“And there’s a frog there who wants to be in the video!
That’s pretty cool …”
– Steve Napolitan
Welcome to the Steve Show! So today I want to talk about pricing. Whether you are pricing a product or a service, the question is:
How do you figure out the right price?
Often when I coach and talk to business owners, they have a dilemma about pricing—they either underprice their product or service, trying to match the market price or serve a wider audience. But in trying to be inexpensive or trying to lower their prices to match their competitors, a few detrimental things happen:
And it’s a downward spiral. In this post, I’m going to share a few stories that will help shed light on the above points.
Maybe you can relate?
Years ago, when I started coaching and speaking, I had many clients. My prices were much lower than they were now. To make the money I wanted to make, I kept increasing the number of clients I served. It didn’t’ take much time to lose the spare time I had because it was gobbled up by serving client after client after client.
It wasn’t sustainable. I lost so much time, I didn’t have much time to focus on self-development or actually looking at my business and discovering better ways to grow it. I lost focus on the activities that helped me build a successful practice, and the activities that helped me stay razor sharp and on-point for my clients!
I couldn’t learn new things. I couldn’t slow down to speed up. I wasn’t as centered for my clients.
I Was Cheating Myself and Cheating My Clients
by Charging too Little!
Since then I have increased my prices and reduced the number of clients I have, focusing on clients who see the value and are in the position to invest in my private coaching.
Since then, I have enjoyed my business more than ever, clients are getting profound transformations in their lives and businesses, and we are all having more fun!
Now, I’m not saying you must at all costs, go to the way high end. There is a market for lower rates.
But that market is a volume-based business model which requires a different strategy to leverage your time in order for your business to stay profitable and sustainable.
In my case, it was simple: I just had to raise my rates. I shared my story because I find many business owners deliver an excellent service that they charge way too little for. And it’s hurting them and their clients.
This applies to products too. I was recently with a friend of mine that I haven’t talked to in a while and he was talking to me about a new product that he’s patenting.
We got into the discussion about price. At his current pricing, his competitors were still a few dollars cheaper than he was, and he was really worried because he wanted to match their price.
“What’s stopping you from launching the product?” I asked.
He said, “Well, the price. We’re trying to work really hard to negotiate with our manufacturers to get the price down to what everyone else’s is.”
Here’s the thing thought: his product is far superior to the market! It saves people time and customers are raving with satisfaction. I was certain that because they were having a better experience, they would happily (gratefully, even) pay DOUBLE because the experience was so positive.
There must be a better reason for why they weren’t willing to raise their price!
What eventually came out was this:
“Well, I want to be able to help everyone.
And if we price it too high, some of the customers won’t be able to afford it.”
Sounds reasonable right?
I responded, “Well you are stopping yourself from having this business. And if you stop your business because you try to help everyone, then you end up helping no one.”
You could tell a coin dropped.
Suddenly, he said, “Steve, you’re right. I can’t be affordable for everyone, but maybe I can be affordable for a lot of people!”
These are some considerations in pricing that you need to think about.
So, let’s sum things up. If you charge too little at your expense, no one wins. If you charge too little trying to over-serve the market and end up not being able to build a profitable business, no one wins.
Pricing things right is about win-win!
If you win and the customer wins, then it’s a match. If you must lose for the customer to win, that’s not a good business model. Over time, it will fail because you’ll get upset about it.
I hope you enjoyed a few new ways to think differently about pricing.
If you have more questions about pricing, I’d love to get more specific on this 😊
Choose Gratitude Create Freedom
(P.S. Are you satisfied with the rates you are charging now? If not, what would you like to charge?)