When you buy a car, you are given a price. You don’t care how much it has cost the car company to build that car. You either decide the car is either valuable to you or not (with perhaps a little bargaining here and there, unless you are my wife, in which case you just buy the car). Some people buy Bentley’s, some people buy Kia’s. Either car gets them to the same place in the same amount of time. Sure, a Ferrari might get you there a little quicker, but that’s beside the point. (And anyway who needs to get to the grocery store at 120 mph? Maybe someone with digestive problems, but I’m really getting way off topic here.)
The point is that people buy things for different reasons. For a North Dakotan, seat warmers might be worth a thousand bucks; if you live in Arizona, your bum will never get chilly enough to turn the seat warmers on. Whatever the reason, at the end of the day when customers put down their hard-earned cash for your product or services, they are deciding that what you have to offer is worth the price.
If you are doing the job right, your clients are buying things that you think they ought to value. They will be more inclined to value these things if they are presented the right way. Price, obviously, is a prime component in your product’s presentation. For instance, let us say you own a carpet cleaning business and you would like to charge seventy-eight million dollars per cleaning. In that case, Bill Gates is probably your really only true potential client. If he passes, you’re going to have to rethink your rates.
So how you do make sure your prices are both fair and justifiable to both the client and yourself? For starters, remember that pricing is not about efficiency; it’s about effectiveness. Setting fair and justifiable prices is not about how fast you get something done—or even how good you get it done. (Although doing a bad job isn’t ideal; always do your best for crying out loud!)
Pricing is about the effect your product and/or services have on your customer. Does the product or service meet the goals you promise it meets? If the answer is yes and your customer buys it, the price is right. Our old friend Dan Sullivan of Strategic Coach says that there is only one person important in confirming your product. It is the person that writes the check!
I don’t mind plugging the hot dog establishment in Hollywood called Pinks but, in fact, they don’t need my plug. More often than not, the line to get a hot dog there is like the lines that formed when Star Wars first came out and people couldn’t get tickets on the Internet ‘cause Al Gore was still a few years away from inventing it.
Is a hot dog worth waiting hours on end for? The people in line at Pinks obviously think so. That’s a perfect example of clients placing a value on something greater than its general cost. They’re willing to wait because to them it’s worth it. In fact, often times, businesses price their products much less than many of their customers are willing pay for the value they receive. Crazy but it is true! You see, many people see values, other than the specific, first impression, value of an item they purchase. A hot dog is not a hot dog when it is a Pinks hot dog. A car is not a car when it is a Ferrari.
Thinking about the various values that we deliver when we offer our product or service is important. Have you stopped to assess the REAL VALUE you deliver? If you have, then it is likely you have confidence in the value of your product.
This brings up a very important point. Too many undervalue the service or product they deliver. Since your product is in many ways a reflection of you, as is the price, you really cannot accurately estimate the value of what you provide without taking a moment to accurately assess your own worth. Presenting a product and standing by its price has a lot to do with projecting confidence in that product. To have that kind of confidence, you must first have that kind of confidence in yourself. It’s amazing the amount of people walking around without an adequate amount of self-confidence. Half the battle of self-confidence is simply deciding that you are worth it. Believe it and it will be true. Don’t be afraid to test what the sophisticates call “Price Point”. Don’t set a price just because it is the same price of other comparable products? Why create a product that someone else created before you unless you can bring greater value to that product than others?
Selling your product or service coming from a confident place, delivering value that your customers want and confirmed by the dollar votes of your customers confirms that THE PRICE IS RIGHT.
Make a list of all the things about you that are of value – not economic value, but personal. Think out of the box. Which non economic values does your product or service speak to or enhance? When speaking about and most importantly pricing your product or service, see how that new understanding effects what you believe that product or service is worth.