There has been a lot of commentary lately about pricing, and I wanted to throw a quick idea at you to see what you think. Most recently (and popularly) Chris Brogan mentioned that he charges $22k for a day of one-on-one consulting. Many of his readers were appalled that he charges so much. Many thought it was well within reason. It was an interesting discussion. How do you feel about it?
How To Look At Pricing
Anyone who sells anything has to approach the issue of pricing at some point. What is the correct price for your product or service? It’s natural to ask yourself “what is my offering worth?”, but I’d like to submit that isn’t necessarily the most helpful way to look at it. Let’s say you’re writing an ebook. What is an ebook full of truly valuable information worth?
You can probably see where I’m going with this. An ebook is not worth a fixed amount. I’ve seen ebooks given away for free…sold for $17…sold for $97…sold for $997. Is the thousand dollar ebook ten times longer than the hundred dollar product? Is the length of the book what justifies a higher price tag? Is the value of the information what defines the price you charge? If that’s the case, how do you quantify the true value of the information contained in your product?
Doesn’t it seem like it should be easier than this? I think it is. I think pricing is just another area where we allow our brains to do way too much work. In fact, it’s fairly simple. You can charge whatever you want for what you’re selling. End of story.
Pricing Is Subjective
Is it wrong for Brogan to charge $22k for a day of his time? Wrong? Unethical? I just can’t see how it could possibly be construed as wrong to charge what people are obviously willing to pay. It seems to me that $22k is probably a lot of money for most people. However, does that mean it’s a lot of money for EVERYONE? Of course it’s not. To many people, $22k isn’t that big a deal, especially if they’re getting something in return that’s greater in value.
I’d spend $22k all day long if I’m getting significantly more back in value…how bout you?
That’s the point…$22k is only a lot of money if the value is not there. If you can take what you learn from that day with Chris Brogan, and apply it to your company and go on to earn more, how can that possibly be construed as wrong or overpriced? I bet most (if not ALL) of the people who complained about Chris’ rate were people who have not used his one-on-one consulting…people who are NOT in his one-on-one consulting target market.
It’s a mistake to view a marketing piece for which you are not in the target market and use your personal disinterest as an argument as to why the marketing must be faulty. You’re not in the target market…OF COURSE you’re not interested. Why would you be?
Pricing is subjective…your product and your time is worth what people are willing to pay. Chris later explained that his intentions were to price his service at a rate that would get him only a few clients per month. He doesn’t have the time or inclination to take on more than that, and the price he set intentionally rules out anyone who is not going to be able to fully utilize the value he offers. He’s selling to a very specific target market, and we should all do the same.
What is a day of YOUR time worth? What is an HOUR of your time worth? What is your product worth? There is no one answer.
Don’t ask yourself what the value of your offering is. Ask yourself instead WHO you’re selling to, and then determine what they’re willing to pay. You can determine via testing, research, surveying or trial and error. That’s your price. Your price is not some magic number that’s the “right” number. There is no right price, and consequently there is certainly no wrong price.
Most Of Us Would Like To Earn More From Our Business, Correct?
I wrote an article for Blog for Profit recently which encouraged readers to consider dramatically increasing the price of what you’re selling. It’s not a prescription for everyone, but it’s something to consider. At least look at the option and the benefits of selling at a higher price…even a considerably higher price. There are a lot of positive benefits to consider. I hope you’ll think it over.
There Will Always Be Complainers, And There Will Always Be Happy Customers
Finally, consider that no matter what you charge you’re going to come across people who aren’t in your target market. No matter what you do, you are not selling to everyone. You’re only selling to a specific demographic. One of the natural side effects of this is that many people who view your offer will not connect with it. Some of them will complain.
I don’t care if you’re charging $17 or $1700 for whatever you’re selling…some people are going to complain and say “what a piece of crap; I can’t believe you’re charging that much. I can get that information for free just by using google, blah, blah”. And you will also get many happy paying customers. Don’t let the naysayers sway you. They’re simply not in your target market.
There is no wrong price for your product. No price is too high. As a matter of fact, the higher the price the better you must connect with your market. That’s not necessarily a bad thing is it?
Pricing Is Packaging
I’d submit that pricing is nothing more than an element of packaging. It’s a marketing component. An important one…but it’s nothing more than that. Do you wrack your brains trying to determine the right color in which to package your ebook? Color is important, and it certainly has an effect, but we don’t typically argue over it. We typically don’t get complaints from people saying “how dare you use red in your ebook cover…that’s so last year. If you had used blue, I would have bought it, but now I’m history.” But when it comes to price…it involves money, so people get emotionally wrapped up in it.
When you use red in your marketing, users either connect with it or they don’t. There is little emotion involved. But when you charge $1,000 or $10,000 instead of $100, some people get upset. As a marketer and business owner, it’s essential to understand that pricing is simply a tool you can use to position your product. It’s a powerful tool, but it’s not a matter of right and wrong; it’s just marketing.
If someone gets upset about your pricing, it’s not because you’ve misused pricing or done anything wrong. You’ve simply positioned your product in a place that’s not appropriate to the complaining customer, and they are choosing to react emotionally.
Value Is Not Optional
All this said, value is not optional. If what you’re selling is crap, then the consumer is going to call you on it. And that’s the way it should be. If you’re going to use any price other than rock bottom, you need quality on your side.
We live in a world that is fascinated with rock bottom pricing, and rock bottom quality is a result of that. If you’re selling at premium price points, quality is the price of entry into that forum. If you’re good at what you do, you have a world of options at your disposal with regards to pricing, and I encourage you to explore your options without inhibition. You are worth more than you think you are!
Did you happen to read Chris Brogan’s article and the ensuing comments? I was amazed at how negative some people can get when it comes to money. What are your feelings on this? Is there such a thing as a “right” price?