Sales Funnel Radio SFR 216: How Much Should You Charge...
How Much Should You Charge?
Q: How many of you guys get stuck on the pricing?
I totally get it. It’s always like, “Man, what do I charge? I’ve got this sweet core offer, what do I charge? Look at all this value… what do I charge for it?”
As I'm Funnel Hacking the message and the offer, I'm also looking at price points.
I'm looking to see:
- What’s everybody else charging?
- What price points have the successful sellers proved?
Because…
The path is already paved. You've just gotta follow it!
FOLLOW THE YELLOW BRICK ROAD
It’s like Dorothy and The Yellow Brick Road. You just follow the proven price points that people already buying and then... (I’ll tell you in a moment… keep reading).
It's great… because a lot of the decisions are NOT even up to you.
You just have to know your Red Ocean:
- Talk to sellers
- Get really intimate with the buyers
... And then, BAM! 80% of your decision making comes from other people.
MY FRAMEWORK
I look to see historical price points.
I might see:
- $97
- $147
- Someone at $127
- A cheapo who's afraid to charge money and has a lot of internal hangups... they only sell for $47
I had money hang-ups for a long time too. That's why my first product was $127. I was afraid to charge more money.
You might find someone's who’s like, “Oh, I'm gonna be the $297 person.
BUT... most people will be kinda in the mid-range, between $97-$127.
I'm like, “Hmm... If I’m really cheap I won’t be able to spend much on ads and still cover my cost of goods.”
You look at all the historical price points, and then if you can't be super cheap... *Be Really Expensive*
You need to figure out: “How can to be premium?”
For example:
If there's only one guy selling at $297, then I want to go that little bit higher, “Hmm, what if I sell at $347?”
...Then I justify the premium price point by creating an offer
If I can't be really cheap, I need to figure out how can over-deliver and out-deliver everybody else inside of that market
WHY PREMIUM PRICE POINTS WORK…
Not all industries are gonna have a mid-tier $1,000 offer, but that's very common in the info product model. There’ll be multiple price areas in different industries… so you need to check yours out.
If you see a house for $1000 you probably shouldn't buy it, right? You know what I mean…
There’s probably something wrong with it, right?
So you need to see what the price categories are in your Red Ocean.
What are the:
- Really high price point
- Medium price point
- Low price point
- Historical price points
... And then you can look to see how you can be just a little bit premium.
For my business, I want the name. I want the reputation.
I don’t want people saying, “ It's like only like $4 for the house. There’s gotta be a catch!”
Because there's an interesting thing that happens with price, let me explain...
THE $5,000 LAMBO
Do you own a Lamborghini?
I keep making fun of Lamborghini’s. I think they're super awesome. But... if it's NOT yours don't go take a picture and act like it is... that's all ;-)
If you do own a Lamborghini, I think you're cool. I'm not making fun of them.
Anyway, let's say that you want a super cool car. Say a Lamborghini. Or a Ferrari. I'm bad at cars. What's a cool car? A Batmobile, *Definitely*
I'm NOT a car or a sports person at all.
So let's say you go to a Lamborghini store and you're like, “I’ve been saving up for this Lamborghini forever. It is my dream!”
You walk in, and the salesman is awesome and you go for a test drive:
“Imagine what it'll be like taking your spouse out in this car…”
The salesman is putting you into an emotional state of anticipation:
- What will it be like?
- How will people look at you?
They’re playing with your identity.
You start thinking, “Oh man, this is gonna be so cool. I can’t wait. This car is soooo me!”
Subconsciously, that’s the game that’s going on...
Just as you’re getting out your wallet to buy, the salesman comes over and says, “Dude, I got something so special for you. It's so awesome. We’ve decided that we will give this new Lamborghini to you for only $5,000.”
What’s Your Reaction?
Yeah. EXACTLY! “What's wrong with it?”
Suddenly you start to feel different about the car. You're like, “Is this crappy? Is there an engine? What's wrong with this car? Am I just buying tires and a frame… What's going on?”
BUYING AN EXPERIENCE
I'm trying to help you understand that you do the same thing to your customers when you go too cheap on price.
Stop going cheap, a lot of 'em don't want cheap.
I don't want cheap when I buy certain things now. I'm like, “Give me *REAL* expensive. I want the best experience that I can get.”
Your customer is buying an experience
So when I look at different price ranges, if it's NOT the super obvious low thing, almost always I'm gonna go as expensive as possible and just add experiences into the offer.
So as far as pricing models go, Man, beware of selling the $5,000 Lambo. l look at the price point and think, “Okay, I'm a little bit premium... great!” I don't wanna be the $5,000 Lambo.
There's no identity status increase when someone buys a $5,000 Lambo.
Everyone's gonna look at you and be like, “You're an idiot! What’s wrong with it?”
A lot of people buy brands just so they can say, “Uh yeah, I bought this really cool car. It’s a Lambo.”
It's not cool that you bought a car. It's cool that you bought a Lambo.
People wanna be able to do that when they buy your products as part of reselling themselves post-purchase and selling others; so don't rob 'em of the experience.
Price can actually be a BIG part of that status experience, but most people run to discounting price.
SEE YOUR VALUE
Because you’re an expert at what you do, you probably DON’T see the value of what you offer, and then you discount, discount, discount… *STOP*
A guy came to do some work on our house. He said, “Man, I'm sorry we gotta fix this electrical outlet. It's gonna be $100.”
I was like, “That's totally worth it to me. I have no idea how to do electrical work and will not die over $100, fix it for 100 bucks. You want $200? Sweet”
You have to understand that your perception of price is NOT their perception of the value.
That's a good one. Bam! Lemme say it again so it sinks in:
Your perception of the price is NOT their perception of the value.
That's the whole point.
...And when your natural knee-jerk reaction is to discount price because you're afraid, you're in your own head.
You're valuing it from your side. That's NOT how your customer values it.
I have no idea how to do a lot of handyman work. So I'll pay a lot of money so I don't even have to think about it. So charge MORE money.
STATUS INCREASE
Have you ever bought something that you're NOT really proud of buying?
A lot of times it's because there wasn't a status increase included with the purchase…
Maybe it was really cheap and you're like, “Yeah, I just went the cheapest option... I know…” You try and save face that way, (which is actually a way to increase your status too).
You get MORE status increase when a person’s like, “I bought my dream car! Let me post pictures all over the place.” They want that status increase.
Understand that that's how the game's actually played.
What's the value to the other person?
Value does not mean dollars. It doesn't.
It means:
- Solved Problems
- Identity
- New Beliefs.
...It means buying the Lamborghini *full price* ;-)
Boom! If you're just starting out, you're probably studying a lot. That's good! You're probably geeking out on all the strategies also, right? That's also good.
But the hardest part is figuring out what the market wants to buy and how you should sell it to them, right? That's also what I struggled with for a while until I learned the formula.
So I created a special mastermind called an OfferMind to get you on track with the right offer, and more importantly, the right sales script to get it off the ground and sell it.
Wanna come?
They’re small groups on purpose so I can answer your direct questions in person for two straight days.
You can hold your spot by going to offermind.com. Again, that's offermind.com.
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