The Art of Pricing: Products and Packages
So any adjustments you can make low cost on your products your overhead work out of your home initially on location for doctors have a huge advantage because they don't have any overhead other than their office in their home and they get to go on location to help consumers which means they can charge more and I don't know why they don't charge more like I said yesterday for massage therapist comes to your house he's going to charge twice what he does if you come to him so why aren't on location photographers using that as a specialty high end customer service thing that you paid more for no get it so let's revisit products for a second low cost of good hypersea value your product should reflect your brand okay don't carry everything the price of each product should reflect a twenty percent cost of good that's kind of my number there's arguments on both sides for that for example if it cost you twenty dollars to create it should be pricing one hundred dollars however this does not take ...
into account perceived value an eight by ten classic example it cost you ten thing there's argument that could cost up to fifty dollars to create but the first one costs fifty dollars to create multiples though after that you know it's about ten bucks or so with the process the cost of the product the time you put into it the factional all that stuff people think oh, I should only charge you if it's ten dollars I should only charge fifty for it really? Can you charge more for it? Maybe maybe not staying with the digital file classic with a digital file everybody thinks it's so cheap to produce the perceived value with a digital file is jain enormous? Look at what they can do, they can print forever that has a huge value to it. So you gotta charge for it even though it was just your time to edit the images and the cost of the disc. Okay, so proceed value plays a high rolling it. Of course, creating it means product hard, cost your time costs to edit design, order package and deliver. Okay, so building packages don't tell me how much time we have we're doing way. I'm gonna make sure building packages truly is an artist science and I've kind of talked about the science of pricing. Now we're going to get into the art strategy of developing pricings that your client purchases exactly where you want them to purchase to meet that twelve hundred seventy three dollar average that you need to make every single time they come through the door, okay, this is the fun part of pricing, I think it's fun, some people don't, but I think it's kind of fun because you're kind of artfully helping a consumer by where you need them to buy and it's kind of cool when it happens so if you're going to do packages which ice I do encourage for photographers are starting out because it's an easier way to soft sell you don't have to be a pushy sales person with packages that kind of sell themselves you must provide incentive for that client to want to move up okay so package is so much money package being so much money package c is higher than that how do you structure those packages so that package c is the one you want people to buy okay your lowest package should have no value no value at all no discount okay it shouldn't have much in it it shouldn't have anything in it that the client really wants so no digital files here we all know they want total thousand give prints so the lowest package has to be something that the client wouldn't necessarily by and it should have no ingrained value in it no good deal okay the mill packages where most consumers will buy it's kind of consumer buying psychology people by in the middle they just do they don't wanna be the cheap guy and they don't want to be the most expensive so they kind of purchase in the middle which is you can use to your advantage the top package should be your whopper the one no one ever buys okay if you sell it raise the price you're all writing furiously eleven I'll stay on for a second so they can all right fantastic. There are a few tried and true methods for creating package is what you choose depends on your business model your brand and what you're comfortable selling I mean, some people are comfortable selling certain ways of pricing and this is highly individual teo you okay? So I'm just going to tell you the general ways that most photographers do packages you can kind of evaluate your own packages and see oh yeah that's what I do then look at the other models and see if maybe that model maybe something you'd rather do that would be easier for you to sell and develop and create. Okay. So method a classic traditional package the set size the set number one sixteen by twenty to live in my fourteen and five eight by ten six hundred bucks. Okay. What are the pros to this it's easy to create its easy understand consumers are very familiar with it. The cons are just the substitution. Oh, can we get to find my seven for one of my pan? You know that classic response it's not flexible for that reason and the consumer gets some things that they don't necessarily want because it's in the package method c be excuse me go back one the big ticket item with the gift prince so for example in the package there would be a twenty by twenty four campus and twelve gift prince for two hundred dollars okay I'm just randomly throwing prices out there are the price of it is not the point it's how it's structured okay the pros too this is offer some flexibility with those gift prints they cannot choose no eight by ten by seven four by six that kind of thing it's easy to see the price points the consumer khun see that you know packages start at five hundred and go up to twenty two hundred or whatever that spread maybe and it's fairly easy to understand for the consumer the cons it has a price ceiling there's a top traditional packages have the same issue there's a top there is a limit to what someone will spend in your studio but the whopper package right ok do you really want to limit your clients that way substitution again a problem people will say well I don't want the canvas and what we have this package family meant many gift prince okay consumer gets stuff they don't really want again same thing I don't need twelve gift prints oh but I want the canvas and the five gift princes in the one with the eleven by fourteen I'm saying message similar a little more flexibility big ticket item was a print credit so a session album and then five hundred dollars to spend on prince and that's a thousand bucks or whatever do you see? My point is that kind of package the pros that offers some more flexibility they could maybe buy with that print credit a canvas or my fourteen or anything they want in there, but they still have to get that album. It's easy to see the price points again. The client can see where the middle is and it's easy to understand the cons again has that price ceiling substitution zara problem and the consumer get stuff they don't want. So that's a problem in there? Not always, but and some people don't mind those problems. On a lot of this is you just have to kind of live with what problems each package. Each method has its pros and cons. You have to figure out which ones you could live with. Okay, so method hee is the one time discount. I'm not really a fan of this method, and I can tell you several reasons why? But basically they purchased ala cart, and then, if they order that gave that day, they get twenty percent off to me, that twenty percent off kind of cheapens the product. You also have to hard sell because it's all a cart, they could come in and just get one eight by ten and then get twenty percent. You know and you can instigate a minimum order or we have a minimum order of five hundred dollars under studio, but I don't like to say that because it implies that you have to spend a certain amount no matter whether you like the images or not and to me that's pushy sales not everybody feels that way and if you feel that way it's not a problem like I said, this is totally according to how you sell what your personality isn't remember my sister and me we have different personalities, we run successful businesses, you can run a business based on your own decision making skills and your own strength of the person, so just cause I like something or don't don't take much stock in it, okay? Because it may work really well for you the pros you know this offers some flexibility and a lot of flexibility actually they can pretty much by what they want it's easy to see the price points because they just have a budget and they spend it and it's easy to understand. The cons are hard to control your average really hard to control your average have to be a good salesperson the discount implies cheap and it implies pressure to buy now, which of course all my clients by now, but I don't want to owe you twenty percent off if you purchased today feels like smarmy salesman to me and I'm that's not really me so you have to decide if that's if that's something that you're comfortable some people are totally comfortable with that this is what I do create a collection critic election is like customize your own portrait package so you follow a certain number of steps so for example this is a three step model choose your our product choose your album choose your difference you can choose whatever you want do you want the the high end fifteen hundred dollar album from a single book? Do you want the middle of the road album from prodi p I in which album do you want? You have the choice to pick our products do you want to canvas? Do you want just a regular old print? How many gift prince you want? One five, ten twenty the choice is yours so the pros too this is offers tons of flexibility for the client the consumer gets what they want what they need there is no price ceiling in the world is there or you could have a ten thousand dollar sale of this kind of pricing. If you want it's easy to adjust and change when you want to add new products and all you have to do is add it to your list and make sure it meets your cross of good and that's it okay the cons it can be difficult to understand the client has a lot of choice and so they're like whoa I don't get this so you have to explain it the no price ceiling thing is also a con it's an advantage to you but it's also a con because the consumer can't see where the middle is so they go oh what am I gonna spend there's no comfort zone so you kind of have to explain to them well most of our clients invested around eight hundred thousand dollars on their porches and they get a lovely selection of art products and digital files for their use okay so kind of telling them where the middle of the road is so there's no clear price point for the consumer and that can sometimes confuse them but I haven't found any issue with it and the flexibility that it provides me I love it's also super easy to put into pro select because it's basically just all a cart ordering with rules the fella you by allah cart with a couple rules as long as you meet these three steps you've created a portrait package but it requires a lot of thinking you got to think yourself okay what's the lowest somebody can get out of my studio and in my studio that's about six hundred fifty dollars for create a collection this is my exact pricing choose one or more wall art or albums I have four different styles of wall art and I have to see one too. Three, four five I have six different albums okay that's ten products in my studio ten that's it but each one those products speaks to my brand it's low cost, high dollar and it's profitable. The second step is to choose your digital files. You can either have full rez negatives or you can have images that are printable up to eight by ten then I haven't ala carte priceless, so if you don't want to do collection you could buy digital files ala carte but they're twice the price but you can come in at three ninety five so my consumer who's a twenty one year old mother looks at three ninety five was all I could afford that but when she gets in she realizes that there is no value to it she's going to have to spend a little more to get what she really wants then they make the decision. Do I want to do that or not? Can I afford her or not? When they come in and they see the art and they talk to us, we developed oration ship some of them say yes, I want to do it it's worth it to me is it a loss leader a little bit, but you can still come in and get us for reasonable price, that is. And then you add the sessions he under that? That is the rock bottom price. I am willing to do a session for rock bottom. I don't like doing it. But I will. I try to not honestly, no one's ever bought ala carte. We change. This pricing was it left me mayors and no one has ever bought no excuse me. One or two people has bought a car when we first started and then we kind of adjusted things to make it work that way. So digital files the question should you sell them or should you not? Huge controversy here. Okay. Whether or not you self house depends on your business model, your brand and your target market. Really? The pros and cons to it. It's. Easy to produce it's. Fairly cheap to produce it's in demand. It has a high perceived value and it can be very profitable if you price it correctly. The cons the files are transitory, they're not archival. And I have marking materials that preaches this to my consumers. I tell them to make a print of every single digital file because that print is archival. A digital file is not eventually that digital file will corrupt, and then you're s o l okay, they're easily corruptible the client may not print which is huge you have to get them to print we have certain ways of doing that in our studio the client may print low quality again it's all about client education you've got to make sure you educate them on why they need to print a certain way they're easy to alter what you may not like there's no control and there's a huge lost opportunity cost what does that mean lost opportunity cost the ability to make more money on down the line once you sell that file you could never make money off it again ever so you better sell it for the right price okay I really want to drive that point home do not sell digital files that is not profitable to you it's very important to charge a perfectly for them if you're going to do it okay and they should be really the most expensive product you carry or they should have toe by for us we have the hybrid model you have to get an art piece to get the digital files I want to print for you I want you to have an art piece something that's lovely and an heirloom I want to keep that spirit alive and photography I really I don't want that to go away because there is nothing like the prince those water color printer something I love making it just the organic feel of it coming off the printer it just makes my heart sing. I get goose bumps when I see images come off the printer, I squeal sometimes tiffany laughs at me all the time because I squeal when a campus comes out there and I'm also pretty, you know, and seeing your work big it's just you know, when those sixty five campuses went up in the hospital, I was like, is this amazing? They look fantastic. So I want to see my work printed, but I also want to make my customer happy and they want digital files. So how do you balance the two? And coming up with that hybrid critic collection model is what I've discovered helps me. It may not help you, so keep that in mind. You have to really get into who you sell, what your brand is, what you're comfortable selling, etcetera, etcetera incentives can help you okay, purchase a portrait collection received for gift that's a great incentive spend x amount and your next session fees only x amount. Any newborn client who purchases create a collection can enter the baby plan for only one hundred fifty dollars. Who I just got a baby later who's gonna come back to me three times in one year and spend an average of seven to eight hundred dollars on a session okay they spend lower on the baby planets because they're coming back three times a year and I understand that so purchase a twenty inter larger canvas and any album is twenty percent off that kind of thing purchase a newborn collection like a scent and interesting planet is such spend x on your and your order digital files are included it only x that's a really popular one I used to do that with my old credit collection pricing where I would say if you spend this amount seven ninety five or more in a portrait collection and all your digital files are included for an additional two hundred fifty dollars in high rez automatically up my average to about a thousand dollars a session that's his back few years ago and that two hundred dollars covered the cost of good for everything so my profitability went up and most people were spending over a thousand dollars to get those files to my average with sessions he was around fifteen hundred large session okay next the projection appointment in depth then alive sale session with our family from yesterday just so you know in that sales appointment I will be selling with our pricing and our model okay I'll be chatting with mom and dad what I really want you to pay attention to is for the give and take what I say to her how I talk to them how I make the decision in their court it's all about the client what they want, you're just encouraging them to do things with their art that they'll love later. Watch for that systematic approach that we're going to talk about the next segment, listen for key phrases, okay, and look for body language not only in me, but also in the client. If you want to find me, this is the facebook page. For those of you who want to download the download so that's about it. Let's, take some questions. I know there are some we have about ten minutes to do that. I want to backtrack a little bit because a question came in from d photo who had asked about the lowest package having no value when you said that and d photo said in your lowest package with no value what does the customer get? Just your time in shooting so I think there was a little bit of that. Didn't you understand? Quite grasp that concept of what you meant by no value. Most of your consumers will want to buy a package because it's easy, it's kind of set up for them. Okay, so there's a couple strategies you can put your lowest package at that twelve hundred seventy three dollars, okay, so you know, your average is going to be that or higher every single time then you can put more value in it but you want people to upgrade you want them to purchase the fifteen hundred dollar packets in the two thousand dollar package so what that means is you have to put the mohr valued products in the higher packages you have to give them more for their money as they spend more money. Is that following to make sense so that bottom package when I say it should have no value it should just be the cost of what it is let's say for example, you sell on eleven by fourteen four hundred dollars okay? Just example on dh you sell eight by tens for fifty just a round number six so in the lowest package you have just this is totally example don't do this this is just an example but you say you have two eleven by fourteen and for eight by tens that value is four hundred dollars, right? That package should be forty dollars as you get to the next package say there's two eleven fourteen for eight by tens five five by sevens on a digital file for only five hundred dollars do you see what I'm saying as you spend more there's more value to the consumer so when the consumer looks at your packages and will cost if we just spend, you know, three hundred dollars mohr look what we get more that's the art of pricing that's, when your plan it looks to your pricing and goes, oh, if we just spend a little bit more money, we can have all of this, which is exactly what we want. So to get what we want, we have to search, spend a certain amount money companies do this all the time and pricing this is the strategy to get you to purchase more it's the value meal. Okay, you can either buy a big mac at mcdonald's for five bucks or for six to get the french fries and a large coke with it. Its a classic scenario that's all I'm saying when I say that value that big mac has no value. The bottom package, no value it's five bucks, but if I buy the value meal, then I get the coke and pepsi for only a dollar more coke, pepsi, coke, french fries you soon I'm saying that's, how does that make more sense? Just wanted that to be clarified. Okay, because there's definitely value in there. Yeah, julia I d photo would like to know and I know I've experienced this. Do you ever have tio explain or educate customers? Why things cost what they do d photo says I've had a a few argue that you're just pushing a button why does it cost so much and also an attending to that question a couple people are asking if you water mark your prints that you provide your digital files you know I don't want to mark them um anything that we put online on our facebook page radio but I don't want to mark them for my consumers d yes sometimes I do have to explain so for example this album here that's in a super book um it's a gorgeous album printed in japan the paper is delicious and a super book's quality is just unmatched so we designed the box we designed the cover and we designed the pages inside okay, you can customize this anyway you like you can write a letter to your child one of my clients right now are putting the lyrics to the song from rascal flatts my wish my wish for you so we're putting those lyrics throughout the entire book in strategic points for the images are each sibling wrote a hand written letter that we're scanning and putting into the book for some time that went into this there's some sentimental value okay this is a fifteen hundred dollar album in my studio it costs me about three hundred fifty dollars forty dollars hard costs so it is when my higher cost of good items but fifteen hundred dollars is the minimum I can charge for it I was the one making money okay there's almost a twenty five percent cost of good on this thing but the client sees the quality they see all the work that goes into it that graphic design and hard labour and that sometimes when I have to say that I have to say them and even though I produce it pro select and the writing I have to do in photo shop and customized that so even approached like makes it a lot faster for me to do this it still does require some work. The client thinks that it takes a lot more than it really does and that's okay, the fact is that my skill level that I've developed over time the amount of education money I've spent on education thousands of dollars, all of that factors into the price of the product over time, my equipment that I replaced every year that has to go into the cost of the products the retail cost. Ok, so when a client says to me, oh my gosh, you just have to push a button no it's not that easy. I would love it to be that easy because then I could sell these things all day long because they'd be a lot less expensive simple is that I mean and sometimes that I always say that too for doctor sometimes the truth hurts I go into the lost opportunity to me cost field my clients all the time. Why are they so expensive, it's, just a disc. Well, sir, every time we sell a digital file, there is a lost opportunity cost associated with that file. The minute I provided to you, we will never make a living off of it again. You have complete rights to do anything you want with it. Personally, you can print it as many times as you like and for the cost of that file. The number of eight by tens and sixteen by twenties and thirty by forty campuses that you can receive out of it is much more valuable than the actual price of that file. I'm selling it to you for that shuts him up pretty quick and it's the truth, and it said kindly and said, hey, respect to my living is all I'm saying, this is my sandbox, play with me or not.