Bundling Pricing Strategy
Bundling. This is the value meal of photography. So it's the principle of combining what you want to sell with what people want to buy and giving consumers a better price in the process. So lets go to the fast food industry, the king of the bundling principle. So the most profitable product for a restaurant would be a soda, right? And so they know they're gonna sell an entree, a burger. They're probably gonna sell fries, the soda's always the question mark, right? So by putting that together with the two things they're pretty confidence they're gonna buy and giving a lower price in the process, everybody ends up buying a soft drink and spending a little bit more money than they would have if they hadn't. It adds to the profitability of the business and the customer walks away feeling like they got a great value. So that's how you use packages in your business. Packages are a really interesting thing because some buyers love packages. And they're like, "Okay, where's the deal?" You've g...
ot people that come in, they're typically the analytical client that can look at your price list and in two seconds knows exactly what the best deal is on the price list. Have you guys all experienced that customer? Oftentimes that's the husband that comes in and they know immediately, boom, this is what we're getting because that's the best price. Bundling is not always appealing to a high-end buyer. A high-end buyer is gonna come to you and they're gonna want what they want and they don't really care how much it cost. They're gonna get exactly what they want and they're more of an a la carte buyer. And so depending on who your client base is and how they're used to buying things, this can be incredibly appealing or absolutely not. And so you need to use this with caution. And I think it's really important, also, to say here that just because somebody has a lot of money to spend doesn't mean that they're a great client. One of our all-time favorite, best, most amazing clients was a truck driver and an administrative assistant that loved our work. And we made payments for months with them so that they could afford what they wanted. We worked harder for them than anybody else because they were investing so much with us, percentage-wise of their life. And we've had other clients that have come to us with gazillions of dollars to spend that walked away with just a couple of things. They didn't value what we did. So when you think about your target client, it's not necessarily somebody that's incredibly wealthy. It's somebody that really appreciates what you do and sees the value in you doing what you do and they appreciate that. So don't assume that your client is the one that makes the big bucks. Your client is the one that appreciates you for what you do, okay? Alright. The flip side of bundling, and by the way, we use both packages and a la carte in our business and different clients buy different ways. You can use bundling to make people do what you want them to do by making the alternative unappealing. So here's how that works. This is our price list. This is our current price list. One of them. So the way that this works is we sell wall art. It's at the top of the page. And we sell big wall art. So the very first thing on my pricing structure, is a 60 inch portrait. And then a 40 inch portrait, a 30, 24, 20. This is where I want my clients to go. It's the fist thing. Everything else is secondary. So when I show this to my clients, they get it. They're like, oh, the choice is wall art. One of the things about this price list is it's really easy to understand. They go up in hundred dollar increments, except for this one because it's really big and has shipping issues. So it's $100 to go up in size. It's clear, easy to understand, anybody can look at it and be like, oh, this is the pattern. If you look at this, also, I don't have a 16x20 and a 20x20 and an 18x20. I just have a 20 inch portrait. I'm gonna crop it because I am the artist, I am the, actually it's Peter but, my husband. So the 20 inches, I'm going to decide the right shape for that image. I'm gonna take that off of them. I don't want them telling me a specific shape for that particular image. So that's also another decision that they don't have to make, I'm doing that as the artist. Then, all they have to do is look at a finish and decide if they want our standard, signature, beautiful finish or if they prefer a canvas or if they prefer an archival fine art rag linen paper. Or if they prefer metallic. That's it. And I have those. They can touch them in their hands and feel them and say oh, I like this one. Easy decisions, right? And then down here, this little line right down here, 8x10, 5x7, 4x6, and wallets. Bottom of the list, I don't even care about those. They ask about them. So here's the funny part about this. Some really nice price lists, do you know the reason I have this? So that I can tell people that my prices start at $99. And I say that to my clients when I'm talking to them. When I first meet them I say our portraits start at $99. Our session fee is either $100 or $200 or whatever it is. But, depending on what you want, we do everything custom. And then I start telling them about the different options that we have. Lemme show you what this price list actually looks like in person. So this is it. It is a photograph. It's mounted on double-weight matte board. And it happens to have the variety of finishes, this one is our signature finish. It's what comes standard on all of our photographs. I hand this to them and let them look at it. But as soon as I say that, I say, "But really, the best value is in our collections. Let me show you those. Our portraits start at $99, but our best value is in our collections." So I've turned that and I have a second price board. These are our collections. And I'm gonna show you what our collections look like. So here's our portrait collection. It's almost identical to the original one. I still have the same portrait sizes. The prices are a little bit more. And the difference is, between the two lists, these wall portraits come custom framed and they include five 8x10s. Now if you remember on our a la carte menu, 8x10s are $99 each. So with this 16x20 photograph, at $699, this is an incredible value and it's custom framed. So what I've done between these two price lists is I've created one with the intention of saying, "My portraits start at $99." But I've made that unappealing by making this an incredible value. See how that works? I don't have to talk about the $99 portraits anymore. Who would invest that? That doesn't make any sense at all. So now, all of a sudden, where is my base sale? If you look at the price list, I have a $100 session fee and my first collection starts at $699. Boom, target sale, $800. It's a no-brainer. Do they feel good that they're getting five 8x10s and a custom framed piece for the wall for $700? Comparatively, that's a steal, right? So this is how you use these strategies. My target sale isn't $800. I don't want to work if I don't make that. That's like the bare minimum. I really want to at least make $1,500, to be honest with you, on a portrait session. And often much more than that. So let me tell you how this works. Whenever I have a series of things, where do people typically buy when they don't know what to do? In the middle. So interestingly enough, the middle is called the medium. So clients that don't really know what they want, I've given them guidance. I've placed it in the middle of the price list, I've called it the medium, and that's where they're gonna go if they don't know what to do, which happens to be $900. But there's more, there's more layers to this. The one right above that is called the standard. The standard is really where I'm trying to drive my clients. It's a 40 inch piece for the wall. It's $1,100, plus a session fee. That's really where almost all of my clients go on this one. They either do the medium or the standard. And those are the sizes that I believe are best as decor for the home. It's a 30 inch portrait, it's a 40 inch portrait. One's over the sofa, one's over the mantle. That's where I want my work hung. And that's what I tell people, are you gonna hang it over the sofa or over the mantle? Oh you have a hallway, we should talk about the grande. I didn't know we were talking about a hallway or a focal piece in the room. Lets talk about that. See how this price list gives people opportunities to feel really good? It guides them into buying exactly what I want them to buy at the price I want them to invest at and it includes the five 8x10s which is what they called for originally for Christmas gifts. Is this where my high-end buyer goes? No. This is the person that's on a budget. And it's almost always a $1,500 sale. And I'll tell you how we get to there in just a minute. But are there, and did you see the 8x10s? Small, off to the side, insignificant. They still choose the finish. Oftentimes people upgrade. Sometimes people want wallets, not so much anymore. I still have them occasionally. Boom, right? That sale is done. It's easy. My price list does the work. And honestly, I can go into the sales session and be my client's biggest advocate. I want them to love what they get with me. I want them to help find the best solution for what they need, what I can provide for them. And I want to help them find the best value. And because my price list is structured in a way that supports my business, I can go in there and be their friend and do the best thing for them because I know what I'm gonna do what I need to do for my family. Make sense? Okay. So how do we get that extra couple hundred dollars of sales? I told you I didn't really want to do a session for under $1,500. So I've got the hundred dollar session fee, I've got the $1,100 order, I still have $300 on the table. Guess what you can get with a thousand dollar investment. Digital files! (laughs) So I can offer digital files for $ with a thousand dollar investment. They've gotten what they want, I've gotten what I needed, and everybody walks away happy. This is your best tool in your business, it's important to craft. See how you can be really creative and use these strategies in different ways to get people to do what you need them to do. It's great. And we're all used to buying this way. We spend money like this all the time, it's normal. Every company that's successful uses strategies like this. Take a breath for a minute, that was a lot of information. What questions do you have about the strategies we've covered so far? Because I can see smiles again, which is a big relief for me. I can see eyes seeing light at the end of the tunnel. Yes.
Kathy, I have to say, I was a manager for the largest retail department store in the country for a number of years and, while that's a strategy that we talk about in principle, I've never seen it described so well in fact. That was astonishing, that's really really cool to see that. Good job.
Thank you very much. I appreciate that.
Sorry, a practical question. How many digital files would you give? Are the 8x10s just the one picture so it's the same pose? You've only used one file, is that right?
That's a great question. No. So I don't like to say no to my clients. I try to say yes as much as I can within the parameters of my pricing structure. So for the collection, they can have any image that they want. So with the large one and with the five gift portraits, that's six images total. And for the digitals, I have some options because nobody is the same, right? So the first option for digital files is I will sell them a la carte for $199. I hate doing that, I try really hard not to do that. I don't think it's a good value for them and I don't think it helps people. $199, and honestly I think I've done that twice in my career. The second option is, so $199 for a single file, $299 for the same six files included in the portrait collection. I've already done the work on them, all I have to do is put them on a drive. The third option is, for $399, you can buy all of the images from the session. And they're sized, and I tell people, to be printed as an 8x10 or smaller. And the way I phrase that to my clients is, you know if you're gonna put something on the wall, you really want Peter to do his artwork on the images. So these images are out of the camera, unless they're ones that you've ordered and then we've done retouching and artwork. And if you want anything bigger than an 8x10, come back to us. You're gonna really appreciate the difference in what we can provide. Yes.
Great question, thank you. A question had come in from Derek Curry. So you had talked earlier in the class about people seeing images and that ending the sale. So the question was if you do give away low resolution digital files for sharing on social media does that also end future sales? So when you're giving away, not giving away, when you're including those digital files, are they all high res, do you make, do you encourage people to share them on social? How does that work? Absolutely. So by the time they get those files, my sale is done. So they've purchased them. They've often purchased a collection or another piece of wall art or an album. They've seen them the one time in the sales room. They've paid me in full for everything. And then, I want them to broadcast our images with our logo on it everywhere. Because the only thing better than having a great sale is having somebody really excited about what you do and sharing with the world how much they love the portraits that you've created. So we size them so they're printable to 8x and I don't really think people print them very often. We've seen it occasionally, but not very often. It really is to share with the world on social media. So by then, I've been paid what I need to be paid and I want them to broadcast them out to the world.
Just going a little bit deeper on that sort of the delivery side, this is a question from Bebop, who says, "If you make that thousand dollar sale and then give them the digital ones for $300, do you license them so it's personal use only? Or are you effectively handing over the copyright?" Can you talk a little bit about what, how you communicate with your clients about that?
Absolutely. It is for personal use. Do they use it for a business headshot occasionally? I'm sure they do. It's not gonna be used for an ad campaign or anything like that. So we use it, we have shared copyright. We retain the copyright on everything. We give them a license to print them for personal use or share via social media. Alright, lets keep going on this next strategy. The rule of thirds. This is cool, you guys are really gonna like this one. So you determine your target sale and then you structure your products so that your clients buy a third of them at a time. So thinking back to the strategies that we talked about before, can you start to picture how this might work? Lets talk about it. So for a portrait, you could have a thousand dollar session fee with a $400 minimum purchase. $500 up front, paid at the time of booking. Then if you have your sale strategy, your price list, guiding people to a $1,400 sale, which is how mine was structured, then you get them to place that $1,400 order. You apply their minimum purchase, which leaves $900 left. You ask for half of the $900 at the sale and the other half of the $ when they pick up their order. The way this works best is if the timing of this is spread out over different paycheck cycles. So if you collect the first $500, or I'm sorry, it was a $1,400 with a $400 minimum purchase. That's where the different numbers are. So you get the $500 up front, that's the first pay cycle. You wait a couple of weeks or a month for the sales. You do the portraits then you have the sale session about a month later. At least a couple of weeks later. You take half of the balance at that point then you wait another month for another paycheck to come through and you take that last $500. That way it spreads it out so that anybody can come up with $500 over three months. It makes it doable for your clients. Whereas some of your clients might really stretch to invest $1,500 on photography. So you give them a way to make it happen. So the way it works for a wedding is even easier because usually you have a lot more time involved between when you book it and when you do the wedding. So these aren't as happy numbers, but they're still pretty round. If you have a $2,700 wedding package, which is a pretty common amount for a wedding, you ask for half whenever they book the wedding. Then, here's where it's really important, you do an engagement session in between when they book and whenever you do the wedding. Now the engagement session, the way we've always handled this is we include the engagement session with the wedding package, but it doesn't include any product. So the engagement session goes through our same portrait process. Same sale strategy, everything. And so an engagement order may be an additional $1, if the sales process works. That happens between when they book and when they do the wedding. And then, two weeks before the wedding, they pay that final balance. Rule of thirds, it's spread out. This is a great tool for clients that are on a budget and couldn't invest $4,000 up front. You guys have heard the adage, how do you eat an elephant? A little bit at a time. This is that. $4,000 might be a breaking point for some clients. It's not that they can't afford it, it's that they don't see the value in it at the beginning. But if you give them a great experience all the way through, and all of your brand and you products and your pricing align, they'll be able to. They'll see the value and be willing to invest that after they've been through some of the process. What's better than rule of thirds? Rule of fourths! So how does this work? Same thing. Determine your target sales, structure it so that your client buys 25% at a time. So now lets talk bigger dollars. If you want them to invest $2,000, have them do it $500 at a time. For a portrait session, start out with the minimum purchase and the session fee. Use those tools in your toolkit. Then structure your pricing strategy so that you have a $1,900 order. One of the ways that you can do that, is through an album because an album gives your clients a lot more portraits, they're getting more of the images. So if you have a client that's like, "I can't eliminate any, I want all of the images." Give them a product that has all of the images in it. That's something that you can charge more for. So you might have an album. Have them place a $500 deposit on that album when they place their order and say, okay, I'm gonna design something custom just for you; it'll be ready in about three weeks. Once you approve it, I'll take 50% of the remaining balance and then when you pick up your album, it'll be ready to go. Rule of fourths. Here's a different perspective on rule of fourths from weddings. You know, sometimes when I talk about this, I feel like people think that it's kind of a bait and switch or a little bit shady or something they might not be comfortable with. And it's really not. This is how people buy things in all kinds of industries. It's just using these tools in a different way. When you see the behind the scenes of it, it's a little bit ugly looking, but it happens all the time. And so I want to share with you how this worked. I was really nervous about implementing some of these strategies because I love our clients and I want to do great things for them. And I was like, y'know, if they say they're gonna spend $2,800 with me, that's what I'm gonna charge them. I don't feel really good about saying, "Well you could get this if you spend a little bit more," because I would be uncomfortable with that. But here is something that we tried way back in 2006. We had 14 weddings booked with a 2,800 package. And that package included time, it included an engagement session, and it included a 40 page album. And we went to this amazing workshop and we had just done a new pricing structure for the next year and the guy that we were listening to said do this and I promise you you are going to almost double your average sale. And Peter and I were like, "Well, I don't know. We'll try it." So it's pre-design. And what the idea is that clients can't picture what you can do until you've already done it for them.