Knowing Your Worth with Casey Brown

What I believe though, regardless of where you are in that spectrum, sometimes really surprises people. For me to say is I think it is for most every company a waste of time to worry very much about what your competitors are doing.

We are on the home front and as always, this podcast is brought to you by Homefront Brands. Simply building the world's most responsible franchise platform. Encouraging entrepreneurs to take action to transform their lives, impact communities and enhance the lives of those they care the most about. All the while delivering enterprise level solutions to local business owners out there on the homefront where it counts. So if this sounds like you, check us out@homefrontbrands.com today and start your next chapter of greatness building your dynasty on the home front. I will be right here looking for you. And we have a rock star of a guest today. Welcome, Casey Brown.

Thank you Jeff.

Awesome. I am going to do a quick intro on Casey and then we are going to dig in and there's going to be we are going to stack value in this podcast today so we can charge a lot for it because Casey is a pricing expert, the founder and owner of Boost Pricing. Do you price from fear or from confidence? Do you price to win business or not to lose it? Even with a perfect pricing strategy, margin still shrink in the face of out of control discounting and fear based pricing to help guide you through the fear and complexity of better pricing. And we are going to spend an hour with Casey Brown today. She is a self proclaimed pricing geek and president of Boost Pricing, a firm that helps companies sell at higher prices. Her passion is for organizations to be paid well for their excellence. With degrees in chemical engineering, Spanish and business and career experience in engineering, Six Sigma and pricing strategy for multiple Fortune 500 companies, Casey brings unmatched expertise to help audiences discover their true pricing power and watch their profits rise as a result. Her 2015 TED talk, which is excellent, has over 5 million views today. And many of us don't know that the biggest obstacle to pricing success isn't competition, customers, insufficient business knowledge, or lack of sophisticated cost and pricing analysis. Today Kasey will demystify all of these things and the real cause of underpricing to launch you onto a path to improve pricing, dramatically increase profits and grow sales. Welcome Kasey Brown.

Thank you Jeff. I'm so delighted to have this conversation with you today.

Oh there's so much to unpack here today and pricing is is such a hot topic, especially all of the businesses that we're in. We have consumer facing businesses, membership models which have incredible price sensitivity Inside it, you go up $10 in a fitness concept and they, there's a revolt. But then they go spend $400 a month at Starbucks. But why don't we start back? Because our audience is always interested in people's entrepreneurial journey. You've been incredibly successful in your career and, and you've delivered some of the largest. I mean, you've delivered keynotes to the EOS convention and you are an accomplished and well sought after speaker. You demand a high price for it. You know, I was going to ask you if you wanted to speak at our conference, but I'm afraid of the negotiation with you on the pricing. But would you care to share a little bit about your background, how you grew up, and then we'll work towards where we are today.

Sure, yeah. I was raised in a, in a blue collar family. My father had a bunch of different jobs. He was in construction as a laborer and did some roofing and some truck driving. So very, very blue collar. My mom stayed home with us. It was a very, very modest childhood and it was tough in some other ways. My dad was an alcoholic, and so there were some real challenges present for me as a kid in that family. And also, you know, there's plenty of love and, and a lot of good times too, but how that sort of informs that, that journey. A lot of my decisions early in my life were very driven to be, you know, what's the best way out of this poverty situation. You know, my, my family, my parents, you know, agonized over money. My entire childhood was the number one topic of conversation and the number one topic of fights and, and there was a lot of doing without. And so, you know, a good example. When I was a kid, my dream was to be an actor. I wanted to be on stage. I'm a ham. I love making people laugh and entertaining people and. But that did not look like a very clear path out of poverty. So I decided that a surer way to be able to pay my bills as an adult was to be an engineer. And so I set my sights on a top 25 private engineering school. And I knew I had to go if I was going to do that, I was going to have to get scholarships. And so I decided to be the valedictorian of my high school when I was in eighth grade. And that's what I did. I was about to turn to the high school. I got a scholarship to Case Western Reserve University, went there and majored in chemical engineering. And so very much of my early path was very frankly Very scarcity driven and really about risk and managing risk and being okay as an adult. And I got out of school and got a good job. I was working at GE as my first job out of school as an engineer and, you know, made more money my first year out of college than my father had ever made his whole life. And I, you know, I thought I was loaded because, you know, I had all this, all this disposable income for the first time in my life. And I had plenty of school debt and things, but that was as far as I'd ever gotten in my plan. You know, my parents had always talked about education being the key and the ticket out of the kind of situation we were in. And so get a, get a good degree and a good job was the highest aspiration I'd ever had. And all of a sudden I found myself in my 20s with a good job and not really knowing what the heck to do and, and feeling some dissatisfaction with that. And I think that I didn't know it at the time, but those are sort of the early winds of discontent that pushed me towards entrepreneurship. I think I was always sort of born to be this, to be my own business, a business owner, business leader, entrepreneur. But I didn't know it then. And so it took a, you know, a number of different twists and turns in my job history that I just started to feel kind of frustrated that I was in these large bureaucratic organizations, public companies. And so the quarter point was the live and die moment. And so they would, oftentimes I would see some really poor decisions being made just to make sure we could make the quarter. And I just, I felt like I was working really hard inside of a machine that I couldn't really steer to make somebody else wealthy. And I didn't feel particularly aligned with the vision or the mission or the values of the companies I was working in. And so, and my brother, my older brother, who obviously grew up in the same poverty I did, had become a business owner a couple years before I had. And you know, business owners, it's like this weird cult people want. You know, once you're in it, you want everybody else to join it. You know, he wouldn't shut up about it. It's like, come you got to do this case, you got to start your own company, you'll love it. And. But I was pretty risk averse, as I had shared, I mean, most of my business. My decisions at that point had been to avoid too much risk of, you know, having to eat, you know, ramen and, and you know, keep the heat at 50 degrees in the winter. So I resisted for a long time, but eventually, I don't know, there was just this tipping point where the frustration of staying in these organizations that I didn't agree with became too great. And the risk of jumping out there on my own, it just didn't seem like. I look around and I see a lot of business leaders and owners and I'm as smart as some of them and I'm a really hard worker. So I figured, you know, what I lacked in talent or intellect I could make up for in hard work and finally just slept out, leapt out and did it. And it was, it was not smooth, it was not easy. It was a lot harder than I thought it would be. It took a lot longer to be successful than I thought it would be. I wasn't making money at the beginning, and I worked a million hours. I said yes to some business I should have said no to. So, you know, I learned a lot of lessons and took a lot of lumps, but I make a lot of mistakes. I don't make very many of them twice. And so I got better at it and, and, you know, here I am almost 15 years later and happy to answer any questions you have about the journey since then. But in terms of how I got into business ownership, that's really the story.

So people that grow up in difficult situations tend to have a different view of risk. And we have similar backgrounds, we grew up in similar fashions. And I always knew that I was going to be an entrepreneur. My father was an entrepreneur. I watched him have an engineering company, kind of a failing small, three or four person engineering company. He didn't price well. I don't think he probably, you know, he. But, you know, he, he stuck it out for a while and I watched him work seven days a week to try to make it work and work through partner issues and that kind of thing. But how do you think that, you know, the power of broke, as some people say, made you look at risk? Because my view of it is I started this business with $2,500 in a briefcase, and they dropped me off in a city. That's all I had. And I found a place to rent for $400 a month. That was a shared. I hit the street and I went out and started getting business. And then I found people to help me do it, and it just started from there. How do you think that early upbringing and those challenges have informed who you are as a business owner today, how you spend your time? You do 600 hours charity work a year, which is amazing and I'd love to hear a little bit about that. But when you think about risk tolerance and the psychology of that with you, how much value did it put on how you grew up and how much credit do you give it?

I think it's a great question. I think it's, it's impossible to know how much of my decision making and discernment today is directly as a result of some of those early experiences. I think it, it's inevitably and inextricably infused into everything in, in many ways I think that the risk, my risk tolerance today is, rather than being a reflection of, of my early childhood experiences is more, you know, a triumph over them in some ways because I think the, the natural result of those experiences was what the way I lived my early life was kind of pull in the tentacles and take the least risky path and take this, make the safe bets and the, and make this, make the smart safe moves. And so some of the sort of evolution of my tolerance of risk, it's a couple things. One is just a matter of habit. In other words, when you take a risk and it doesn't go, it's not a disaster, I think that can open your mind and your tolerance, your ability to, your willingness to take another risk or a bigger risk. And so, you know, example of that is when I started the business, I never had more than a couple of months of forecast into new business coming. And the pipeline was always relatively short, which meant that although I was cash positive, I didn't know if I was going to be cash positive in two months or three months. That was incredibly difficult the first year or two of business. And now, more than a decade later, I'm used to the fact that I don't know where Q4's revenue is coming from. It's just not the length of our sales cycle, it's not the nature of our business, but that it will be there. So I've learned to have more confidence in myself. It's all going to be okay in the end. If it's not okay, it's not the end. I don't know if you want to call it wisdom, but certainly maturity. And taken enough, you know, hard knocks in my life that I've learned that the imagined fear is often far greater than reality for me. If I go back to that moment when I was really deciding to quit my job and start the company, I had an unspecified fear. Cause I was, by the way, recently divorced, single mom of two little girls, two Babies. And I'm quitting this cushy corporate gig with, you know, a company car and a 401K. And I don't mean to brag, but they paid me every two weeks like clockwork. And I'm jumping out into this unknown territory with no certainty and no backup, no safety net. My family didn't have any, any money as you described. So if, like, if I crash and burn, I'm. I'm really on my own. It felt like the possible risk was I'm going to go jump out there and, and we're all going to starve and be homeless, right? And that was like, I was too scared not just to do that to myself, but to do that to my kids. So for me, a lot of times when I'm facing some worry and some fear, and including in this moment, specificity is very important. What is actually going to happen? Like, if the worst happens, what does that actually look like? How painful is it, how bad is it, and what's the recovery out of it? So the first is sort of the magnitude of how bad it can be, and then the second is how likely is it? When I looked at that for starting my company, so the worst thing that could happen is I jump out there, start a company, and it flops. Nobody wants it, nobody's willing to pay for it, and I burn through my savings and I gotta go get a crappy job, which I already had. So I knew how to do that, right? I could go get a crappy job. Really. You know, I have a marketable skill set. So when I really named with specificity the outcome that I was afraid of, it didn't look that bad. And then you kind of layer on top of that the probability question, like, how likely is it that I'm going to fail at this? I thought the probability was really low. So I think that's. That kind of process has really been become part of how I evaluate the world. And as I'm making a decision and I'm taking a bet, that's a risk, what's the worst that can happen? And then how likely is that? And what that has led to is, is an increasing risk tolerance over time.

One of the models of thought that I've, I've learned, we had a CFO that was the ex CFO of Pepsi Corporation. And of course when he was with us, like he was, I mean, he was probably in his late 70s, so. But the knowledge was there, but he just, he wasn't looking for the big corporate job. So we, we found him and he came in and really helped us understand. But he said, everything in business is about probabilities and anything can go to zero and nothing is 100%. So the question is, what are the scenarios that are potential outcomes here? And then how do you understand what the probability of success is in each of those things? And then specifically, should you choose a path that has the right amount of risk versus reward versus timing? What are the, what are the few things that you need to do to increase the probability of success of that outcome? And that's something that I think as entrepreneurs over time we just are turning things over in our head constantly. I find myself just, just almost like on autopilot, going through, okay, you know, market opportunity and legal. And then team is the team. What's the team likely to do? What are, you know, know who's likely to be disrupted by this, by this opportunity and by us doing this? What are we giving up? What's the opportunity cost of this? And, and the more experienced we get, I think we, we just are constantly. And it really boils down to risk. Like, what is, what is what, what do we have the potential to lose? What do, what do we have the, the opportunity to gain? And where are we going to be then? Can get to that next ledge and climb ourselves up there? What can we see over the top of the mountain and what are the opportunities from there? And I'm just like, I can't for the life of me, I don't have a good answer. I have a canned answer as to why after I sold my business, I came back and have started what amounts to 31k ones now. Like, what, what, what, what is the point? And my, my answer is a good one and, and I love it. And I, I, I sometimes I close that talk with it is, you know, my daughter's going to law school and she graduated from Clemson with an accounting degree and she decided, I've told her she's a lawyer since she was five years old because zero like great reader, great writer, zero empathy, and I am the first one she's going to sue. Like, she's already told me, you know, I'm paying for the college. But you know, she's going to double down on it for whatever she's got. I don't know, she's building it. She's been building a case our entire relationship. But you know, I said, well, you know, you've just decided to go to law school. She hustled in, studied for the LSAT for two months, got a great score, and then she decided she, her boyfriend was going to New York to work for an investment banker company. So she just barely qualified to go early admission NYU Law School. And I said, well, if you do it then you're going, if you get in, you're going early admission. And I said you could go for free to a top 30 law school, many, many great schools and they would be happy to have you come there for free or next to nothing. And we'll have to pay for not only school, but a New York City apartment for three years here. I said, are you sure that's what you want to do? And she says, she says, didn't you always tell us that we need to compete at the highest level that we qualify for? And I'm just like, well, yes, I did. Darn you kid, I didn't know you were listening, you know, with your, with your AirPods in. But apparently she did. So, you know, as entrepreneurs we get into this mode to where we are just absolutely climbing up this mountain. But, and it could be charity work or it could be more purposeful work or could be remodeling a house or you know, building out a cabin or something. But like once you get into this building mode, and that's where I like to coach people to get to like. I have another friend who's was a two time Olympian swimmer and she called and she asked me for a conversation and I, and she's like, you know, I've, I've, I'm a TV personality six weeks a year and I was an Olympic swimmer. But then the rest of her life she wasn't really pushing. You know, she says it's just this huge dichotomy of, of like pushing really hard to do something that's challenging and great and big. And then, you know, 80% of her life she's doing this other thing. Then I just asked her, I said, well, why are you approaching the rest of your life any differently than it took for you to become an Olympian? And said you should apply that to everything. And maybe you just, you don't have your purpose right in, in terms of that other stuff.

But anyway, it's really important to the conversation we're just having as it pertains to how I stay in building mode and have ambition and want to push and wanna grow and wanna take risks, but do that in a way that is from a place of wellness and I think, you know, in a place of free choice versus sort of feeling compelled to achieve. And I think I spent the first, probably 35, almost 40 years of my life, compelled like I had to, you know, just more and more and more. Not because I've ever cared very much about wealth per se, but more like out of that scarcity. Like, I was driven, but not from a place of really, truly freely choosing my path. And so some of where I'm at with respect to risk and everything else has a lot to do with, I guess I would call it, you know, sort of deep inner work and meditating and learning to be okay with the outcome, even if it isn't exactly what I expected, because those. You're right. The calculus of risk is constantly in our brains. We probably don't even notice we're doing it. But there's always things we don't know and to your CFO friend's credit, like nothing's a hundred percent. And sometimes I've made some decisions that have turned out for a variety of reasons, quite disastrously. And so then the question is, how do you, how do you navigate that and be okay in here and. And then also not have that, in my case revert to that scarcity mindset and that fear based decision making?

Did you ever have. Were you ever cognizant of envy and comparison as a roadblock for you, or did you ever. Do you ever have a problem with that? Many of us do. And it's something we have to deal with.

Yes. And it's interesting, I just was thinking about that when you were telling the story about your daughter. You know, it sounds like our backgrounds are pretty similar in our current situations. We're certainly in a spot to be able to afford to give our kids some things that weren't available for us to us as children. And so I think, and as I'm hearing you tell that story about your daughter, she's grown up in a world of I can. And you maybe grew up in a world of I can't. As the starting point. The default position is we can't do this, we can't afford it, we can't pull this off. And my children are very similar. That doesn't dawn on them not to ask to do something or to raise their hand to do it. And of course, that's always been my goal. And my dream as a parent is to give my children a life that, that they can have. And yet I feel sometimes a little saddled with the baggage that of my own childhood. And I sometimes I envy their freedom a little bit.

Wow.

And certainly at different points in my life have looked at people who had it easier, who had a better starting point. But this is one of the reasons I do all the volunteer work I do. As I tell you, you spend a week volunteering in Guatemala with people who aren't able to give their kids enough to eat and suddenly the problems that I think I have disappear. They're not problems, they're inconveniences.

That's powerful. This has been a powerful conversation. Let's move on to the pricing. When was it that you first realized that there was a business inside of helping people price their products appropriately?

The introduction to pricing was somewhat accidental. I was an engineer, as you described at ge, but I saw all these people on the commercial side of the business going to sales meetings in Las Vegas and taking customers out for, for golf outings. And I thought, what the heck am I doing in this lab? I want to go hang out with the people. I'm a people person. I have a big personality. So I wanted to get closer to the sales and marketing end of the business. And the best way to do that in GE at that time was to go into a Six Sigma. I became a Six Sigma black belt and ended up on a rotation in that program in pricing. And so I didn't know anything about it. I certainly didn't seek it out. But that was big. Sort of began my love affair with pricing. It's this intersection of art and science people and process data and psychology. You know, you read an econ textbook, it looks really mathematical and clinical, right? Like this sort of demand curve math. But the real world's super different. It's a lot more nuanced and gray and more like a game of poker where everybody's hiding the truth. And so I got very fascinated. That's how I started my, my corporate career in pricing. But most small and medium sized companies don't have access to some of those super expensive and super sophisticated methods of making pricing decisions. They can be very expensive. And so I had this idea that I could bring this knowledge of good pricing strategy and execution that I'd gotten at some of the, you know, biggest and best companies in the world to the, you know, to the mid market and work with small and medium sized companies to help them get better. I saw the market opportunity, which turned out to be true. But the thing that I didn't appreciate at the time, that is my favorite thing about working with this group of companies, is that a modest change in pricing makes a meaningful difference, not only in the company and their profitability, but how that shows up for the people that work there. You know, if you're a 30 person firm and you suddenly have 10% more to your bottom line. Now sometimes people are getting a profit share that they wouldn't have otherwise gotten. So now somebody's putting a new roof on their house or paying their daughter's college tuition or, you know, this is a, there's a real ripple effect in the work and it makes it so satisfying to do it versus when I was in, you know, corporate America and if I was wildly successful with our price increase, then it might add a tenth of a penny to the shareholder price or something. You know, it just didn't, I didn't feel the connection to the human in the way that I do working with the businesses I work with.

Now sales, I've like to say, is the ability to articulate differentiators between you and your competition and between you and them doing nothing at all. The first question I ask when I, when I look at a price is why is it so much higher? There must be more value here. Clearly they understand where everybody else is priced. And I want to know like, okay, what do I get for the, you know, I'll use a fitness membership, right? We, we price high and prosper. We are huge proponents of being, there's, we will say that there is no benefit to being second highest whatsoever. We have to stack value inside of the offering. So we have to be able to articulate the value and stack so much value that it seems ridiculous that we can deliver that much value for that much price. And generally people have the value inside of it, but they just don't articulate it well. They don't communicate the value, they don't create the value, they don't define the value inside of it. And by virtue of that, if you go, well, it would just be, you know, it'd be easier for a front desk person to sell if we just drop the price, you know, so, and, and you know, if, if you're, if you're asking for pricing feedback from the marketplace from your salespeople, well, we all know what that answer is going to be. They're going to do the math as to how to get the highest position, how highest commission out of whatever it is they sell. So there's really a lot of form forces that affect pricing. But at the end of the day, undervaluing your product or service and your failure to articulate that, I think is where most companies run themselves around in the swirl and have those conversations and ultimately just price matching or price dropping or price discounting, Is that fair?

100%, yes. And you kind of this was sort of embedded in your narrative there about the fitness concept. It's not just that you, or underpricing it and all the inevitable financial implications of that, you actually send a signal of value to the market. And this gets to kind of how you started the conversation. There's something called the price quality effect, which is where we infer quality from pricing. It's expensive, it must be good, it's cheap, it must be garbage. It's why you never eat it in 99 cent. All you can eat shrimp buffet, right? Like there are, there are things that are so cheap there. Not a deal. That is not a good thing.

I would, I would try it, but.

Yeah, I would say never, never again. That's how I end that. I would never do that again. So that price quality effect operates in every sector of the economy. Now, if you're selling something much closer to the commodity end of the spectrum, if you sell, you know, tonnage steel there, there are still differences in the value of the best supplier in the market and the worst. And you can still command a price premium. But that price premium really gets shrunk down because the difference from one product to the next and one supplier to the next is, is relatively low. But as you described, this is true for you, the fitness concept. This is true for Evana Clean. This is true for Boost pricing. This is true for every company that offers something different than somebody else. That the ability for somebody who's shopping for that product or service to tell truly how much more valuable you are. Sometimes, I mean, we can do a great job of trying to articulate that, but there's some amount of kind of judgment call on the customer's part, on the prospect's part to say, yes, I'm willing to pay these guys that much more. And one of the signals that they're using for determining and discerning value is the price itself. And so very often, especially in a business, a service business, where you cannot touch and feel the product, somebody who's looking for the very best isn't going to choose somebody that's cheap, even if it is the very best, because their price sends a signal that they're not great. They are what I would call suspiciously cheap. So that's one really important thing about what you said. The other one is, and I open the TED Talk this way, no one will ever pay you what you're worth. They'll only ever pay you what they think you're worth. And you control their thinking. Which goes to the second part of your story, which is it isn't just about having exceptional products and services. You can build the best product or service in the world, but if your customers don't know that, understand that, see that, believe that based on how you sell to them, then you're gonna always struggle to earn a price premium. So you know, frankly getting the product and service right and then getting the pricing right, like the number, that's only half the battle. The other half is how you communicate it and the messaging that you wrap around it and how you help the customer understand and connect with your value.

You've said that there's two times when people raise their prices, when they can and then when they must. I would suspect that if people are raising prices because they must, because they not making their bills or they're losing money, that they're already way near the bottom. How do you coach people? When you get into you, you work for mid sized businesses. So you, you get inside and they've called you because they've either heard about you or they believe inherently that they've got a problem with their pricing that they've been unable to fix themselves. When you go into a company like that, what do you, what do you do and how do you start?

Ooh, that is a great question and very difficult to answer because it largely depends on, on what we find. But I will tell you, I'll broadly say that pricing problems fall into one of two areas. Something strategically is off with what how they're pricing, their pricing structure and strategy can be improved and the other is execution. In other words, you know this. I'll use your fitness example again. If the, if the leadership and ownership develops a pricing plan that says, hey, we want to be, you know, price for, how'd you put that?

Price for price high and prosperity.

We're going to have a price high and prosper philosophy and standard. And this is what we're going to do. If you then, you know, you could build the best pricing strategy in the world if you hand it over to your salesforce and they are not trained, equipped, incentivized, with proper guardrails around them, they'll march right around that and discount anyway.

Right?

And, and so often I would say most of the time people who come to us think they have a strategy problem. And I would argue that their biggest opportunity, not that we couldn't make improvements in their strategy, but their biggest opportunity is in fixing the, the, the last mile, which is the people whose job it is to go out and communicate and sell and defend it in the marketplace and making sure they're doing that from a place of confidence and strength, not from a place of fear. The way I describe this is, you know, investing a lot of time and money in a world class pricing strategy without fixing the execution side is like giving your keys to your Ferrari to your toddler. We got to teach the kid to drive. Let's start them out in a Camry. It'll do fine. It'll get him from A to B, but we got to teach them to drive. And so that's where working with the sales team, pulling back the curtains on the customer tactics that they face, and then arming them with the messaging and methods and tools and frankly, most importantly, the confidence to negotiate from strength is really the place that we start. And so we have sales training programs designed for sales and pricers and other customer facing folks. And then sometimes we do some strategy work as well.

Is that what you mean by bullets before cannons you can ease into it or you have to make sure that you're prepared for all the steps of the journey to get ultimately up to the price goal that you've set?

Yeah, I mean, so bullets before cans. This is a Jim, you know, comes from Jim Collins book, I think this is for me about where can we spend the least amount of effort and take the least amount of risk for the biggest return. And so applying that to the, to the model I just described, where we've got both strategy and risk and execution. Strategy takes a lot of effort and cost and it's still risky because you're still leaving the execution up to people who aren't on board. And so it takes less money and less time to train the team than it does to fix a strategy. And the risk on that is very low. There's always low hanging fruit and money tied up in poor execution or even decent execution. So that's where the bullets before cannons applies. Here is where can we take the least effort and the least risk to get the biggest return.

When you're doing your work, how much do you pay attention to the competition in the marketplace, competitive pricing? Because I could see that you're focused on your client, what they do, the value that they bring to the marketplace, finding other areas of value that they weren't really talking about, making sure that they're worked into the sales process in the right order at the right time. You know, pre handling typical objections. But there's always going to be that objection to say, yeah, but it's 30% cheaper over there. Like how do you, you know, is that ultimately the moment of truth where it comes to. Or does that question never happen? If you followed the sales process and you've built enough value and they just. Absolutely, they just. I want to have this, I want to have this company.

Right. Well the, the, the importance of competition and their pricing decisions is varies depending on where on the spectrum of total commodity to total differentiation. You fall, right. And so the more close you are to the commodity end of the spectrum, the more the competitors pricing does factor in. What I believe though, regardless of where you are in that spectrum and this is sometimes really surprises people for me to say is I think it is for most every company a waste of time to worry very much about what your customers competitors are doing pricing wise. And the reason is that there's almost there. There's always difference. There's always difference. Even if. And you. I'll use a distribution model for an example because you know, you're a distributor, you're selling the physically the exact same, literally physical same product as another distributor selling that same product. And I get that question like oh no, but they only charge X. Okay, but you have it in stock, you can, you offer a warranty, you get it next day, you can install it, you service it, you back up the warranty that your competitor does. All these, you know, what are all the differentiators that make you worth a little bit more now again, the little bit more at the more commoditized end is you know, maybe a couple percent, whereas at the other end maybe it's 10, 15, 20%. But there's always a price premium available to those that can differentiate and be and be better. The reason I share that relative to competitive pricing is it's so common when people come to us that they, you know, they want to know if we do it or if they should invest in it before they hire us to do this sort of market research study around, you know, competitive landscape. And I say to them, let me save you 50 grand. That report is going to come back and tell you some people are cheaper than you and some people are more expensive than you. How does that inform your pricing strategy? In other words? It's sort of this sort of seductive obvious thing that I don't think is really true, which is we have to know what everybody else is doing to make a good decision ourselves. I think that price, the best prices are based and rooted in the value that we deliver, not in our cost and not what the guy down the street who doesn't deliver. What we deliver is charging what we deliver and the value that we create and Then importantly, and this is to your prayer point, how effective we are at communicating that. So people will pay it by and large, like if people have competitive data or competitive intel that we want to sort of infuse into some of our decision making. I never think it's a bad thing. More data is always better. But I believe that the reliance on that or the reaction to that, especially for the best in class and better in class companies is going to result in you underpricing to your value. I don't ever worry about it, is the short answer.

No, I and that's been my experience as well. And I think it's very dangerous with your sales team because they tend to be hyper focused on it. Well, we're selling against, you know, Bob's and they're going to be at this. So you know, how do I answer that question? But really that's well that you know where the competitor is going to be. So you really don't need to even worry about that. You need to worry about what, what we need to do to sell.

One other thing about that is almost all of our market intel comes from customers telling us that I got this lower quote or showing us a quote or showing us an invoice and they are only ever going to show us the one where the cheapest. Right. So we're seeing a portion of the story, this curated version of the story. And so if our understanding of our own market position is informed by partial and frankly prejudice data that's tuned to the agenda of our customers, then that's going to lead us to under price. So it's not just what you said and what I said prior that that isn't as relevant based on our value. It's also not even true oftentimes. And so we're believing the customer, we're letting that, you know, dictate our pricing strategy that is always going to lead to underpricing.

Brilliant. So let's say that we're in a home service business, maybe fencing and our average install is 7 to $10,000. We lose an opportunity on pricing. What are the opportunities to learn when you lose on pricing or you lose as a result of, you know, somebody say, well I'm just going with the cheaper person. Are there opportunities inside of that?

Yes. Especially if you have a chance to ask some questions such as you could ask questions like were there any problems that we didn't solve or address? So like setting price aside, was there anything about our proposal that you didn't like or where we missed the mark? Were there Some boxes we left unchecked did our problem. If the prices were exactly the same, who would have you, who would you have chosen? If they don't say you, then you didn't have a price problem.

Right?

Like they're going with a cheaper guy. But that isn't what. And if they did say you, then you say what was it about what we proposed that you liked so much that would have made us your choice if the prices were exactly the same? Let's just. The idea is when you ask these kind of follow up questions is to put price to the side and learn more about the value and what they value. And by the way, yes, we should ask those post mortem but I think even as we're approaching the sales process early on we can learn a lot by saying besides price, what else are you going to make this decision on? What's most important to you? And I think it's important to say the words besides price or setting price aside because our customers, we've trained them, the world's trained them that we've got to say price is going to drive it. And for some industries that's the number one and for other ones it's not, it's always on the list. So let's just set it aside. Besides price, what is most important to you? What is, what is the, what are the critical things? What, what are the top three things that you care about besides price? If we aren't asking that early, then we find ourselves having to ask that late. I would, I think if we can slow down, ask more questions up front and then even when we lose. Do you mind? Thank you for, for letting me know that you're. You've gone with the other guy. Do you mind telling me, get you spending 30 seconds telling me what about our proposal you really liked and what concerns you had so that I can learn for next time.

The customer might say, for example, I went with them because they have a warranty and we might have the same warranty, but we just didn't let them know about it or we didn't make it clear that we had the warranty.

Right.

And also too in the home services industry, which is a lot of what we do in the Homefront Brands platform is do you want to go first or do you want to go last? Now if you go last, then there's a chance that the job's gone by the time you get there. So I always prefer to go first. But then you have to do a very thorough job to the extent that they don't really want to wait for that next person to get there and they want to be comfortable with you. You know, if there's, if they haven't talked to the other people yet, you're not really sure what the comparative elements are going to be to the proposal and the quote, because they're going to. The people that go after are going to have the benefit of saying what you, you know, doing, doing exactly what you just talked about. So, you know, I think people buy, you know, so make it easy for people to buy, you know, have financing available to make sure that you stack all the value inside of the products. You can also create some, which I'm not a big fan of necessary. But there's also time pressure. There could be, you know, we can get you in the schedule. Some people. When do you need this done? Well, I really need it done before the end of the month. Well, if we did this today, I'm thinking about all the things that forced me to make. Yeah, I've got friends coming in at the end of the month. When do you know? Well, I need it done before then. Well, we can do it next week if we get you on the schedule. Okay, fine. You got it. I'm not going to get another quote.

Yeah. You define sales early on in this conversation. I often define it as making prudent information available to people or, sorry, making good information available to people so that they can make a prudent choice.

Yes.

You know, sometimes, especially people who have never been in sales or who see it from the outside, some people have a very negative opinion of what sales is like. It's some kind of gross thing or manipulative thing. If you're doing that, you're doing it wrong. It's never about manipulating. It's about giving people good information so they can make a prudent choice. So as it pertains to the, you know, the industry you just described, we, we worked with a roofing company that often also preferred to be first and, and for the reasons you outlined. But then they sometimes struggled by comparison on things that they actually didn't. They were like, to your point, we have the warranty. They were just as good or better, but in the, in the consumer's mind and the homeowner's mind that they weren't as present to it. One of the things we did with them was make a, you know, a leave behind, which is essentially a shopping sheet that says, here's a checklist. You know, you're probably, you know, are you going to talk to B.S. yes, I've got two other appointments this week. Great for you. Please make sure that you ask these folks these questions because it's really important that you make a great choice for yourself. So this is a couple of things. One is clearly all the things on that checklist we're awesome at and that's good to, you know, plant that seed for the customer. But also the idea that you're helping to arm them to make a better decision is a give first model that I think it generates trust with a customer and can make sure that you know that you aren't forgetting to tell them any of the value that you deliver. And the other thing is like when you said if they said they went with a, you know, then because they had a warranty and we didn't, well then we can learn that there's some, there's some aspects of our sales process or our communicating value that, that need to be shored up because we should never lose over not having something that we have.

I have always had success making sure that the customer was better educated when I left than when I got there and putting yourself into their shoes and saying, you know, if I'm you, here's the kind of questions I'd be asking. And the checklist is something we have used in different businesses over time because then they can just go down the list and say like I know when I'm getting questions asked to me that they've been coached and educated by a competitor because they're asking very specific questions that a normal customer wouldn't and they're going down some sort of a list and then, and then it gives you the opportunity to knock those things out of the park. Yes, absolutely. And oh, by way, in addition to that, here's another thing that you should be thinking about and here's something else that, that, that you should be thinking about. I would like to talk a little bit about margin. Margin is not a four letter word. But I think if I was a consumer and I'm listening to this and I could be like, where you should push as much margin as you can get, they might feel like, well, you're ripping me off. You should only make a certain amount of profit or cost plus on a situation like that. But the reality of it is is that the benefits of running an efficient and effective back office, middle of the business supply chain delivery mechanism, those should go to the, to the contractor, the provider, the business. Those benefits should convey to, to that knowing that there's a minimum margin that you need to make. I think that's powerful. So it kind of puts a floor to the salespeople. But once you identify the floor, man, some people just run right to it. How much of this as a. As a. As a salesperson, knowing the margin and knowing what we want to get, how much of this is like playing poker, like there is. Because by the way, your customer is going to ask you standard question. How much room you got in there for me?

Can you sharpen your pencils? That your best number. Is that the best you can do?

Yeah. How do you psychologically prepare customer facing people to deal with that, knowing that they're sitting on a 74% margin on a deal?

Boy, that is a. That is a question we can spend two hours on by itself. The. There's a couple of things I want to say. First is it is not uncommon for salespeople to get head trash about margin. And it's too much. We're greedy, we're gouging, we're taking advantage of. They have. And it's different by industry, but, you know, there tends to be these sort of rules of thumb living in the head of the salesperson. And it could be, you know, 30% good, 40% competitive, 50% is ripping somebody off. Right. And anything above that, they just look at you like you have two heads when you tell them, you know. So this is an inevitable result of margin transparency is these sort of margin ruts or margin memory that I think can be very, very damaging to not only to a company's profitability, but also sometimes to our sales. Because there are some things that maybe we need to be at a 23 on because the product or the nature of the opportunity demands it. But we get in these sort of one size fits all ruts, and that's very damaging. The second thing I would say is cost doesn't drive price, only value does in any industry, if you get that fence put up halfway and you realize you had the wrong color or the wrong material, you got to tear it down and put it up again. The customer doesn't pay you twice. Whatever your costs are, does not drive what the customer is willing to pay you. And yet in many industries, especially those where there's sort of, you know, what I would call sort of custom. You know, you're not manufacturing 27,000 pens today. You're putting up, you know, this fence on this property with this, you know, square footage and linear feet. This. Tomorrow you're doing this other one. And the custom nature of some industries sort of backs us into the unenviable. You know margin conversation. And I say unenviable, because if it's transparent, then that can cause the problems I described, but we can't get away from it. It's sort of like the evil we're stuck with. Customers don't know or care about your margin. They will ask the question you described, but they don't know or care about your margin. Your people do, and inevitably they think these things are so inextricably linked. I'll hear things like, and you've heard it. Oh, this is a 40, you know, margin type opportunity. Or this product we, you know, is. Is typically a 50, or this customer is a 27. Just like they don't. They don't know or care about your margins. None of your customers have ever called you up and said, jeff, I like what you've proposed, but it's a little too pricey. What do you got more in the 27% margin range? They don't do that. So whenever possible, and however possible, I think it's really important to create some breathing room between the margin and the price. And by that I mean helping people understand that disconnect that's there and that 99% margin is not too much if the value's there. You know, quick story on this. We did worked with an office furniture dealer. They had this cubicle system that was. Was $3,000, and alongside that, they sold a bracket, this little proprietary piece of hardware. And it was 97 cents. And I said, why not $1.97? Why not 297? Why not $3.47? One of the guys in the room was like, incensed, like, that's 90% margin. It's a $2 part. Nobody knows or cares about your margin on that, by the way. On the cubicle system, they were making like 11 points of margin. So some of this is helping people understand the concept of granularity around pricing, or as we call it in our business, the riches are in the niches and getting out of the one size fits all, breaking some of the margin memory. So inviting the salespeople behind the curtain to understand the business side of that a little bit better. And then most of it is around building confidence. And, you know, we have our system to do that. Lots of people, you know, managers and business owners are good at motivating that and their people. But it's tremendous confidence in the value and then the skill set and mindset to defend it.

I had a similar experience with a company that was selling air compressors, and they were competitive on margin there. But to maintain the warranty, you had to buy their special lubricant. And their special lubricant was about a $99 item at 99% margin. So they were just able to. Yeah, but if you wanted to, if you wanted the warranty, you had to maintain the equipment the right way. And, you know, there was an extra $100, which is very material inside of the scope of things, and it was a repeat buy for these things. So there's, there's different places to, to put your margin and all of that, so. Well, that's, that's fascinating. Anything else that we should have asked you today, Kasey, that we haven't?

Well, I will just mention that right now is a very unique time in history for pricing. We are coming off of what has been the, you know, for the past 40 plus years, the highest period of inflation that we've experienced in the US Market. And it's starting to cool off a little bit, but there's still entrenched continued inflation. And even as that's happening, we're seeing some counter pressures with some softening of some markets and some cooling off of the economy in some areas, which is going to create more price pressure. So you've got inflation crashing into recession. A lot of businesses are pretty nervous, pretty scared. And I would just offer a piece of counsel which is it's not time to go hunker in the bunker. It's not time to sort of retract the tentacles and operate from a place of fear, particularly if you're best in class or better in class company. It's very tempting when competitors start getting aggressive and slashing prices and the pie starts shrinking and everybody's grabbing for scraps. But it's incredibly important not to grab a falling knife and just operate with some dispassionate, careful decision making. Navy Seals saying is slow is smooth, smooth is fast. So we want to react quickly, but we don't want to react in a panicky way. Take the information that's in front of you and as dispassionately as possible, just slow down and make an effective decision. I think that's always true in pricing. That's evergreen advice. But I think right now, and especially as the market maybe gets a little bit tougher, it's going to be really important. Otherwise, companies are going to give up all the gains they've gotten in the past couple years and then some.

That is words to live by. Thank you so much, Kasey. How can people reach out to you that are interested in talking to you about helping them with their pricing.

You can reach me on our website, boostpricing.com you can email me at Casey roostpricing.com C A S E Y boostpricing.com and then you can. I put a lot of information, a lot of blogs and videos out and those are all published to our website as well. And you can find those in the blog section. But I'm also really active on LinkedIn and always welcome people to find me on LinkedIn. You can find me, just search for Casey Brown and you'll see a loud redhead talking about pricing. And that's me.

I did. And you did. You popped right up.

Okay, great.

Last question. And you just gave us an incredible nugget. But if you had one sentence to make an impact in someone else's life to today, what would that be?

It is unjust to accept mediocre pay for excellent work.

Perfect. Perfect. Casey, thank you for investing the time with us today. It has been an absolute pleasure and I look forward to our next session together. And we will. Our paths will be crossing again very soon.

Thank you, Jeff.

You're welcome. And as always, I have been and continue to be Jeff Dutton. And we are on the home front, simply building the world's most responsible franchise platform, taking action to transform lives, impact communities, and enhance the lives of those that we care the most about. This sounds like you. Check us out@homefrontbrands.com today and start your next chapter of greatness, building your dynasty on the home front. I will be looking for you right here.