Transcripts
In this episode of Live with The Pricing Lady, we take a look at
Speaker:price setting tips for beginners.
Speaker:Oftentimes people get stopped before they even get started because they
Speaker:simply don't know where to begin when it comes to setting prices.
Speaker:In this episode I'll share with you three things you should start with
Speaker:when you sit down to set yours.
Speaker:Sit back, relax and enjoy the episode.
Speaker:When it comes to where to start with pricing, the reason that I find
Speaker:this so important is because where you begin will determine not just
Speaker:the journey, but where you end up.
Speaker:It's important for you to be able to begin in the right place from
Speaker:the beginning so that you can work more effectively and efficiently.
Speaker:That's not to say that if you start in the wrong place, there's no hope.
Speaker:Of course, there's plenty of hope and there's plenty of opportunity,
Speaker:this is based on, let me say my experience and what I see startups and
Speaker:small business owners getting wrong.
Speaker:And then struggling more than they need to.
Speaker:Reflect as we go through this conversation about where your efforts and energy
Speaker:goes when it comes to pricing and what little changes you can make
Speaker:in order to be doing it to better.
Speaker:When we think about sitting down to start with pricing, the very first
Speaker:thing, and you probably are seeing this coming, if you follow me regularly,
Speaker:is to start with the customer.
Speaker:And this is one of the things, as I said, that people overlook
Speaker:when they're doing their pricing.
Speaker:They think they need to focus on the competition and the costs, which you
Speaker:do need to include, but if you just focus on that, then very quickly
Speaker:you can go in the wrong direction.
Speaker:Because who you're targeting in large part will depend on where
Speaker:in the range of prices you fall.
Speaker:Yeah.
Speaker:Where your offer will end up being.
Speaker:If you're targeting a group that is extremely price sensitive and they're
Speaker:looking for the best deal always and the cheapest offer, then that is
Speaker:going to, in large part, dictate what you do or can do with your pricing.
Speaker:As opposed if you're targeting people who have a lot of money or
Speaker:who have a lot of disposable income.
Speaker:If you focus on the customer, then you can start, driving what you're
Speaker:doing with your pricing strategy in the right direction from the start.
Speaker:Whereas if you start with, for example, the competition, you know, people always
Speaker:come to me and they're like, how can everybody charge so little or so much and
Speaker:I can't figure out where to price myself?
Speaker:Well, you can figure out where you can be in that range in part by
Speaker:understanding who you're targeting.
Speaker:It helps you to narrow that down.
Speaker:The reason to do this is really to avoid heading in the wrong direction and using
Speaker:false assumptions or assumptions that you haven't fully tested because you
Speaker:haven't fully understood which market is the best one to focus on first.
Speaker:When it comes to setting your prices, if you try to set prices based
Speaker:on targeting everyone, then you position yourself as a generalist.
Speaker:In the marketplace, generalists will command less than average prices.
Speaker:Now, that could be your strategy if that's where you want to be, but I would
Speaker:guess for many, no, I'm not guessing, I know for many small businesses,
Speaker:they actually have more strength by playing in a niche area and being
Speaker:the expert in delivering something for those people or in that context.
Speaker:Now the second thing you want to take a look at when you are sitting down to
Speaker:set your prices is your business goals.
Speaker:If one person has starting their business because it's a fun side
Speaker:activity for them to do, they're going to have very different business
Speaker:objectives than someone who is trying to earn an income to live off of.
Speaker:Now, you may think that it's wrong for some people to do that, and right, the
Speaker:only way to do it is to have a fully fledgling business with big lofty goals.
Speaker:But the reality is, is every business is different, and they're trying
Speaker:to achieve something different.
Speaker:If you compare yourself, let's say you are trying to live off of the income
Speaker:your business generates, and you compare your prices to someone who's just doing
Speaker:it as a side gig, you may find Their prices, in your opinion, are too low.
Speaker:And then if you position yourself against them, you're setting yourself
Speaker:up to have a business where it's going to be really hard for you
Speaker:to get the profit engine running.
Speaker:Your business objectives, whether you want to go for profit, or you want to go
Speaker:for market share, or you want to focus on this segment or that segment, or, you
Speaker:know, all of these different business oriented goals are very important to what
Speaker:you're going to do with your pricing.
Speaker:If your goal is to have the most market share, you're going to have to do
Speaker:something very different with your pricing strategy than someone who is just trying
Speaker:to earn a decent living and wants to go spend a lot of time with their family.
Speaker:Not that those two things are at odds, but your strategies might be different.
Speaker:The third thing that you want to take a look at when you're sitting
Speaker:down to set prices is your mindset.
Speaker:The last year I did a poll, I'll probably do it again this year
Speaker:because it was such a great one.
Speaker:I did a poll about what is the thing that influences your prices the most.
Speaker:The options were the costs, the competition, the customer or yourself.
Speaker:In my experience is you.
Speaker:You have more influence over your prices than anybody else in that equation.
Speaker:The quality of your mindset when you sit down to set prices, if you think,
Speaker:I can't do this, I don't know how to do this, I'm not good at math.
Speaker:Or if subconsciously you're thinking, who in the heck would pay me that?
Speaker:I couldn't possibly do that.
Speaker:That's going to have a significant impact on what you do with your prices.
Speaker:The idea here is that you need to question some of the thoughts that
Speaker:are running through your head.
Speaker:Even the ones that ignore most of the time or even joke about.
Speaker:Yeah, sometimes the ones we joke about are the ones that are actually
Speaker:doing the most damage along the way.
Speaker:You need to think about those and, and make sure that you address those before
Speaker:you go too deep into your pricing so that it doesn't have such a big influence.
Speaker:If you believe you can't, you won't.
Speaker:If you think you're unworthy, Then you'll behave in a way that reflects that.
Speaker:That's why it's so important to also consider your mindset.
Speaker:Those are the three things that I wanted to offer to you as
Speaker:things to start with when you're sitting down to set your prices.
Speaker:Most people will start with costs and competition, which are external factors.
Speaker:Of course they are important in your overall pricing strategy
Speaker:and how you set your prices.
Speaker:But I am a big believer and my experience has shown that if you start with the
Speaker:customer and your business objectives, you can actually come up with prices
Speaker:and then you can use things like costs in the competition as checks.
Speaker:As checks in the first place for costs, can I do this profitably?
Speaker:And what will it take?
Speaker:How much volume do I need?
Speaker:And for the competition, where am I positioned in the market?
Speaker:And that, does that make sense relative to what else is out there?
Speaker:If you start with a customer and your business objectives first, and then
Speaker:use those other things as a check, you actually get to better prices for your
Speaker:business, you end up usually being much better positioned in the marketplace.
Speaker:Turn that equation around from cost and competition first to the customer and
Speaker:your business objectives and make sure that along the way you're stopping and
Speaker:asking yourself, okay, are the things I'm saying in my head or the self
Speaker:doubts that I have, are they realistic?
Speaker:Are they helping or hurting me?
Speaker:And what can I do to set them aside so that I can come up with prices
Speaker:that are right for my business?
Speaker:Those are the three tips that I wanted to share with you before you go.
Speaker:Let's talk about what this really means.
Speaker:What it means is you've got to get clear on who you are targeting.
Speaker:Now the tendency is that you'll want to reach everybody.
Speaker:But what I can advise you in most cases, if you can focus on
Speaker:one customer target group first.
Speaker:It's going to make it so much easier for you in your business.
Speaker:Because that will help you focus what you do and when it comes to your
Speaker:pricing, as I gave the example earlier, It will help you understand where in
Speaker:the range of prices that are out there.
Speaker:You need to be positioned.
Speaker:Second of all, we talked about how important your business
Speaker:goals are to understanding how to position yourself in the market.
Speaker:What you're trying to achieve (i.e. business goals) can be enabled
Speaker:by what you do with your pricing.
Speaker:But only if you pay attention to that at the time you're setting those prices.
Speaker:And last of all, we talked about the importance of your mindset.
Speaker:So what can you do to help yourself, so that you're sitting down to
Speaker:set prices with a clear mind?
Speaker:Well, some tactics you can use as you can journal about what you're feeling.
Speaker:When you sit down to do that and then, you know, set those feelings aside,
Speaker:if they're ones that might influence you in a, in not the right way.
Speaker:You can do a meditation.
Speaker:So leave behind the fears and the uncertainty.
Speaker:You feel about pricing for a time, do that with a meditation
Speaker:or a mindfulness exercise.
Speaker:There are a lot of different tactics you could do, but sitting down to do pricing
Speaker:with a mind that is sort of free from some of the negative thinking that you might
Speaker:have around pricing in your business is going to be really important to helping
Speaker:you or keeping you from getting stuck when you're first setting those prices.
Speaker:Before you go, there are two more things I'd like to share with you.
Speaker:First of all, in 2024, I have a masterclass series.
Speaker:This is a series of six 90 minute courses where we're going to talk and go
Speaker:deeper into some very specific topics.
Speaker:The first one in 2024 is on March 5th and we're going to be taking
Speaker:a look at understanding prophet.
Speaker:I encourage you to join me.
Speaker:We'll pop a link in the show notes for you.
Speaker:In this.
Speaker:90 minute course, we're going to use my pricing toolkit and the calculators
Speaker:in there to help you better understand profitability in your business.
Speaker:And I'll show you how to use those tools to help you make better pricing decisions.
Speaker:The second thing I wanted to share with you and also invite you to
Speaker:join me for is my newest course called the customer compass.
Speaker:The customer compass is all about understanding your customers by
Speaker:doing customer insight interviews.
Speaker:So if you're clear on who you're targeting, but you don't
Speaker:yet know a lot about them.
Speaker:And you want to dig deeper.
Speaker:This is a course for you.
Speaker:I'll show you over about 10 days, how to do customer insight interviews.
Speaker:We'll get you taking action and practicing so that when you do the
Speaker:interviews in front of customers, you have worked out the kinks already.
Speaker:If you'd like more information about either the masterclass or the
Speaker:customer compass, then you want to head over to thepricinglady.Com,
Speaker:click on the events page, and you'll find all the details there.
Speaker:We'll pop a link in the show notes for you.
Speaker:I wish you a great day.
Speaker:Thank you for joining me.
Speaker:And as always my friend.
Speaker:Enjoy pricing.