The Level
Happy Thursday Reader!
Pricing products and services is usually an afterthought based on a gut feeling or a WAG (wild ass guess) in the creator economy and digital thought leadership world.
But here’s the problem: if you started with a WAG and haven’t looked at the data to make a more informed decision about what a more appropriate, VALUE-based price should be, as the months and years go on, you’re leaving big time dollars on the table.
I’m here to help you provide maximum value, over time, to your customers, so you have the opportunity to earn the money you want. You’re going to work too hard for too little money for too many years if you don’t deeply understand the VALUE you’re providing through each and every thing you sell.
In This Issue:
We discuss value-based pricing strategies in the creator economy and how to maximize revenue by accurately capturing the worth of your products and services.
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Believe it or not, pricing is as much science as it is art. It’s figureoutable.
And to be honest with you, pricing B2B (business-to-business) products is way easier than pricing B2C (business-to-consumer) goods.
When selling into businesses, you should aim to capture about 10% of the value your service adds to your customer’s business — say, if you boost a business’s revenue by $100,000 in the next 12 months, you should charge $10,000 to $20,000 for your services.
When you’re selling directly to individual people for non-business use (B2C), it’s tougher to pin down the exact value you’re providing, which is why we guess… and hope… and pray that people will pay what we’ve listed on our landing page.
You’re inevitably going to launch your product with an educated guess on pricing, and that’s okay, but here’s how you launch with the strongest price point available to you, that people will actually pay.
To price your products and services like the pro that you are, you need to clearly identify the exact value your product or service provides to the humans who are purchasing it.
This means detailing the life-improving benefits customers will have after buying what you’re selling. Literally make a list of all the ways your product will change your customers’ lives for the better and solve their biggest problems (which you are uniquely positioned to solve).
Are you saving people time, money, energy, effort, and reducing mental overhead and stress?
Bear in mind as you do this that the “features” and logistics of how you deliver that good stuff is just the packaging (e.g. course, membership community, pack of templates, coaching, etc.).
What you’re actually selling is a transformation from undesirable mental states and circumstances like fear/uncertainty/guilt/burnout/overwhelm/etc to highly desirable ones like: confidence/clarity/community/attractiveness/power/freedom/peace of mind/etc.
After you’ve made your value/outcomes/transformation list, prioritize each line item based on what your customers care about most, not just what you think is important.
This key exercise helps define your unique value proposition—the X factor in your marketing that generates FOMO and desire, which is what it takes to motivate your prospective customers to pull out their credit cards and buy from you!
Your unique value proposition/customer promise is the most important factor in how you price your product(s).
What is that promise fulfilled actually worth to your customers in terms of cold hard cash?
And yes, you need to know industry pricing norms and competitor pricing, BUT never undercut a competitor and call it a pricing “strategy”.
Also, never use cost-plus pricing, where you charge what it cost you to create and deliver the product or service and then add on a little more and call it “profit” – neither of which reflect the real value/outcomes/transformation of what you’re selling.
This is the information/data set you need to start with a strong price that accurately reflects the value your customer is going to receive from it. But sorry, pricing is not a one-and-done kinda thing, just like every other area of your business.
🤔 Hit reply and let me know: What’s your biggest challenge in coming up with the “right” price for what you sell?
🤔 Hit reply and let me know:
What’s your biggest challenge in coming up with the “right” price for what you sell?
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Put on your CEO hat and commit to analyze key metrics on at least a quarterly basis. Stay close to your customers, talk to them regularly, and combine your metrics with the feedback you’re getting in order to effectively adjust your pricing from time to time.
All you can ever ask of yourself (and others!) is that you make the best decisions you can with the information you have at that time – so educate yourself based on reliable data and information, and make new decisions based on what you learn. This is good advise for all areas of your life and business.
Let me know your biggest challenges in pricing, and I’ll address them either directly or in an upcoming newsletter.
Until next week,
- Amanda
P.S. We are dropping a killer podcast interview with one of the world’s foremost pricing experts THIS Friday – don’t miss it.
Pricing is the biggest and most impactful lever you can pull to increase revenue (and profit!!) in your business. Take it seriously. Find our podcast here 👇
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