This is a YouTube video titled "How to Figure Out Pricing" containing a monologue or presentation from July 28, 2023, explaining a formulaic approach to pricing based on value and risk, using examples like lottery tickets to illustrate pricing decisions. The content is instructional and focused on pricing strategy.
And today, what I want to share is how we can use formulas and, yes, our processes to help us feel more confident and convey more value in conversations around pricing. To get us started, I want to look at a basic formula for determining price. Price being the result of value and risk. The basic assumption is that however much value someone's going to get out of the thing that you're selling, say that new website is going to make them $10,000, we're going to consider how likely it is that that website is actually going to give them $10,000 in sales or value, and that is going to determine our price. Think of it almost like a lottery ticket. If the lottery could win a hundred dollars and we are 100% certain we will make $100 off of that lottery ticket, we'd be willing to pay up to $99.99 for that lottery ticket to make an extra penny. But if the odds of us winning that value getting that result is lower, we're probably not going to want to pay as much money upfront because of risk.
