily in pricing theory, but I think if you price yourself on the middle toe, lower end, you should put your lower price package first, I think you if you price yourself on the middle toe higher end of your market you should put your higher price package first it's meeting your market where they're at and that's just a personal opinion all right thanks for being patient you guys what we gave the internet a chance to ask questions so over to you guys I know you have lots of questions so I have a really hard time coming up with packages because we offer so much so we do photography and included in that I mean you could throw in second shooter album engagement session boot law session we also offer video services and not just for the wedding day but also they could do safe date video and we have a photo booth so these all go along same lines of the wedding but we have so much so shall we do d rickman separate prices for photos of the prices for video or try to include packages that include them both because if I do that then I like we'll get tim packages or something so I'm already confused well first off what are your clients must have the disc is the biggest one then would be the engagement session on dh then video photo booth we dwell on elbow kind of that what your top three must pass a disc engage in session and video so there you have your answer you need to build your packages around your wedding photography model and the video needs to be a complementary must have ticket saturday because your clients must have number one number two something related back to photography so your wedding photography is your video is is an add on and a support system for your wedding photography if you want to offer them combined into the same umbrella, you know again that that comes back to you if you're often one of the same company, then what you just told me is basically the wedding photography is the most important part and that's, what we're going to use to build your packages in the videos are more like an add on and essentially piece like our number three must have in the album lies does that help and we'll get into more details you're going to see how this all plays out when we do the extras list and when we do presentation, it all starts to come together nicely remember just to summarize you guys, we just went through one of the two common pricing models you might prefer ala carte you might prefer packages there's reasons to go with both you know I'm sorry that's that there's reasons to go with either you need to pick one or the other though you need to pick one or the other okay, so yes, you always have an extras list that sits alongside your package or your ala carte the extras list always sits there, but you can't do both packages in all the cards. You can't serve two masters at the same time, you have to pick, you have to choose and you have to stick with it. You can't go back and forth because if you want to be clear to them, you can't go back and forth. It doesn't work, it doesn't work, so you're gonna have to pick one of the other and you have to stick with it. So you just heard packages, and now we're going to all the car in the next segment, and so again, why I truly believe each was successful, and I'm to go through the next segment. I truly believe each can be successful in profit. Also, I'm not advocating for one of the other, but I'm gonna show you had to do all the car in the next segment, and then we'll talk more about exactly how that plays out in your business.
Ratings and Reviews
a Creativelive Student
Eventhough I'm not a photographer I got so much value from this course. The pricing strategies and the concept of specialism apply to any business and made a huge difference in how I get and work with my clients right now. I recommended the course to several of my friends and would recommend it to anyone who's stuck in their business doing things they don't enjoy and gets little money for it. Fantastic job, Jared, thank you!
I'm just so blown away with Jared and this course and his experts that he brought in. It is truly A-Z of running a photography business answering the question what to charge and how to show it to get the most purchases. He spends a whole day on this question. The first day all about you and the "authentic" you so you can attract like minded individuals. The last day, in person consult and sales. This is my first purchase through Creative Live, even though I've watched many classes free during the live taping. I'm so happy I did it. I'm going to watch it over and over again. WELL worth the cost!! My review? PURCHASE NOW while it's on sale!!
I see another reviewer touched base on exactly what I was going to say. I was hopeful this course would discuss portrait photography pricing, and not just wedding photography pricing strategies. Since I don't shoot weddings, the 'packages' discussed was completely invaluable info to me. I can translate the concept, however, but it still would have been nice to know that this course was geared towards wedding pricing etc. With that said, I don't regret purchasing this course and still learned plenty from it. I enjoy Jared's teaching style tremendously.