Should you lower your prices?
In Part 1 of Persistent Myths of Pricing (And How To Overcome Them), we looked at Myth 1: Ending prices with 7 or 9 (e.g. $97 or $99 instead of $100) Now, let’s look at Myth 2: The Fear of Pricing—You can feel the “right price” in your gut.
Should you lower your prices to get greater sales? Listen to this podcast as we explore the second part on the myths of pricing.
Imagine you're in New Zealand right now.
And you're about to jump off a bridge—with a bungee cord, of course.
What can you feel in your gut?
But how do you know it's fear? And more importantly what would you need to do to get rid of the fear?
Remember the fear you had when you first rode a bicycle?
You probably don't, but the fear existed. It exists when you're learning to drive a car, going for a first date, and there's even a trace of that fear when you first land a new job or show up on vacation in a city you've never visited before. The moment you are dealing with the unknown, the fear surges to the surface.
And yet you're on auto pilot if you're visiting that city for the twentieth time
Bicycles don't scare you as much as they should.
And driving to the supermarket while juggling a mobile phone isn't something you do, but you'll sneak in a call or text anyway.
Pricing brings the same sense of queasiness to our systems
And the way we justify it, it by burying the fear. We bring our “woo-woo” systems to the surface and say we'll know the price is right based on our “gut instinct”. But what if your gut is just good ol' fear? Because you know it is, don't you? And the only way we can prove this point is to take something that you own and try to sell it.
What's the gut instinct for selling your house?
There's zero gut instinct in play the moment you have to sell something that is already known. If all the houses in your area are selling at $500,000, would you listen to your gut instinct and sell at $300,000? Never mind that three years ago, you bought the house at a lower price. You still want to sell at $500,000, don't you? And if you can, you'll happily accept $550,000 or $600,000.
A client of mine used this gut instinct in his business
He works hard—much too hard to earn what he's worth. And the reason why he's struggling so much, is because his pricing is based on gut instinct. He has to put those products and services on sale, on his website. And when he puts those prices up, he feels like he's in the middle of New Dehli, and needs to find his hotel. He can't speak the language and though there are helpful folks around, he's not quite sure. His brain is racing for a situation that's a lot less stressful. A vacation closer to home, perhaps.
There's no such thing as “gut instinct” in pricing
We've used a dartboard to price our products and services for well over 12 years. It's a method where you put your prices on a dartboard, and you find some darts. Then you throw them on the board. And you have your pricing. If that sounds flippant, well, yes, it is. But it's a lot less flippant than using your “gut instinct”. ”
Take for instance, the cartooning course. We started the course at no charge (if you felt like it, you gift an Amazon voucher). That course was $500 the next year, and today it's priced at almost $1000 (for about 20 weeks). The Photoshop course (to help you colour your artwork) is just 4 weeks and costs $500. The article writing course goes for 12 weeks and hovers at $3000. The headlines course goes for 10 weeks and costs $800.
“The Brain Audit” has 185 pages and costs $139. The book on “Testimonial Secrets” has 125 pages and costs $45. The same applies for any course, product or service. No matter where you look, there's no logic to the pricing at all. And yet there's fear.
Every time we've raised the prices there's enormous fear
When we raised the price of the Article Writing Course, we moved it from $1,500—to where it is today at $3,000. How do you know how much is too much? When we sold the Protégé course at $10,000, how would we know if it was overpriced or if we were underselling ourselves? The answer lies in fear. You make these price decisions in a vacuum—dart-board style. And this is scary. Even if you're comparing yourself with the marketplace, the client is not doing the same tour of the marketplace before settling on your product.
The only way out of this fear is to keep pushing yourself out of the comfort zone
You read about the cartooning course we conducted, right? Why offer it free? My clients already know that I'm a good teacher. They already know I'm a good cartoonist. They also know that they should be paying a substantial fee for something that's going to take them on a six-month journey. And yet, I was unsure—fearful, even. So yes, you can let the fear get a hold of you. And yes, you can price as low as your “gut” will tell you.
But remember, your “gut instinct” is your comfort zone
It's the lowest possible price you can afford to charge. Once you've listened to your gut, it's time to move upwards. Raise your prices bit by bit, or in large chunks. As you get amazing testimonials, get more confident about your ability to deliver, you need to stop looking towards the “gut” and start looking up at the dart board.
And yes, this brings us full circle to our summary
Myth 1: Ending prices with 7 or 9 (e.g. $97 or $99 instead of $100). There's no basis for this crazy figures. Use whatever you like.
Myth 2: You can feel the “right price” in your gut. Nope. You never could. That's just fear talking. And once you've sold a product or service at a higher price, you'll feel the price is just right—until you have to raise the prices again. Raise it anyway.
You know how you had to suffer wearing those coats because your parents thought you'd get a cold? Well, the same suffering can bring you down with myths in pricing.
Stay clear of the myths, and you'll find that you can get better prices for your products and services every single time.