Psychology of the Sale
Cos big fortune one hundred companies, fortune top twenty five invest millions and millions of dollars to understand the psychology of the sale guys when you walk into a store and a matic ins in a certain spot facing a certain way wearing a certain color that is not by accident, there have been focus groups and studies put together to determine how you will respond to that how you will respond to a color toe a smell right toe lighting conditions this is not accidental, but it's retired furs we think that doesn't apply to us hell if it don't, it applies to us just like it does everyone else it's called consumer behavior we have to understand the psychology of the sale. If you compete on price, you will fail say it again. If you compete on price, you will fail. Low cost providers require high volume bottom line so how is a single person as a sole proprietor? Can we pump out high volume of photography? You can't it's impossible and so it becomes this vicious cycle you lower your price, yo...
u book events, you make less money, you can't buy anything, you lower your price again because somebody else is coming into the market who's a weekend warrior who just got their camera and thinks one hundred dollars working a full day on a saturday is a lot of money I can't compete against that I won't try to compete against that I went the other way I raised my prices I don't want to compete on price I was in pennsylvania earlier this week speaking at a pennsylvania peep a event and the one lady I told her how much we charged for our weddings base price starts at forty five hundred to five thousand dollars depends on the time of year is my calendar starts booking up my prices go up I don't want a book how many weddings okay, I don't want to book one hundred weddings a year and so as we start booking more and more events, prices start going up it's that simple told what we charge for a wedding she just heard this gas from her I could barely get two thousand dollars for a wedding I've been in business sixteen years, so I looked at her I said, why is that choose? Well everyone else around me is lowering their prices so you're competing on price and she's family she runs a legit studio you're in business sixteen years you're running a legit studio you've got two, three four shooters on you've got a brick and mortar space you are legit studio you start going backwards on price how do you recover from that damn near impossible? Would you ever go into wal mart and spend five thousand dollars on a sofa would you like almost laughable all you like you know I would spend twenty nine dollars on a sofa right? Because that's what you expect to spend there so once you start going backwards in price right wal mart can't suddenly go from you know the low price special and you know, yellow light whatever the hell they're advertising too suddenly we are this elite high end you know like like not target tar jay okay no it doesn't work that way you're not you're not going to do that most art is not high volume it's just impossible we can't do it as people will burn out art is very subjective. Okay, what looks good to you might not look good to me. What looks good to me you might think sucks it's all good I'm looking for my client who loves what I do but I can't have twenty sows running around it's not possible it's very much connected to who we are as people so we can't possibly be high volume and be artist it's it's just counter intuitive most photographers if you talk to them one offer more boutique personalized experience that's what most of you want you want a smaller niche business where you're engaged with your client you get to know your client you're part of their life whether it's with babies whether it's with weddings right we connect with our clients I love my clients they're amazing I love being there on their wedding day guys truth is you could probably pay me half the money and I would still enjoy wedding days I just love being there I love documenting those moments babies can't stand it not my thing, right? I don't like I made a mistake I said I hate babies I said that at a peep a event uh yeah, it was a really bad because that's not what I meant, right? I love little kids, but as far as photography goes that's not my niche that's not what that's not what I'm passionate about, I'm passionate about seniors, I'm passionate about weddings so you've got to find what you're passionate about and go after it and there's nothing wrong with that right? Find your niche but you are in fact an artist if you're competing on price, you are attracting the wrong client you're attracting the client that doesn't want to spend money you're attracting the client that doesn't care about what you're offering your attracting the indifference they're just looking for a guy with a camera, a gal with a camera that's all they're looking for. So how are you gonna? How are you gonna convince somebody they need something they don't want it's very difficult to do all right, so you always hear the allies to ask most, okay great, but in this case we're not selling ice to eskimos. They're not going to buy something they don't want or see value in. You're gonna have a very difficult time convincing them. This is worth x amount of dollars when you go to sears, when you go to wal mart and get it for five dollars, two dollars, right twenty poses for nineteen, ninety nine I don't want to compete in that space. Low price equals perceived low value. Perception is reality. If you are cheap, you must not be that good, and I particularly don't care about it, right? If you're looking for a great suit, you would not go to target to buy that great suit. You're typically going there because you're expecting something inexpensive, right? So it's again, perception is reality. It is all counter intelligence to compete on price in our industry makes no sense. Stop doing it! Stop doing it now, there's no reason to keep doing it is a losing proposition. It doesn't make sense based on everything I'm telling you again back to business school one on one and we're in business school, we have to learn about price elasticity. We had to understand that and for those of you out there your pride like going glazed over oh my god I don't understand this I'm gonna break it down and put it in the english for you if your target client is very price sensitive then sales will drop as you raise your prices right the hot mohr you charge for something unless you're going to sell the less you charge for something the more you're going to sell I don't want to be high volume we have to come to an agreement that in order for our photography art studios to be successful okay we cannot be high volume let's say you're a baker and you make unique cupcakes okay you can charge more money and make less or you can go buy a plant and become the hostess of cupcakes right where you have to start pumping out millions of cupcakes a day a year a month in order to make a profit margin where do you want to be? You've got to start thinking like that if you're there so am I my hometown yeah in o'fallon illinois is just great cupcake place that opened up she makes amazing cupcakes she is a little niche baker you walk in you see the owner you talk to the owner it's a family operated business when you go to your grocery store and you buy a box of hostess cupcakes you know who made him you care? You feel like they were made with goodness no right? You just it is what it is, but somehow when they're made and you know who's made them and there's a little bit of personal touch suddenly you're willing to pay a little bit more money for that. Okay, same concept for photography. Nothing I'm saying here okay, sounds making up this is all business one on one. If the target client is not price sensitive than sales will not decrease significantly as price goes up and we'll talk about what is an elastic it when it pertains to price. So once you understand what influences price sensitivity okay, you can this becomes very important. So for example, the more substitutes of product or service has the more price elastic it is fast food is tends to be price elastic rites when we think about it, mcdonald's has many, many alternatives. Do we agree? Lunchtime you're looking for a sandwich? Well, you got jimmy johns. You've got subway. Youve got a host of other sandwich shops, right? Would you pay twenty five dollars for a sub? Never writes almost laughable. You wouldn't do it because there's so many alternatives out there, so this becomes very price elastic that's why you see the value meal that's why you see lunch special for ninety nine right drink fries chips, whatever the case may be. Okay, you know what else is ah, very price sensitive. Photographers offering time camera and a dvd. They're everywhere. There are tons of alternatives of photographers out there just offering their time and a dvd of the digital images. Right. So anybody want to debate this with me? This is reality, man. This is the world we're living in. There's nothing to argue with. You can find a photographer with a time camera and dvd any where you are. They're everywhere. Let's, flip this fewer substitutes of product service has the less price. Elastic is said to be it's said to be elastic branded luxury items have almost no substitutes branded luxury items. Drill that into your head because I want you to become a branded luxury item. In fact, they have brand loyalty. We all know brand loyalty, right? What's your jewels. You drink coffee? What? Your favorite coffee? So you're starbucks. She said let's, get your mike. I wanna have a combo with you. Starbucks. Starbucks is your favorite coffee. How much do you pay for a cup of starbucks? Do you even know? Yeah, three something. Three something do you really look? Or they just tell you what the price is, right? And I usually get other things things you don't even very tension, I'm thirty four, so that is that is that what's called brand loyalty right now you're in a town, obviously we're in seattle, but you're in denver, okay, will you drive by other coffee shops to go to starbucks and get your coffee? Of course. So that's brand loyalty so you really don't care what they're charging if they raised their prices twenty cents for a cup of coffee, would you stop going there? No, no price. Any elastic guys apply to your own brand think about a brand that you love, that you're interested in, that you would travel further for now you would pay more money for again. I want you to see that what I'm telling you is riel and founded in business principles because we deal with it consumer behavior, the psychology, the sale every day it's not just about photography, everything we do, so if it works on us, why wouldn't it work on our clients? So louis vuitton, christian lobaton, ferrari, waldorf, historia these are luxury brands that people are loyal to. I am loyal, I travel so much I am loyal to the hilton brand of hotels I just feel like I get superior service I get I love the point system they give me right you stay the night at their hotel you get so many points so their reward program the rooms are always clean whenever we go to a city we look for a hilton property that's where we want to stay that is what you call brand loyalty transcends price can I go to priceline and get a room ten dollars cheaper night twenty dollars cheaper a night five nights it's a hundred bucks is that worth it? Yeah, not for me because I have brand loyalty I love the brand let's see photography would create brand loyalty what would create less price elasticity photographers offering a unique experience a unique style, unique products and superior service when you are offering these things these things okay not just this what's in their matters as well service turnaround time your albums quality your personality everything you are going to build brand loyalty you are going to transcend the value of your dollars and I need you to go beyond thinking. Oh, well I'm uh you know it's three thousand dollars I'm twice the price of the local photographers we're not competing on price that guitar for doing a wedding for ninety nine isn't doing this they can't they can't afford it you just heard them right, antonio told you, there's one guy he's like, how do you afford to do this? You're not charging enough that's. Not my competitors. I'm gonna have clients that are gonna look at that and go. Oh, my god. That's amazing. This is what your photographer, dave, you with your images on it from your wedding? Oh, my feet are just gave me a cd with a sharpie. Okay? And they're gonna talk about that questions on this. Questions on the psychology, the sale, which excellent line. Of course, if you guys have some right here you guys are experiencing. I'm sure what you're gonna get your price points are going to be and how much they maybe change fluctuated. I sound like I ask a quick question before we go on line and come to you guys. But of course, we talk aboutthe sale. We talk about pricing. Something that comes in the fold is fear. Yeah, I feel like if I put my prices out there that I was. So how have you in your career? Especially starting out. Get over. If any fear that you experienced putting yourself as a as a premium product slash service. Yeah, that that is hard for every photographer and that's a great realistic fear. You know that's not a fear that I would take lightly it's about that plan what is you where do you want to be when you close your eyes and you think about your brand and you think about what you want to do for a living where do you see your brand that's the first challenge you've got to see where you want to be if you know if you close your eyes and you're like just wandering out in an open field that is not good right? That means you have no focus no drive to where we're trying to go once you know where you wanna be the rest becomes incremental so to speak how do we get there that's what we're gonna work together on right but you've got to know where you want to be you've got to buy into this that's why recovering this that's why we're spending this time is to help you I know that when you make this decision to go this direction you understand that it's founded and business principles that is the key here so to that point talk to because I know all of you are different phases in your career what are your thoughts, jules? I'm looking to hear from you we've had this conversation a nauseum I want to hear from you what do your thoughts what are my thoughts on where I wanna be? Yeah and doing this price elasticity raising your prices well a few years back when everyone was lowering their prices we actually raised ours and did work where we're still doing the same amount of weddings and events but we are making more money so works it's awesome. So you separated yourself just by raising your prices? Did you do anything different when you raise your prices? Not then. Okay, so you just kind of you woke up one morning you listen to me. You saw me in denver and scary it was scary, but we did it. But you did it and it worked. Yeah. Okay, so I'm not saying guys that it won't be scary that it shouldn't be scary or that you shouldn't take steps to now that you raise your prize, start rolling in stuff like this, but by raising your prices, you will immediately create separation between you and your competitors. So that's good. I just want to make a comment about this when I first saw this crazy guy named self cicada online last year ah, you were talked about this and you know I contemplated it. I'm like man it's it's super scary to do but I did it I double my prices not handing out sharpie dvds anymore and my clientele has doubled so it works man and that's why it's it's the only analogy I can give is it it is going to be scary. I get it, guys, I understand it's scary because you're looking at this going wait a minutes out. I'm struggling booking business today and you want me to now raise my prices? And the answer is yes, I need youto have faith. I need you to trust me that if you do this, it will evoke certain consumer behavior that even if you can't explain it, even if you think it's like some mad black magic voodoo magic, I'm telling you it works because there's companies that have spent millions of dollars right propagating this on, of course, investigating itself. Danielle, I recently raised my price is quite a bit, and we just did a wedding at expo last month, I found that everybody loved us. Ah, they loved my work and they loved my fianc and I but they did say we were just above their price range and we were the most expensive photographers and they didn't hire you or they did. They didn't hire you. I'm looking right in your eye and I'm telling you that's, okay, not your story. It is scary, you've gotta let them go look, there is a difference between your client. Ok and the one you're going after or the one you had in the past today and the one you're going after in the future there is a different and the difference is it's the difference between somebody who sees the value in your art and one who's indifferent and doesn't care and as you raise your prices this is what's gonna happen to you there's going to be this kind of gray area where you're freaking out you're panicking you don't think you can get to your client where is my client and you're going to keep getting these referrals from bad clients bad clients refer more bad clients let's to find a bad client bad client isn't somebody who's like a bridezilla that's not what I'm referring to bad clients are people who don't see the value of what you're offering and don't want to spend money on it they could be the nicest people in the world tell you what let's go get a cup of coffee but I want to book a wedding that's gonna pay the actual money I don't want to shoot your daughter's one year birthday party for ninety nine dollars I've got better things to do on a saturday that's not what I want to do there is going to be this kind of limbo area where you're going to run into this people in they go we just can't afford you do when they tell me you're too expensive yes that's what I want I want that rumor out there. I want the room or out there that we are. Dude, they're super expensive. You know why it creates this level of elite nus for our brand, right? Whoa, you hard south and kata. I heard his expensive. Yes, that's what I want out there do you understand that it's consumer behavior, right? My client's love knowing there are clients out there and I'm not talking about looking for a needle in a haystack. There are people out there who have money and want to spend it. Do you not believe that if you don't believe it, drive around your town, look a town away from you, who's, buying all these multi million dollar homes who's buying them not people who want to spend five hundred dollars on photography, right? You know why? Because they've got a couch in there or a chair that cost them four thousand dollars. If you could pay for thousand dollars for a chair that you're probably going to sit in twice over the next year, because it's in your sitting room, you can pay five thousand or ten thousand dollars to me to create memories that are going to sit in your room forever you with me to mindset, lisa, I just wanted to comment, I think the biggest thing for me I know I provide good service, I'm good at what I do for I own a salon and I'm breaking into the photography thing my clients know that I provide a good service, they're loyal to me. They will refer clients everything like that it's the fear of breaking out of my circle and their circle to try tio how do you get other people to say I am that good? You will be happy when you leave. This is going to be a good thing chews me, yeah, in the beginning and I love that you're saying that, by the way, because I guarantee there's hundreds of people out there thinking the same thing or feeling the same way going just what you're saying, right? How do you do it when you first start making that transition? Look at what we did in the beginning, you could book me in my base package for a wedding for nine ninety nine hi ninety nine there was no freaking way I was making a profit. That's why I was about to go bankrupt how do you buy a new two thousand dollar lands from canon or an icon when you're charging nine ninety nine for a wedding? So why I gotta work five weddings just to be able to buy a new lines doesn't work right, I want to have good equipment so I need to be ableto charge accordingly now I'm not saying walk out of here and go like, oh, I was charging ninety nine now I'm twenty thousand dollars no, you're going the complete wrong direction, right? What I'm saying is right now you're on the low end of the market I need to get you into the meat of the market and the meat of the market you could easily for a wedding because we're not talking about any other line of business right now but you could immediately for a wedding being the twenty, five hundred thirty five hundred dollar range for a wedding and you are an average cost photographer that's about average across the united states but you're all thinking out there well, I charge nine ninety nine now and I can't book any weddings that's a host of other issues you're dealing with that in different client we've got to get to our target and you're never gonna get to your target. I guarantee you the person who can afford a five thousand dollar photographer would never pay ninety nine for the socks for no matter how good you are let's say your work is better than my work let's go with that your photography is better than my photography you charge nine ninety nine for yours I charge forty nine ninety nine for mine I guarantee you I'll book that fifty sixty thousand dollar wedding before you do has nothing to do with our photography its consumer behavior you're only ninety nine you must suck oh he's five thousand dollars he must be good whether I am or not our work could be identical your work and be better do you understand what I'm saying? Okay yeah so we had one of our first clients was a friend of my husband's my husband's actually the photographer and um we charged her very little because she was a friend so and we just gave her the cd and that was right in the beginning of the business that we watched your high school senior photography course than we actually started charging for thanks and she came back for the holidays. Teo teo have our kids photographed and and we explain that we restore prices and I went over the priceless before we even shoot and she said ok, I only really have five hundred dollars to spend so I said okay that's fine you were friend we'll do it again but we'll stay you know we'll see what you spend afterwards she ended up spending over a thousand dollars yes sam says he'll have money for what they want to have money for right so did you do it? Did your work become that much better from the first time you watch us no and she actually referred us and said a lot of great stuff on facebook and stuff like that so it was really good she didn't when it was just the three of you are probably freaking out last you're doing your happy dance you're like twice the amount of money because yourself I want to give now because of that right yeah I'm gonna start collecting on all the people I've helped I want like you know we're going to run this mafia style I want like a little one little taste of the action so I can't take any questions dude, we have got massive amounts of data guys strap in hold on here we go so maybe you're still not a believer after all this so when you think quality what's the first brand that comes to mind grabbing my guys um bmw apple apple quality keep talking about quality ferrari ferrari good when you think a cheap what's the first brand that comes to mind all those mikes while my walmart grab the mike kia kia u s o b m w two kia okay so tell me then if you are looking for cheap would you go to nordstrom's if you're looking for cheap suit would you had into nordstroms no it would never happen right uh if you were looking to buy high end exclusive suit right you just won the lottery you're like dude, I'm getting the best custom suit ever made I'm gonna head down a men's warehouse no write it doesn't even make sense you guys are laughing at me because it's so stupid you're like sal you're funny, okay? Because this is how you're behaving with your businesses why would you expect if you wanted a top knot suit? Would you expect to pay more money for it if you're like I want the best suit I can buy you know you're gonna pay money for right? Why would that be any different than our photography if people want great photography, what makes you think they wouldn't understand? They have to pay good money for it? Do you understand why I'm I go where I'm going with this? Your price will create certain assumptions about your brand if you are cheap, people will have no value for what you're offering now I don't want to hear all these weird objections. I don't know sal this one time I had this I don't care about the one time I care about eighty percent of the time eighty percent of the time your clients have no value for what you're offering if you are expensive perception immediately changes no one walks into my studio thinking I only thought I was gonna spend a hundred bucks in here it doesn't happen why? Because those people are saying you got south and kata I heard a super expensive do you understand the psychology off the sale if they think you're expensive they know they're going to spend money if they think you're cheap they don't think they're going to spend money so how do you get a cheap client to spend a thousand dollars can it happen? I'm sure but as a rule man you got an uphill battle every time you step in the room with that client that is not the expectation I want out there that is not how I want it I don't want to compete on price so perception is reality I cannot drive this point home enough in fact I want to show you guys a bell curve here this is reality almost every business everything we do can be applied to a bell curve so when we're looking at this bell curve here on the left hand side you're seeing ten percent that is the low end of the market I do not want those clients in any way shape or form they soon have somebody show up with an iphone to photograph their wedding is a with a camera okay not my client the meat of the market is that eighty percent in the middle that's where most of the market sits again this could be cupcakes this could be wine this could be whatever you want it to be this is the meat off your market that you should be targeting the top ten percent that's the elite these are people who throwing million dollar weddings. I don't want those clients either believe it or not, that's not who I'm going after the minute there's a hiccup in the economy? I can't I can't get through those clients. I don't want to be a twenty thousand dollar wedding photographer when you're a twenty thousand dollar wedding photographer your book in three, four jobs a year maybe. Okay, good for you. Good for you if that's what you are that's not what I want to be I want to have a business where we're shooting thirty five to fifty weddings a year consistently in the on ly way you do that is by playing in the meat of the market right in here noticed the fifty percent mark here okay, I don't want this part of the market. This is a low end there's that pride of storing a five thousand dollar do it yourself wedding I don't want to be in here, she's, not my bride, okay? She doesn't see the value in what we're offering, so I want to play right in this meet and what this is here is this is going to allow me. This is true factual data I have I have broads who are throwing a fifteen thousand dollar wedding total fifteen thousand our wedding spent ten with us okay, I would say she's down there right towards where that hash mark is she's down in the bottom side of that curve. Then I've got brides who are throwing two and three hundred thousand dollar weddings. They're up not quite in that ten percent range, but they're up here. Okay? That's, my client. So I'm bridging this gap. You understand how big my potential client base is? I'm not going after a very small niche when you're on the low end, you are in fact going after a niche it's just the wrong niche that you're going after. I want to play in the meat of that market so that the bride of does have money. I'm not I'm not so cheap that she looks at me as perception's reality, right? And she looks at me and she goes hey can't possibly be any good, but I'm not so expensive that that bride who sees the value in photography won't come up and spend towards me. Does that make sense questions on this is where I got to get you to be? I got to get you into the meat off the market and get you out of that low end, all right, so let's recess, where do you want to be? If you still want to be compete on price after everything we just talked about this morning, I'm going to bang my head into a wall, right, because I'm not getting through to you. You've got to stop competing on price. It doesn't work it's a downward spiral to nowhere, there's, just nowhere to go. All right, what is it? Cp I studios went out of business, right? That was sears portrait, and I believe the walmart part of their photo studios. They were based in st louis there now done there, defunct, right. Why? Because that business model doesn't work. You can't stay in business in charge nineteen, ninety nine for twenty portrait of a little kid sitting in on a stupid topped with fake soap chips. It doesn't work it's, not where I want to be.