Price Anchoring: Boost Your Video Business & Charge What You Deserve! EP #309 - Den Lennie

Have you ever struggled to confidently charge what you're worth to a client? Or perhaps you've maybe found it difficult to get the price right and so you perhaps undercharge? Well, in today's video, I want to share with you a powerful process called price anchoring. And this is when you take a price that's perhaps vague from a client and when they ask you to give you some kind of guidelines, you anchor them with a higher price first and then you have a very low price. And what price anchoring does is usually opens up a discussion so the price will land somewhere in the middle. I'm going to teach you step by step the secrets to setting the right price from the very outset, creating powerful perceived value and negotiating with clients like a pro. Don't undervalue yourself anymore. It's time to take control of your business and learn this powerful technique. And hey guys, I am Dan, and if you're new here, welcome to the channel. I have been in the video industry for about 25 years and in that time I've negotiated with all sorts of clients, some really large clients and some a lot smaller. But price anchoring is something I've always used to position myself as an expert. I was lucky enough to make a number of launch films for Sony and I always use price anchoring to get the highest possible price for the work we were going to deliver and not allow myself to be caught up in giving a price too early. And in today's video, I'm going to break down how to price anchor so you can apply it to your business and see improved results in your bottom line profits straight away. Now, if you are new here or are returning and haven't yet subscribed, it would do us a huge favor if you could give us a thumbs up, click the bell and subscribe. It really helps us to get the message out there and grow this channel. Thanks so much. Now let's get on with the video. So I want to go and just tell you what price anchoring is and give you an example. So if you are working with a client and they're not giving you any clear indication of budget expectations, then what I propose you do is give them three variants. You start with the all inclusive, all singing, all dancing, you producing the very best video you can with the most maximum number of days filming and editing, and you present that to them as the very high price. So let's call that $60,000 for argument's sake. The next price point is going to be your mid range price point. And what you can say here is we'll cut back on some of the locations, cut back on some of the filming days. We won't get quite the same result, but we can still tell a great story, reduce the scope of production and bring that price in at say $35,000. But if money is really tight, we can do this for $15,000. But basically that will be a one interview, a talking head, a few graphics, and you probably won't get quite the same result as if you spend more money. Now, what this does in simple terms is it anchors the price at the highest point to make the midpoint price point not seem like too bad and actually seem like the best value offer. You see it in pricing tables all the time where they've got the most expensive, the very basic, and something in the middle, which they usually call most popular. What we're doing with price anchoring is giving the client a kind of gasp price and also a very cheap price and something in the middle which is actually close to what you want to achieve. Now, if you didn't have the high price anchor and your first price was $35,000, the client might decide that that was too much. But because you put a $60,000 figure in front of that, 35,000 is not as much as 60. And here's the really smart trick. Nobody wants to go for the cheapest price on anything, so they'll naturally move away from the cheapest and go to the mid range. But that is the initial trajectory you want to have. With price anchoring, it's really important that you understand your value that you are bringing to the table. As creatives, we often undercharge for the creative process that sometimes we don't take into account the work involved in coming up with the idea, developing the creative idea, and some of the back end production management things that you do to pull something together. So you want to be considering all of that to give a fair price range for your services. Knowing your true worth will help you set a price range that feels a little bit uncomfortable on the high end, but you're comfortable negotiating down. And anchoring just gives you the confidence to start a conversation and at the price point you want to, which is probably going to be the mid range price point or possibly even the higher range. But what's super important here is we're taking people away from the bottom end of the market. An example of this in the higher end is to show examples of higher end projects and compare them to what lower end projects look like. Oftentimes clients don't talk money because they don't really understand the process and they're just not sure if exactly what they want. So if you show them a high end version at the higher end price point and you say for this much money you can get this as opposed to if you only spend this, you get that then they've got some way of anchoring themselves into the buying process. This anchoring will help the client understand where the value is and therefore help them understand the context around the price versus the output and ultimately make it seem more reasonable. One of the big areas that clients struggle with pricing is they don't really understand the true value of working with a professional crew. And so there are times when they think, well, I can shoot this on my phone and it looks like this, why would this cost so much more? And so you have to go some way to demonstrate and explain the process so they have context to why more production days cost more money. Where price anchoring really comes into its own is you're basically offering three tiers of pricing within the context context of one project, a good, better and best. And what you're saying is you want to develop a relationship with the client in terms of consulting. So you're saying, hey, if we really throw everything at this and get all the best tools and all the best people and take time to get the light right, work on location, get great actors, we can make this really look sensational. But that's going to cost this. Now at the mid range, we can streamline some of that, still give you the same output. And we can use our skills as filmmakers to streamline the production value, but still give you the same story if price is going to be an issue. And then at the bottom end, we've got a belt and braces, we can absolutely show up and cover the event. But if you want something more polished, you're letting the client realize there is a sliding scale. The more money and time is spent on production, the higher the output. And that might actually serve them better in the long run. But by giving them three tiers of pricing, and I often like to anchor it in things like flying. You've got economy, premium, economy, business class and first class. They're different levels of service. And when people understand why something costs more money, they're more likely to then be able to make an informed decision about which is right for them. And you'll be surprised, people rarely go for the cheapest option. They'll often go into somewhere in the middle and and start negotiating with you about how can you trim one thing from here. Can we take one thing from the expensive package? Can we drop something here? And that's where you get into discussion with the client. Now what is particularly important here is if you present a client with one quote, they're gonna say yes or no. If you present a client with three different quote levels or three tiers, their decision is about which one to take or which combination. And that begins the consultative process. And from there you're in the conversation around which one suits them best, not whether or not they're going to go for it. Now, you have to perfect your pitch when delivering a price anchored series of options. And I grant you that it's not actually that easy off the bat, but it is something you can develop with practice. In fact, just this week in my coaching program, the Video Business Accelerator, we had a coaching called Discussing price Anchoring. And a number of the guys on the call threw their approaches into the mix and we had this really amazing call where each individual member of the accelerator was able to share their perspectives on price anchoring and help the client out who was going into a situation unsure of exactly how to do this. But when you deliver this to the client, you have to do it with confidence. You have to have done your research, have examples, and visual examples of good, better, best are really helpful when anchoring the price and negotiating to a positive outcome for everyone. Ultimately, everybody wants to win. The client wants to feel like they're getting a fair deal. You want to feel like you're able to push your creativity and have the right tools and the right resources to make it really work. But this process is a really key skill and one that will serve you for many, many years. A compelling pitch will have your clients feel more, more comfortable in your anchored pricing. But be open to negotiation. When you start this conversation, you want to be flexible. You're trying to understand from the client what's important to them and what's not. And when you give them three options, they've got a sense of picking and choosing which bits they want. And you have a dialogue about how to achieve the best outcome for them. By starting with a higher price, you leave room for negotiation while still securing a rate that that accurately reflects your true value and worth. So next time you're going into a pricing conversation, think about anchoring your price with a higher price, a mid price and a lower price. And if you'd like some help in your own business, then check out the Video Business Accelerator. I'll link to it above and below and you can discover if you would like some help with your price anchoring. It's just one of the many topics we discuss on our weekly coaching calls, Inside the Video Business Accelerator.

You've been listening to the Video Business Accelerator podcast with your host, Den Lenny. If you are a video business owner who is tired of going it alone and would benefit from mentorship, support and weekly accountability.