Price Your Product
I have no idea what to charge for this. Have you been there? Have you done that? Yes I know. Um You know and just like so many things pricing is relative but you need to know what it's relative to to be able to price properly. And so that's what we're going to talk about today. What should price really be based on? Well first of all it's not how much you think your time is worth? Okay the let's just throw that one out. Okay instead you want to think about the value being delivered and the transformation being created, the value being delivered and the transformation being created. So you can ask yourself questions like after this transformation takes place, how much more time is my client going to have? How much more money would they be able to make, how much easier will things be for them? How much weight could they lose, how many more relationships could they be in, How many more friends could they make? You actually can start turning the transformation into kind of quantifiable piec...
es and you want to do that as much as possible. The more you can make those quantifiable pieces, things that you can actually assign dollar amounts to, the better. Obviously you can't put a dollar amount on how many friends you have Unfortunately. No. Yeah fortunately um but you can on how much more time you have or how much more flexible your schedule is those kind of things can be quantified down into dollars. And so that can make it easier for you to figure out what to charge for your products. Even if you're not in A in A. B two B. Service or B two B field, if you're selling direct to consumers, people who don't own their own businesses, you can still quantify their time in terms of money or quantify their experience in terms of money. Quite often, not all the time, but often if you can definitely use that you also want to take into consideration the story that you want to tell relative to the rest of the market. Because Price tells a story. This is a big thing that we forget. We think about price all in terms of math in terms of numbers. But Price tells a big story as well. Um I've talked about price and a number of my creative live workshops. One of them was value pricing and business models for creative entrepreneurs. And in that class, I talked about how the price of coffee tells us a lot about how we can think about pricing and the story that we want to tell, because coffee comes in all different forms and at all different price points. So think about the prices that you're charging in your business right now and what story that's telling about where you fall in your industry, where you fall in your market. Um you also need to take into consideration the investment customers need to get results. This was another thing that I was thinking about in terms of Quiet Power strategy. Um the amount of money someone is willing to spend is absolutely related to the amount of time and energy and mental bandwidth they're willing to put into a product that can be different in different markets, it might be different for different audiences. It's not like this isn't a magic formula, but you do want to consider relative to the results are relative to work that has to get done to get results. What kind of investment does someone need to make and think about how that influences your price. Then you also need to think about the profit that you want to create to reach your business schools. What's the profit that you want to create to reach your business goals? When you think about a product, when you think about an asset that you're building in your business, you have to consider profit. Because one of the ways that you can move your business forward, get results for people and deliver, distribute your product is to have is to pay other people. And when you pay other people, you're no longer paying yourself for your time, which means you need a way to make money. Well, what's the way that you make money profit? And so you want to make sure that you're building into the price that you charge? The profit that you want to create to reach your business goals and to reach your personal goals. Because let's be honest, your personal goals matter a lot here. And this question of profit really brings us back to less than one, how much are you willing to write checks for? What kind of expenses are you willing to invest in to take your product to the next level? Yes, absolutely. You can build a product on the cheap and I recommend it. But then if you're going to take it to the next place, you're going to have to really invest in it. So let's look at what some of those expenses that you might want to consider our because even though you can build a product on the cheap, you want to be thinking towards the future so that as you're pricing your M. V. P. As your pricing your introductory offers that you're also setting yourself up for success later on. I've talked to so many people who have priced a product sold a product over and over and over again only to realize there was no room to scale beyond that there was no room to improve and they had to double or triple the price of their product to be able to make it work later on. And that's really painful. It's painful for you. It's often painful for customers who are expecting to pay one thing and find out they have to pay another thing. So we wanna be thinking towards the future when it comes to setting your initial price. So here's what you need to consider better or different website hosting. You want to think about product delivery fees. It also totally bums me out when people boo hoo about Paypal fees, If your boo hooing about 3%,, you need to raise your prices. It really bums me out, it makes me super sad. So please don't do that anymore. Just raise your prices, even if you just raise your price is 3%, you don't, that's the cost of doing business. All of these things that we're about to talk about are the cost of doing business. If you want to make money, get comfortable paying fees to make money. It's, that's how it works. They deliver an amazing service. Alright, file storage fees, if you're creating any kind of information product, you want to think about how you're gonna store that product where it's gonna live and that costs money. Here's a big one. Sub contractors or employees and we're not gonna get into the legal differences between those two things today because we could spend a whole three day creative live class on that. Um but you do need to think about who's gonna be on your team, how they're going to be working with you and how hiring people can help you make more money. Well, if you want to make time, not an object or a constraint in your business, hiring people is a huge part of that, People can help you create more, people can help you sell more, people can help you reach more people. People can help you create what you do better so that it sells more easily. People can help you with so much stuff. One um general guideline here is that if you're thinking about bringing on people, you should be able to come up with a reason or a way that bringing on that person is going to make you more money or make your business more money okay. If you're gonna bring someone on, make sure you know how that person is going to make you more money. Sometimes that person themselves makes you more money. Other times they free you up in a way that you can create the products or the flexibility that then allow for you to generate more revenue because of that person. But you should always know what that connection is, that's key and then customer experience, support or customer service. This is one of the first places I encourage people to invest in, whether it's an application or whether it's a person or whether it's both. I think until you hand this part off in your business, you don't realize how much time and energy it's costing you. And then the last thing is time to further develop the product. If you don't know how you're going to take time to further develop the product before you build it. Trust to be, it is not going to happen. And I've gotten into this cycle before and it's really sad because you want your product to get better, you want people to have a better experience of it and at its most basic, you just want more people to be able to buy it, right? But if you don't invest in further developing that product, make the time for that, make the money for that, you know, incorporate that into your price and into your profit, then you're not going to be able to take that time and you're gonna get stuck. I don't want any of you to get stuck on the product development process. Your task for this lesson is to choose an introductory price for your new product. What I don't want anyone to do is stress out about it. Please don't stress out about it. If you come up with a price that you're like, yes, I know this should be the price, but oh my God, it scares the heck out of me. Like, don't stress out about that part. Just be like, yep, that price makes sense. Just forget this up. Forget the other part. I don't want you to stress out about it. I don't want you to take weeks and weeks or our even hours or hours to decide. You can do the research, you can think about the story that you want to tell, You can think about the results that you're going to create and then come up with a price. Seriously