Sliding scale and pay what you can? Why I don't like it...

Sliding scale and pay what you can. Pricing. I'll just come out and say it. I don't think it's a good idea for most business owners, including myself and many of my clients. And I'll just say this, if you are a big fan of that kind of pricing and you're not interested in hearing an opposing viewpoint, you don't have to watch this video. I could save you that time because I have been around that kind of pricing based on what I see. Colleagues, my friends, my clients, some of them use sliding scale pricing. I've been around it for 12, 15 years. I have tried it myself and I'll just come out and say I don't think it's a good idea and I'll share. Why? There's a couple reasons. One is that it puts a burden on the customer to decide what is right. So in my viewpoint, the customer or the client has already had to do the labor of deciding whether the product or service is right for them. Okay, so because as we all know, so much of marketing is, I mean most consumers know to distrust marketing. Why? Because so much of marketing is hyped up. It's, you know, buyer beware is the typical phrase, which is, you know, the marketer's job, the business owner's job is to do their very best to persuade you that you know their product is probably right for you because they just want you to spend money with them. Of course, the more ethical and authentic business owners say, well, no, we want the right fit, we want that. It's really a win win. But the customer, client doesn't know that. So just be a buyer beware is most of the good advice most of the time. So the client is already having to think through, to read through what the service or product is about and then maybe even having to talk to their family about whether, especially if it's a larger price thing or just at least to think through their own budget. Hopefully some people don't even do that, but at least to just sit with it, hopefully for a moment or five, whether or not this product is right, they've done that labor already. And now with sliding skill and pay what you can, now you're asking them to do the additional labor of okay, customer, client, you have to choose which price to pay. And let me say this, especially if it's a service where you are providing us like you are interfacing with the client, you, the business owner, interfacing with the client, it puts a lot of pressure on the client to say, well, I don't want to pay something that might offend the service provider. Now this is especially, maybe especially true for some cultures that are more sensitive to offending others. Or I mean, I guess my lineage, my culture, generally speaking, Asian cultures, not only many others don't want to offend and so or are particularly sensitive to it. I would say American culture is less so in America we're less afraid of offending others. We're more bold about it. So maybe for Americans it's like, well, I'm just going to pay the lowest rate I can. And you know, I don't care what you think about it. I don't know, I don't feel that way. I. So for example, there was a restaurant in my neighborhood many years ago, this is more than 10 years ago now, that charged pay what you can pricing. And I love the restaurant. It was like wholesome type of food. It was, I think it was vegetarian or it was vegetarian, maybe not vegan, but I loved it and I loved going there. And their menu was really weird because it was just items and then they had no pricing on any of them and I had to figure it out what the. And I always felt nervous about it because I didn't pay until the end. I'm like, oh my gosh, what am I supposed to pay for this thing? So it was. So I experienced that burden pretty quickly. Now there are bigger companies I've heard that do kind of sliding scale pay, which I've heard Panera used to do it maybe, I don't know if they do it anymore. And I feel like with a corporation it's less, it's more faceless and it's just like, okay, you know, you don't mind just paying the least you can perhaps, or whatever you felt right that day. But with a small business owner, especially if it's face to face service, like if I were hiring you as a coach or a consultant or a healer or a mentor or whatever, and you asked me to pay what I want, what I can, or pay a sliding scale, you're giving me quite a bit of burden and pressure to not offend the relationship by paying too little or on the other hand making myself feel like I didn't get a good deal by paying too much, you're burdening me either way. I would rather you just tell me what the price is and let me decide whether or not it's in, it's my right budget or not. And if not, I'll just say, you know, and here's the thing, it's okay that the customer or client stretches a little bit. So the host lighting scale, pay what you want comes from a really good place. I agree. It comes from a place of compassion, right? And it's like, oh, I know that I want to serve these people, but they tell me they can't afford it. Now that's an interesting part too, but we'll talk about that in a bit. They tell me they can't afford it, but I still want to help them. So I'm going to give them a lower price than I would everybody else. And that's where it begins. Then you're like, well, then what about this other person who can even afford it less? What about this person who can clearly afford more? I charge them more. It's like it starts to become complex and fraught with emotional challenges from both sides. So let's say that, you know, similarly, it's funny, like, also in Asian cultures or other cultures, I'm sure, too. Like, Asian cultures, love, you know, love a good deal. Love a great deal. Like, always trying to find sales and whatever. And so pay what you can, pay what you want. It's like, now, as an Asian American, I have this kind of conflicting thing because on the one hand, my Asian side says, oh, don't offend on the one hand. And on the other hand, get the best deal possible. And then my American side said just, well, just pay what is reasonable and just pick a number and do me. I don't know. I. I don't. I'm. Maybe I'm conflating these, these cultural things too much. But still, the bottom line is it's a burden to the client to have to decide even though they've already decided to buy or not to buy. That's a decision. Oh, I was going to say that. The brilliance of. Or the. What I like about a simple price, like one price, like, you pay it or you don't pay it. Is this the customer or client just has to say, well, that's the price. And I have to decide whether or not that's a great deal. Oh, my gosh, what a great deal. I'm getting such a good deal by paying this price. Or on the other side, I really want this product or service. And I just have to stretch my willingness to pay a little bit. Maybe I was willing to Pay, you know, $150 for this thing, but they're charging 250. I really like this service. I really like this product. Let me just stretch to pay the 250 because I really believe in it. I really Want it. It's okay to let the customer stretch a little bit. Now you might say, George, isn't that burdening the customer? No, you're just. Because for many customers, they probably find it a great deal. There's a few people who are stretching and then once they stretch, they realize, oh, it was a good idea. Oh, good decision. Or they might decide, oh, it's a bad decision. And that trains them on future purchases. So you're actually helping the market by training the customer to decide to stretch or just find that as a good deal. Okay, so number one point is that it burdens the client, especially if it's a face to face kind of service. They don't want to offend you and they want to get a good deal. There's emotional difficulty there, number one. Number two is, do you really know the client's financial situation and are they. So for example, I often see sliding scale based on income. Okay, if your income is between zero and 10,000 a year, you pay this low price. If your income is between 10 and 45,000 a year, you pay this middle price. Income is between 45 and 75,000. You pay another price, 75,000 and more, you pay the highest price, whatever. Okay, now two common situations. What if my income is just about zero because I'm supported by my spouse, which happened actually in the beginning of my, you know, before my business, you know, started to get my first client, before I was trying to figure out how to make a full time business. 12 years ago, I was being supported by my wife, so my income was zero, but she was making pretty good money and I had some savings. So it's like, how do you. Right, it's like, then I should pay you, I should pay the lowest price or get your service for free or whatever. Right now. On the other hand, here's the other thing I have had. I've known several service providers who have told me that their wealthiest clients are often the ones who try to get the best deal possible, who try to negotiate the lowest price. There is something to be said about miserly wealthy people. Some, not all. Some wealthy people are quite miserly. That's partly why they got to become so wealthy. And so they are always penny pinching and looking for the great deal, even though they have plenty of money or more money than most people in their city or their state or their province. I've heard, like I said from several service providers, that their wealthiest clients are ones who kind of, if they give a sliding scale, they're always trying to get the Best, lowest deal. And then on the other hand, some of the least financially capable clients are sometimes the most generous. And this is also an unfortunate stereotype which is, you know, has some truth to it, which is some poor people are just really generous of heart and they constantly try to give their money away even though they probably should not give as much given their financial circumstances. But they're just such a big hearted people. They just, so they end up paying more on a sliding scale, even though they probably shouldn't. So how do you, so, so it's like if, if, if I was, if, you know, let's say if I was your client and I was one of the, you know, poor ones and I paid more because I'm, you know, generous. I want you to be sure you. And just to complete the story about the restaurant, I said earlier, I always paid like 20 to $25 for a plate of food. Even though they probably would have charged, I mean just surrounding restaurant, they probably would have charged 12 to $15. I always paid 20 or 25 because I, I wanted to support the restaurant. I didn't want to offend them because I want, I was going to come back, you know what I mean? So like I was always trying to pay more even though back then when I, when I was doing it, I was, my business wasn't successful yet, so I didn't have much money, but I gave what I could. And so imagine if I found out that you had wealthier clients who were paying less than me. Then I'll be like, gosh, so those are some of the issues. Let me look at my notes because I had some other things to share with you here. Oh, that's right. Let me share with you a healthier alternative. Now it's like, okay, George, all right, got it. You don't like, pay what you can. You don't like sliding scale price. You prefer a single price because it's simpler and it helps to train the customer. I mean, it's simpler for the customer, number one. And it helps them to either say, wow, what a great deal or because a single price, there's no emotional resentment on either side. Right? Single price. So here's a healthier alternative. If you still feel like, well, I still want to help people that can't afford me. This is where you need to have the multiple tiers of offers. And I'm going to go ahead and share my screen with you real quick because this is an image that I, that, that I want you to keep in mind. Okay, let me go and share My screen. Thanks for your patience here. All right, so this is you at the center. This is your one on one clients. This is your group program. This is your online courses, books. Maybe some of you don't even have books or online courses or group programs. And maybe it's time for you to consider creating them, especially if you want to serve people of lesser financial means. Okay? Because essentially with each circle you could serve more people, but they're farther away from you, so you have less responsibility towards them. You can customize, you can't customize your advice as much for the people who are farther away from you. And you can charge a lot less for free content for the people who can't afford it. I am happy that they are consuming my videos for free, that they are reading my articles for free. I have over a thousand videos for you to watch at your leisure on my YouTube channel. And I invite you to go and do that, please do you know, free content for everybody. Whether or not you are poor or wealthy or have no income or have all the money in the world, I don't care. You can consume my free content as many people as possible. It doesn't cost me anything more for you to go to my Facebook page, Instagram account, YouTube channel, and consume as much as you want for free, all you can eat. And I will keep on putting free content out there for more help, help of, you know, without charging anything. Right. And then a little bit closer to you are books. Books are something you take more effort than free content to put together. You. My books are a collection of my free content. It's true, it is. So if you didn't know that, you know, if you'd like, oh, I want to save money, I want to buy George's books. You don't have to. You just consume all my blog posts for free. It's just that the books, I take the time to organize certain blog posts into one single theme. I take more time editing them, I put them into, get a book cover done, all that stuff. So books takes me more effort and so it's more of a product I charge. I don't charge much. I think at this time I charge something like five to twenty dollars for each of my books, depending on if you buy paperback or digital. Right. And then online courses are further closer to me because in my online courses I respond to all the students questions as many as I possibly can personally. And I take obviously quite a bit more effort to put together an online course on a very specific topic, step by step with templates. You know, videos and resource guides and interaction with the student and exercises for the students, all that stuff. So it's more interactive. So therefore I charge more than my books, quite a bit more than my books, my online courses, but not as much as my group program, which is even closer to me because people can, I am, I am taking care of my group program participants. You know, it feels like all day long I'm happy to do it. I'm joyful that they, that they are my group program. But I have much more interaction with, with them than I do with just a student of a course, a random course here or there, and then finally the one to one clients. Obviously I have the closest to me and therefore I have most responsibility and most customization and I can charge most for that. I'll put the link in the, in the notes of the video so you can take a look. But that is the alternative that I recommend. Instead of sliding scale, you just have different tiers for different people who either they have different financial means or they're just not ready to pay you yet. Remember, you really don't know what someone's financial means are. They could say, yeah, I don't have any income. But what they're not telling you is that their spouse is happy to support their personal development or their fat. Or maybe they have, you know, they have a, they come from wealthy family and they're able to, you know, they have lots of savings or whatever it may be, or they can easily ask somebody in their life or their business partner, you know, you don't know. And yet someone who's paying you a lot might be. I never, I'm always careful, like, okay, somebody who, you know, whenever someone applies to my program, I always say, hey, is this a financial hardship for you to do this? Because if it is, I don't, I don't want to take that money from you. You know, my group program is getting closer and closer to me and so I'm very careful about whether people are spending money that maybe they shouldn't be spending, including on me or, you know, any business coach. But so I, and in a common sort of objection to this. Well, George, it seems socially unjust that, you know, you are, you are giving people different services who have different financial means. I'm like, well, hold on a second, hold on, hold on. Think of a teacher you admire. Think of a, I don't know, yoga teacher you really enjoy or think of. Well, any, any teacher or mentor you really appreciate. Think about that person. Okay, now do you want that person to have financial up and down based on whether or not their students can pay them or want to pay them. What if a bunch of people who have low financial means want to work with that person? You want them to not be able to make a living? Of course not. And then people who do sliding scale said, well, we have clever ways to get people to thoughtfully think through. And then we only have limited sliding scale spots. I'm like, if you have limited sliding scale spots, that's kind of defeating the purpose. I mean, it's kind of. To me, it's like, well, then you're just. You're not helping everybody who wants you to help them. You're not. So then you're back to the healthier alternative, having multiple peers, right? Fine. If you want to have like a limited sliding scale, that's up to you. But I feel like you're still. You're kind of. It's kind of a crutch. It's kind of like, well, I want to feel good that I'm being compassionate, but not to everybody. Just to, like three people I can afford to become. Really? Why don't I be. Why don't you be compassionate to everybody and just tell everybody, listen, I have multiple tiers. Please consume all the free content. Don't ever buy from me if you don't want to. If you can't afford it, don't buy from me. Don't. But if you can afford it and are willing to stretch yourself on the budget, like, I've never spent money on this kind of coaching before. I'm just willing to stretch myself to see how it is and have great, you know, then you, then you. So anyway, I think I've said enough. I hope this is helpful. I look forward to any comments or questions you have about this kind of thing. And no matter what, I wish you a viable business where you feel like you're really serving people from the heart and where your customers and clients feel like you're charging a reasonable rate. So I wish you well, take care.