Pricing Secrets For Your Product or Service

In this clip, we're going to talk about pricing secrets for your product or service. But before we do, don't forget to follow us, whatever channel you are on, or subscribe, whatever it is exactly. Follow, subscribe, whatever. If you like tips on entrepreneurship, business, and growth. So let's talk about pricing. So pricing first and foremost is the number one lever you can pull when it comes to growing your business faster, right? If you price your product at $99 versus $1 million, What's better? The million dollars probably, right? Um, the question is, well, who's going to actually pay the million dollars? Um, so you have to think about your audience first. So in terms of pricing secrets, the first thing I would say is this. I would almost never charge hourly. If you are going to charge hourly, set your hourly rate like really, really high, maybe $5,000 an hour, $10,000. I'm just, that's, that's a really high amount because at the end of the day, it's hard to scale when you are just charging by the hour if you're by yourself. If you have a team, sure, you can scale, you can delegate things to your team. Sure. Right. Um, but for yourself, you probably want to make sure that you are charging, um, not on hourly, but maybe you're charging on like an annual contract or a monthly contract, or ideally you're charging on value, right? So, you know, if you help a company make $1 million and, you know, they pay you, uh, uh, let's say they pay you $100,000. So 10% of that, is that fair? Sure. Right. Most people are gonna say that. So if you think about it that way, that's going to help you. Um, in terms of pricing. And what I can say is this, in the past people have been like, how much do you charge per hour? The problem with charging per hour is you're getting scrutinized for every single hour. Um, and you know, they're, they're looking at you as like, oh, you know, you didn't do that much for this hour. You didn't do that much for this hour. Um, they're tracking you on time as well. It almost feels like, it feels like you're kind of trapped, right? So that's how I felt in the past. And that's why I think, um, you got to get away from charging, uh, from the hourly game. So the book I would recommend is called, um, Win Without Pitching, and that allows you to charge based on value. If you can get them in the mindset of saying, hey, you You know what? I want to work with you for the long term. I don't want to just do you know I want our incentives to be aligned. So if we do a really good job for you, then at the end of the day, you know you pay us a percentage of it. Or maybe there's accelerators. Maybe they pay you five thousand dollars a month, and then if you hit a certain goal, maybe they give you an additional ten percent bonus. Something like that. You can get really creative with the deals that you're doing, and you don't want to you don't want to just kind of set your pricing based on how a competitor is doing it. You don't want to do that. Don't copy your competitors. I remember back in the day. You know, all these companies would just copy other companies charging $49 a month or $99 a month from software as a service world. And you find out that those prices are not sustainable. At the end of the day, if you charge based on value, it's good for both sides. I mean, you're going to work harder because you're going to be paid a much harder or much higher amount. If you don't pitch it based on value, you're going to be seen as a commodity versus everybody else. Here's another secret for you. One of the reasons why, um, you know, I'm so focused on creating content and, you know, doing the Marketing School Podcast, doing these YouTube videos or, you know, even writing content or speaking at conferences as well is to build the brand, to build credibility. Because what happens at the end of the day, if I think about the business that we get, you know, 50% comes from the content that we create, 35% comes from networking or speaking. Um, and then, you know, we have 15% that comes from podcasts. So almost all of that's coming from inbound that we're creating, right? Um, we, we don't do much outbound. In fact, we get so much traffic that we've weaponized that traffic to make it go Um, you know, become our outbound machine. Building a brand for yourself that's very defensible, that is your moat. Um, and if you think about, you know, the Oprahs of the world, you think about the Tony Robbins of the world, you think about the Kobe Bryants or the Michael Jordans of the world, they have built very big brands and they were very good at what they did initially. And then they built businesses around that because they have a brand. People like to do business with people or people like to do business with a logo. Like, like they want to do business with a brand. And that's how you can command premium price. That's how you can defend yourself because, you know, when people come to you, it's like, why should I pay you that much when everyone else is charging this much? Sure, the other people might be better, but they want to work with a brand that they trust, a brand that they know. So that's another pricing secret for you. You can command a premium if you create a brand. If I— if you think about this, uh, here's, here's an example for you. The power of brand. Well, Shaq. So Shaq, basketball player, played for the Lakers and played for a bunch of other teams, but What he did was he started seeing a bunch of companies that he liked. So Ring, the doorbell company, um, he reached out to the CEO and said, hey, look, I'd like to be your spokesperson and I'd like to have some equity in the company. And that's, that's, that's the power of brand. And then Ring actually sold for over $1 billion to Amazon and that's the power of brand. And then you think about Michael Jordan, the basketball, greatest basketball player of all time. Guess what? He owns the Charlotte Bobcats now. That is again the power of brand, the power of relationships, right? You think about, uh, the Clippers. Who owns the Clippers? Steve Ballmer from, from Microsoft. used to be CEO of Microsoft. Um, I'm sure, you know, the power of, you know, a bunch of other owners wanted to bid, but he got in there because, you know, he's Steve Ballmer and he surely his name, his brand had some pull around that and, um, was able to get him the things that he wants. Give you another example. Warren Buffett. He's able to do deals very creatively because people know him to be a guy that, a guy you can trust. I'm a guy that has integrity, right? That is his brand. And people come to us all the time like, Eric, I love the stuff that you're talking about. I love the way you approach things. Like, I want to work with you. And that's the power of brand because People come to you and eventually because I'm putting all these deposits, like making this, this, this content right now, I'm putting deposits in. Eventually I'm going to be able to withdraw those, those, um, you know, those deposits, um, at the end of the day and you know, I'll be able to cash in on them. Just thinking about that long-term, like I mentioned earlier, you think, you think long-term. Um, when you think about like when you work with a customer, it's not just, I'm going to work with you on a monthly basis or hourly basis. I'm going to try to work with you on value. I'm going to try to work with you for a couple of years. And if you can get them to sign an annual contract, here's the other thing. your cash flows are going to be protected more. Okay? And then it's much more predictable that way because everyone, if everyone comes in on different contracts, your cash flow is not that predictable. And all of a sudden, like let's say a bunch of people leave you and you're going to have to end up either firing a couple of people or reducing your expenses significantly. So that's the other problem. Like if you don't protect yourself from a pricing standpoint, you're going to be in trouble. The other thing I'll add to that is every single year you should be reevaluating your pricing. Like, you know, should you be increasing your pricing for your customers? Um, a lot of SaaS companies, software as a service companies do that. A lot of services companies do that too because their expenses have increased. They've added a lot of overhead, so they might take their prices from $500 a month to $750 a month to $1,000 the next year. It gets more and more expensive. Why do you think the greatest law firms in the world are so expensive? It's because, you know, as they've gotten more and more popular, more and more demand, they have to increase their prices because to kind of match that, right? They're, they're, their, um, their ability to fulfill is, is kind of diminished. So they have to increase their prices, right? Obviously if they had no clients, they had to decrease their prices. But, um, that's what you're able to do when you build yourself to a certain level and you just got to constantly reevaluate your prices because if you don't, you're going to be left behind. There are a couple of resources I want to share with you as well. So earlier we talked about the book Win Without Pitching and, um, there's a company called ProfitWell. Um, Patrick Campbell, he has, um, creates a lot of content around pricing. Um, and I think it's really smart, you know, being, being— so for them, they've created a brand around teaching people how to price the best and that's all they do. That's their brand. They give software away for free. That is their brand. That's how they go about doing things and they build everything inbound at the end of the day. So those are just a couple of things around pricing in general. Those are kind of pricing secrets. The other thing I'll say too is, you know, around pricing, um, the more you can bundle things together, the better, right? So instead of saying you're just gonna get a software thing, If you say, I'm gonna give you this software, I'm gonna give you this other software, and I'm gonna give you some kind of supporting things around that, you can bundle it together to make it this new offer. So constantly think about tweaking your offer, right? In marketing, you know, you might give people an ebook, you might give people like, um, maybe like a video or something like that. But if you can bundle like an offer together, that's going to be much more enticing for people to come in and it's going to help you grow for the long term. All right, so I do want to share a story around a pricing mistake that I made in the past. And so here's the pricing story for me. What I did, um, the early days when I took over Single Grain was I looked at another agency. They were charging $1,000 a month for the services that we were offering. So what I did was I was like, oh yeah, we can charge a little more than that. So I just, I anchored at $1,000 cause I looked at other agencies that were charging around that amount. I'm like, okay, we're going to do $1,500 a month. And I thought like I was the bomb. I was awesome. And we picked up a bunch of clients, but then they're all, they're all like locked in at $1,500 a month. And then a year later I reevaluated my pricing and, um, this is for our paid media services and we started charging $3,500 a month, started charging $5,000 a month or a percentage of ad spend and people were okay with it. Like you increase the prices and people are okay with it because they knew that they were getting a lot of value from the service. So that's basically what happened. And, uh, from there, you know, even to this day we kind of hover around that range, but I think we're even thinking about increasing it even more because we're adding so much more value and we think we're, different and we've also commanded brand presence too. So looking at this over the years, um, taking over Single Grain, I didn't have much of a brand at the time personally. Um, now it's, it's, it's grown to like a, you know, a decent size. And then, um, also the work that we're doing now is so much more high level, especially if we work with like a SaaS company or like a, like a big tech company. We have a lot of those clients, right? We are able to command higher prices because we specialize in that area and we have a brand in that area. And, um, also we, we, instead of doing month-to-month contracts, we now do annual contracts. So all this is, all these learnings have been condensed into kind of where we are now, and it's allowed us to continue to scale and continue to be the company that we want to be. So pricing, again, to reiterate, um, I've given you a lot of stories, given you a lot of tips to do, but, um, it is the biggest lever that you can pull. And I recommend that you spend at least a couple hours a year thinking about it, probably even a little more than that, um, because it is going to affect your bottom line and how quickly you're going to be able to grow. So don't stop here on your pricing learnings. I have another video for you on something similar. Check it out, check it out. And also don't forget to rate, review, subscribe, and leave a comment below if you agree, disagree with me, whatever your thoughts are around pricing. We'll see you tomorrow.