How To: Art of Pricing
So lesson thirty one before we get to our skype chat, I want to go over the next how to, which is the art of pricing and I've I've alluded to a lot of this already, so I'm just going to reinforce it the idea that each projects price is determined through a conversation and I hope by now everybody understands why it doesn't make sense to just email back a number when someone says what's the price for x right there's so much more that needs to be considered, it could be very complex without being complicated. So really it's important to have the conversation with the prospects that you're really interested in so that you can get the information and decide which strategy to use on which one is best so that everyone will be fair it would be fair to you and it will be fair to them so in orderto have that conversation what do you need to find out? We've talked again already about a few of these things, but I want to put them all in one place for you you need to find out the client's budget a...
nd this might be different there price sensitivity which is the ceiling we talked about the floor which is based on what you must charge the minimum you must charge in order to cover your expenses and be profitable. Finding out the client's ceiling is the other side of that what is the most they can pay on one of the ways you determine this is as we were talking about in session to you flotsam numbers so that you say are we talking five thousand fifteen thousand or twenty five and they may say, oh no, we can't afford twenty five so now you're finding out a little bit information about what their ceiling is and you can narrow in on it through a conversation what else you need to find out is your value to the client so this is not exactly about the value based pricing we were just talking about that is what is it in you that they value and are willing to pay for? And it could be such things as your depth of experience you've been at this longer than the other guy and even if it is buyer's market was as was mentioned earlier because you've been at it longer, they will be willing to pay you more that experience has value if you market it right, they won't know if you don't tell them another thing that could be of value is the quality of your service, the quality of your work, your reliability, your process or the chemistry between you personally those things have value to people if you know that if you know what they value and you can ask these questions, then that should affect your pricing and third, who else they're talking to? And again, as I've said before, you can ask either how many other people are bidding on this project or specifically, who else are you talking to? You can ask that question they may not tell you it's fine, but they may they may say, my nephew, that will help you determine what your price should be or they may say the name of a large firm that everybody knows about that you would be bidding against that might affect your pricing too. Who else are they talking to and what is most important to them? Because I think we assume because pricing is so tricky for us that the price is the most important thing to them, that that's what their decision will be made on, but that is not always the case. In fact, it is not necessarily often the case. I have an example from a client of mine recently who was bidding on a project, and she asked this question, what is most important to you? And her prospect basically said, well, we did this the last time and we chose someone who wasn't charging much and it didn't work out very well. So right now, the examples that we see are going to be what we base our decision on she wouldn't have gotten that information if she didn't ask the question so you use the intelligence that you gather by asking these questions toe offer more than one option, right? And so we referred to this a little bit already. Also, this is kind of like package pricing. This is three tiered pricing. So you gather all that information and then you say all right, here's, what you asked me for here's the price for it, but I think you need more than that. Or I could do more than that and here's what the effect would be. And you give them three options with two other higher prices, all right. And in the workbook. Actually, this is an example from a kind of mine. And I want to say thank you to calling gratz er I think from greta graphic she's been in the chat room a little bit with us too, and she very generously shared a page from one of her proposals. And here it is and it's actually in the workbook also, if you can't see it. But you could take a picture of it now if you want. But basically what she's got is package a package be package c and the prices for them and then optional services for things that the client didn't even know they needed but she knows because she's the expert and so she's laid it all out here for them and then they get to choose what their best option is and I can tell you that usually the client knows that the lowest price is probably not going to be the best value they know that they'll get mohr for a little bit more money and consistently when people use this strategy the choice that's made is either the highest price or the middle price but if you don't do three tiered pricing then they're not going to know anything but the lowest price because you're only going to give them what they asked for so this is really you bringing your value bringing your strategic thinking bringing more to the table than the other guy would in the buyer's market that's a very specific question about this he's asking rather than a three tier proposal what do you think about having an online estimate where they can make selection's themselves and it arrives at a price no no I don't like that because I want to be in control of what my client sees and how it's priced and maybe there's a software that does that but you'll notice that a lot of the marketing tools I'm recommending and a lot of the ways to talk about things is putting you in control of what your client sees and hears and so I don't know about that, but it doesn't fit with that strategy, which I think is really important. You keep in control, all right? So the idea here that we're talking about is that you offer two to three options you don't have to after three, you can offer two at two to three different prices, and the highest is mohr than they asked for, which is fine, and then you present the most expensive option first, especially when you're presenting your proposal would talk about this later so that the lower ones don't seem as high, right? This is another one of these psychology of pricing tricks where you give them the high price and then you say, and this one is a little bit lower, and this one is a little bit lower, right? So they decide which one they want. All right, so before we get to the lesson or let's, just do I'm sorry, the exercise for this to wrap this one up. So in the work look, as I said, is the actual page from colleen graeter's, uh, proposal with the three tiered pricing so let's talk a little bit about what types of situations and projects are ideal for this three tiered pricing because it may not be right for everything. Raina what would you say can you think of I would think identity work is one of those people think oh I just need a logo on and then you can say well we can include strategy and we can include you know, the whole suite of applications from business cards too social media profiles whatever it is it's basically very expandable yes to things maybe they hadn't even considered before and of course websites are because they can be so complex right so in a way we're saying anything that has multiple elements that khun b mixed and matched could be good for three tiered pricing one other idea before we move on justin what are you thinking? I think many a production work that works well you know I could either you know help produce your course help you devise you can go find your own team to shoot it or you know well we could bring on a team and shoot it we could bring us everything you know like we can we can add it we could even you know, like it's kind of expandable uh so we could call that the whole enchilada right they could buy the whole enchilada for little pieces of it okay good them like identity packages would be good for this and artie sandra says yes in travel she uses their she offers the lowest cost of the trip and then she goes up perfect