10 Pricing Mistakes You Might Be Making!

Welcome to Million Dollar Grit, the podcast that dives deep into the world of entrepreneurship, where tenacity meets strategy and dreams meet reality. My name is Julie, and I explore the raw, often overlooked truths of what it takes to succeed in business and in life. It's not just about the glossy success stories. It's about the grit it takes to get there.

Hey, everyone, it's Julie. Welcome back to another episode of Million Dollar Grit. Today I'm Talking about the 10 most common mistakes people make with their pricing. Pricing is a big topic. It's a hot topic. It's a fickle topic. Things change in the economy quickly and then things that worked once don't work anymore. And you might be making some of the mistakes that I see lots of new business owners make. And so I want to run down the top 10 mistakes. These are most of them, although I'm sure I've forgotten a few. So mistake number one is choosing an established price because you've seen it quote around in the market. This is the common I'm going to price it 997 or I'm going to price it 4, 9, 7. And these are very common, popular price points. I get why people do this. It's, you know, established in, like the online marketing world. For example, you know, a 997 course for, let's say a business in a box type course and is pretty standard. I'm not saying that the $497 or the $997 price point is a bad price point. It's often not. But if you are just choosing it because you've seen it around, you could very, very easily make a mistake. Let me give an example. Let's say you have a business in a box course teaching people a skill or some sort of job, and you've seen lots of courses that are at both those price points. And you choose the $497 price point because you think, well, I'm new in the market, I don't have a lot of testimonials, let me price it cheaper. Then it comes time to selling it and you've decided, oh, I'm going to build a webinar funnel and I'm going to run ads. Well, you haven't considered that it's very difficult to make a $497 webinar profitable. And so unless you have an absolutely awesome close rate or you're willing to do the webinar live every week, you're just going to run an evergreen on demand and your close rate's okay. $497 is really not going to be enough to actually make you profitable. So sometimes we don't consider the mechanism by which we're selling, and that's where we get stuck.

Right.

997. You could make the mistake of pricing something at 997 because that's what everybody else does and not think about the actual market.

Right.

So if you're teaching people how to, you know, make handmade crafts, well, yeah, maybe teaching someone how to be a bookkeeper is a. Is a thousand dollar value. But teaching someone how to be a crafter, you know, that might be a little cost prohibitive and it may need to be closer to that 497 mark. So don't choose popular prices because you see it around. And if you see other people selling things at 497 or 997, it doesn't mean that it's working.

Right.

That's another thing people will say to me, oh, well, I saw so and so's doing it well. Do you know if so and so is making a profit? Do you know if it's actively selling? Do you know if they have credit card debt?

Right.

Those are a lot of things that we don't know. And so just because you see it out there doesn't mean that it's necessarily right for you. All right, Mistake number two, basing your price on customer research. This may sound counterintuitive, but I think this is one of the biggest mistakes ever. And this is where people go to their ideal customer and they say, how much would you pay for this? And they're like, oh, I'd pay a hundred dollars or I'd pay 500 or I'd pay a thousand dollars. People are notoriously bad at telling you the truth about how much they will actually spend. They will spend theoretical dollars all day long. But when it comes to actually spending money, it's a different story. And keep in mind that psychologically, when you ask somebody the question, how much would you pay for this? They don't want to look cheap.

Right.

They don't want to look like they are, you know, Scrooge McDuck. So they're going to say a price more than probably is the truth. Just human psychology says we're going to not want to look dumb front of other people. So we're going to say a higher price point. Not always, but a lot of times. And so the sort of adjacent problem that comes with this is when you sell something, let's say you sell something at 50 bucks. And the customers come in and they're like, oh my God, this is so good. I totally would have paid 150. Do not believe them. Do not believe them. They are, are well intentioned. They are trying to tell you, oh my gosh, this course is more valuable than what I paid. Which is a great, great problem to have. But it does not mean that they would actually pay $150. So basing your price on customer research like that is just like a classic, classic mistake lots of people make. Number three, forgetting how the price of the pay plan will feel. This is kind of a little funny because when you are pricing something, let's say you're pricing something at, I don't know, $2,000, okay? Well, chances are you're going to have a pay plan, right? And so if you take $2,000 and let's say you divide it by six, okay? Because you want to have a six pay plan because the program is six payments, right? Well, that's $333. And if you're going to add any kind of premium upcharge for a pay plan, which is pretty common, it's going to be more than 300 and something dollars. So now I want you to ask yourself, how does it feel to spend $350 on this product in that first exchange of money? Because you might be saying, man, I really, I really wish it was under 300. Like, I wish it was like in the 297, right? So if you want it at 297 and you want a 6 pay, you are going to need to consider that the price can't really be 2000. It has be somewhere around $1500. Because if the majority of people are going to pay on a 6 pay and you want them to pay 6 payments of $297, the price really needs to be 1500, not 2000. And this is really important when you're thinking about higher ticket items because most people are only going to feel what the monthly payment feels like. They're not going to feel the feeling of the full payment coming out, right? And so that's really important to be considerate of the pay plan price and how that will feel and counting the premium upcharge you may charge. Okay? Mistake number four, lack of consideration for the value of the product related to the price. This is why I created the OfferStack spreadsheet over in Metrics Muse. If you don't know what Metrics Muse is, it's a spreadsheet subscription. If you go to metricsmuse.com, you can sign up. I create all these fun spreadsheets to help people with common marketing problems. So I created an offer stack spreadsheet to help people understand that there is a pocket that you want to sit in here. So if your product is going to make someone, let's say your product is going to make someone $5,000 in the next three months, right? Let's say it's an investing product or, you know, a skills product of some kind of. So if it's gonna make your customer $5,000 in the next 90 days, the value of that product is around $5,000, okay? And maybe it'll make you a million dollars in 10 years. But we go kind of based on like, what's the value over three months? And if you're listening to this and you're like, well, my product doesn't make money, that's fine. Does it save money? Does it, you know, like, what is the value of the joy that it brings? You know, you gotta kind of figure that, that general value proposition, so you want the course to be significantly less than the value, and somewhere between five and ten times less is sort of where we sit. If you go with the 10, it can sometimes feel a little extreme. If you, if you go with the five, sometimes it doesn't seem quite as irresistible. So you got to kind of play with it, right? So if the value of a product is going to make you $5,000, right? You're going to want to. If you go by the 10x, then the price of the product should be around 500. If you go based on like the 5x, the price should be around a thousand. Okay? So that's kind of how you can do that math. Number five, forgetting that the price must be less than perceived value minus friction. I read a great article from Elena Verna over unsubstack, and she was talking about how the price of your product is wrong. And she was talking about this idea of friction. And she says that. So a lot of surveys and focus groups and a B tests, they assume perfect conditions, right? So they, they think, okay, the price has to be less than the perceived value, and the perceived value is $5,000, right? But they're, they're imagining that with zero friction, right? No risk, no, you know, no length of time to get to that value. Right? They're thinking about it with zero friction. And the truth is that customers think very much about friction. How much time is this going to take? You know, how painful is this going to be? For my wallet. And so they have to look at the perceived value of the course. Also weigh the friction and the risk. And if putting those two things together is still, the price is still lower than they will buy. Okay, number six, not accounting for your revenue, profit or income needs. This is a classic. You are unaware of what you actually need to make income wise in your business. You know, you, you have a, a general revenue goal, but you're not super clear on your profit margins, you're not super clear on how much you need to save for taxes, how much income you actually want coming in your home. And so you don't price based on that. This is really common in the service industry, right? In the coaching industry, in the done for you industry, especially when you don't have a lot of CL clients or you have a higher ticket, you don't take into consideration, Well I have 40 hours in the week. This is how much my time needs to be worth in order to make the money that I want to make. And so if you haven't done any of that work, the revenue, the profit, the income, that's really important as well. We did that at the end here of 2024 in funnel. Gorgeous. We did a 2025 business planning and we do some of those projections to help people realize, you know, this is how much you actually have to sell in order to hit those goals. Number seven, not counting cogs. When it's a digital product, cogs is cost of goods sold. So this is common in actual like physical products. People know how much it costs to manufacture, how much it costs to ship, how much the packaging costs. But when it's a digital product we tend to just woohoo. We, we just kind of flake out on that. And so that's really, really important. And cogs for a digital product are things like your time, things like the software tools that you have to run the products on, things like ads and funnel costs, things like if you're paying for customer service. Right. So you kind of want to think about the cogs of any new program. Again, metrics. Muse has a spreadsheet for that. Because when we are building coaching programs, masterminds and things like that, it just helps if have a list of things to consider that will cost you in running that program to make sure that your price can actually cover it. Number eight, pretty common. Trying to be too cheap. This happens a lot when people are nervous or new and they think well if I make it cheap then people will buy. That's sometimes not true. Sometimes if you're the cheapest it is, but it's never super fun being the cheapest. And it also tends to attract the bottom feeders of clients. That can be really discouraging. So trying to be too cheap is usually based on some sort of internal mindset issue that you're struggling with. Imposter syndrome. I'm not ready. Something like that. Number nine is trying to be too luxury. We see this also where people get in these groups and social circles where they're hearing about people charging a hundred thousand or five hundred thousand dollars for coaching and all of a sudden they start, start to drink their own Kool A, get stuck in this, in this environment and think that everything is worth a premium and being luxury. And in some cases luxury pricing is helpful because what it does is weed out certain types of customers, right? So if you, if you raise your price to a point where like people really can't afford it unless they're in a certain position, that's okay. But a lot of times these luxury prices are the most willy nilly I've ever seen in my life. I saw someone say they pay $555,000 for coaching and I am just, I mean, unless that person, that coach is introducing them to a network where they're going to easily make a million dollars, it just seems absolutely wild to me and super arbitrary. So you know, folks would be like, well Julie, you want me to not be the cheapest and not be the most expensive, I'm going to be like in the wishy washy middle. I don't necessarily want you to be in the wishy washy middle. I just want you to avoid the pitfalls of the extreme cheap and the extreme luxury. And this gets me to my number 10 pricing mistake which is basing the price based on your financial lens and if you grew up with money issues and how cheap or frugal you happen to be, right? And unless you are your ideal customer, which sometimes happens, you are going to price yourself based on how you feel about your skills, how you feel about your technique. And this is where a lot of people, they fall on the too cheap or too luxury side, right? They either think they're not good enough and they're just way undervaluing themselves, or they've gotten into a world where they're. The Kool Aid is, the Kool Aid is expensive and they're now thinking that what they're doing is worth, you know, an absurd amount of money. And maybe in that circle it is viable. Like in that circle you can charge that. But Then you know, if that circle diminishes or you run out of an audience in that circle and then you come out into a different circle, that circle might look at you like you're nuts. So I hope this was helpful. These are the ten most common mistakes. Choosing an established price because you see it around. Number two, basing your price on customer research. A huge error that people don't realize. Number three, forgetting to think about how that pay plan is gonna feel. Number four, lack of consideration for the you as it relates to the price. Number five, forgetting that the price must be less than perceived value minus friction. Number six, not accounting for your revenue, your income, or your profit. Number seven, not counting cogs. Excuse me. Number eight, trying to be too cheap. Number nine, trying to be too expensive. And number ten, basing the price based on your financial perspective. If you've listened to this podcast and you're like, oh, baby, that's me, I encourage you to reach out to me. Reach out to me on Instagram. Julie C. Chanel is my handle. Or you can send me an email. Julieuliechanel.com I'd love to help you. This is one of my favorite things to tackle, so hit me up. I hope you have a great day. Talk soon. Bye.

And there you have it, folks. Another dose of Million Dollar Grit. I hope today's episode has left you feeling inspired, equipped, and ready to face your own entrepreneurial journey with resolve. Remember, until next time, embrace the struggle, harness your grit and keep pushing forward. You're stronger than any challenge you face. I'm Julie, and this has been Million Dollar Grit.