When I’m thinking about buying something, I always start in the same place: Price. Of the 4 Levers available to me, that’s the one that can make or break a deal for me within the first few seconds. I know I’m not alone.
In pricing, you need to consider the Goldilocks factor: you want it to be just right.
What are you selling?
It’s pretty common today for people to talk about the value of what they are selling. There’s a reason for that. If your product is a widget that can be bought anywhere, then you have to make sure that your widget is priced the same or below what everyone else is selling that same widget for- which also means you have to spend a lot of time keeping an eye on your competitors.
But when your widget comes with something else- a bonus or extra added feature- then suddenly you have a package that is going to be valued as more than the widget by itself. And if you can show how that package solves a problem that makes me pull my hair out on a daily basis, then you’ve turned this into a valuable package
Suddenly it’s not about the price, it’s about me.
So value-based solutions can bump your price, and your customers will gladly pay it. Everyone spends money all the time. The key is are they spending their money with you.
Price at the high end of your bucket
There are a lot of great resources out there that dig into the details of how to price your product appropriately (I’ve listed one of them below). But one simple tweak that can up your incremental revenue in short order is just making sure your price sits at the high end of your price bucket.
For example, you have an eBook and think that your ideal customer will buy it for $10-$20. Instead of pricing your eBook at the low end, you want to price it somewhere at the higher end – like $19.99. The reason is, we view certain ranges of prices together and determine that they are “okay” for us. So if I’ll buy an eBook for $11, I’d likely buy the same eBook for $19 because it sits within the same mental price bucket.
For you, as a business owner, you generate an additional $8 of revenue for each one of those sales, so don’t shortchange yourself by going on the low end of a bucket.
Number puzzles in pricing
There’s a couple of other pricing tricks that you will notice as you start paying attention to what businesses are charging for their products.
- The 9 factor: If you think your product is a $10 product, you want to price it at $9.99. $20, you price it at $19.99 and so on. That penny makes a mental difference, even though we all know it shouldn’t. Sliding that “9” in there makes us feel like we’re getting a better deal.
- Lucky number 7: You may have observed an interesting trend where a product price point ends in a “7”. It’s meant to catch your attention because it looks unusual. There is vast speculation if using a “7” in your pricing actually has any impact on your sales.
Pricing can be fun, but it is something that needs to be tried, tested, and tweaked as you adjust your lever. Focus on the value of your product, and why it’s worth every penny of your customer’s hard earned dollar.
Then show that value by answering their objections, and ask for the sale. Don’t make Price the lever that causes them to walk away. At that point if they do, they probably weren’t the right customer for you
Free resource
This online pricing guide by Jonathan Wondrusch is one of the most comprehensive pricing resources I have ever seen and it’s FREE. It’s a long post, but well worth it!
Next time, we are going to talk about the 2nd Prospect to Customer lever: Product.
(photo credit Steve Snodgrass)
