Ditching Hourly Lauren Pearl - The Daily CFO Pricing Framework
Jan 7, 2025
Lauren Pearl, an Advisory CFO and insightful daily emailer, shares her expertise in pricing strategies tailored for startups and small businesses. She discusses the essential framework she's developed for setting floor and ceiling prices while emphasizing the importance of understanding customer perceptions and decision-making. Lauren also highlights the power of post-purchase feedback for enhancing client satisfaction and the need for flexibility through continuous experimentation in pricing. Tune in for actionable insights that can transform how you approach your business finances!
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Understanding Floor Price Boundaries
- The floor price is the minimum price you will accept, calculated based on costs and capacity, not a price you should sell at but a boundary below which work isn't feasible.
- For services, cost includes time and effort rather than just materials, reflecting your capacity to serve clients.
Set Ceiling Price by Client ROI
- Calculate your ceiling price by estimating the customer's ROI or value from your service and charging a fraction of that (e.g., 10-20%) to make it a no-brainer purchase.
- Adjust your offering or build trust if the customer's willingness to pay is below your cost or if they perceive lower value.
Combine Research and Conversations
- To gauge customer's ROI, combine objective research about their business impact with direct conversations to understand their perceived value.
- Use this info to set prices and identify needs to build trust or educate clients about your value.