How to PROPERLY Price YOUR Product/Service in 2024

Hey guys, in this video I'm going to take you through a couple of ways to price your products effectively. There's a lot of information on there on how to actually price things and it's like your sales team and there's a bunch of different factors that come into play. What I want to do is kind of simplify it for you and give you guys a bit of a step by step formula that you can use in order to price your products effectively. Not be leaving money on the table, but also not charge so much that it's comically ridiculous. There's something called a wtp, a willingness to pay. If you have a look at like Apple's website and you go up there right now and you go into the MacBook Airs, the MacBook Airs, they're going to have three different variants and there's going to be different prices. Let's just say it's 1600, 1800, 2200. So it's going to be like 16 inch, 16 inch, 18 inch or something like that. And then from there there's going to be something else that differentiates the 16 and the 18 from the 2200. And that's going to be very specific to the clientele to buy the MacBook Air. The clientele that buy the MacBook Air is very much students. What do we know and what has Apple figured out that those guys actually care about is screen size and I believe it's battery life. They really don't care about storage because everything's on the cloud. That's not what MacBook Airs are. So it's really not that big a deal. So the storage is basically identical across all of them. What changes is the screen size and the battery life. Then you go to the MacBook Pros and what really changes is the storage, the GPU, the CPU. So we're looking at performance and storage. That's what really changes. So the chipset, the cpu, the gpu, which is like the graphics, its ability to process and render graphics, and then the storage, so how much it can actually store, that is what is going to be the key differentiator between how much it costs and it's significantly more. If you want an eight terabyte hard drive, it's a lot more. Now, an eight terabytes terabyte hard drive doesn't actually cost that much more to make. It's not like it's infinitely more, a thousand dollars more to make an 8 terabyte hard drive. What it is is that the people who buy a MacBook Pro are willing to pay more for storage. And the people who buy a MacBook Air are willing to pay more for screen size and battery life. So it's the willingness to pay. So the pricing of your product is determined by people's willingness to pay. Now, I know that sounds super straightforward on the face of it, however, it's a little bit more complicated. I'm going to tell you why, then I'm going to streamline it for you. Imagine, you know, you're out there and you want to buy some AM concert tickets, and it's an outdoor concert. If it's raining outside, you are far less likely to buy that ticket. Or your willingness to pay is reduced simply because it's raining on the day that you purchase. Not going to be raining on the day of the actual concert, because that's months from now. But the fact that it's raining will reduce your willingness to pay because you're like, I don't want to go to an outside concert. It's really, really hot today, or it's raining today. And it's going to be like a subconscious thing in your head. But what it's going to do is going to lower your willingness to pay. So how do we maximize willingness to pay and how do we price our products effectively? Now, there's two ways of doing this. Because if you're an existing business with clientele, you can do focus groups and survey your clients. Take a bunch of clients who bought stuff off you and go, hey, what? What is it that you really like about what we do? And what is it that you don't? And what is it that you see real value in? And what is it that you don't see real value in? And chances are you'll be surprised because I think most business owners kind of walking around thinking they know everything about their clientele, that they know exactly what they want, exactly what they need and all that kind of stuff. And in reality, they don't. What we're going to put together, what we think people want, what we think people need. But if you focus group and ask your clients, you may be surprised. At seventh level, we had a program, any PQ 3.0. It's now called NAPE Pro. And we had a lot of stuff in there. It was huge, the program that you get. And so the focus groups were done, and it was like, oh, they don't actually care about this stuff at all. So we can remove it and actually charge the exact same price. And also if we add this and this, because after surveys, we spoke to them, they would pay significantly more for just those two things that don't cost us a lot of money to put in. So we redo the products, then from there we go. This is what you want and this is what you're willing to pay. Yep. Okay, cool. That's the new pricing. Now what if we did this for six months? What if we did it for 12 months? What if we gave you lifetime access, like how much? Right. So we do it that way and we actually survey the clients. That's your best way if you have an existing business with an existing clientele to figure out your pricing is to do that. The other way, if you have an existing business is to have a look at your sales data. Now if you're getting a really high amount of paid in fulls and you're not using funding, chances are you're a little bit, you're like shorting yourself on the money a little bit. The other thing is if your close rates are really high, like I'm talking 50% or above, and you're not doing like raucous pre financial qualifiers or using offers made or any of that sort of rubbish, then like chances are you're a little bit too cheap. The ideal close rate for most businesses is like 35%. That's a good measure that you're letting enough people through to where like not everyone's a lay down. But also it means that your pricing is probably maximized and you're not like leaving too much on the table. If everyone's sort of struggling for money and you're having to drop sell a ton or maybe like always do like long term payment plans. Maybe, you know, you should have a look at how you charge. Right? Because like the payment plan structure is sort of important because some payment plans end up fulfilling and some don't. And so you want to be able to sit down and have a look at that data and figure out and go like, okay, well if we have high close rates and we have high paid in full rates and all that kind of stuff, it's like maybe we could afford to bump this. And what you would do is you would bump it by a couple of percent, set point for a couple of weeks. If it doesn't change, bump it again. Doesn't change, bump it again. Doesn't change, bump it again. Then if it drops a bit, that's fine. But if the net positive from the increase price outweighs that, then you kind of drop it. Drop. You kind of like increase, increase until the numbers make sense and you hit that lower Diminishing return. Then what you do is you let the sales team get used to that new pricing for six months and then from there you try and bump it again. That's how you constantly kind of innovate your pricing. Now the way to do this if you don't have an existing business, is to price shop all of your competitors. And then you can take one or two strategies. You can do like what Michael Kors did. Okay, so when lvmh, right, bought Michael Kors, what they did is they had a look around and they said, yep, we are willing to lose an incredible amount of money. We are going to undercut everybody. What that does is it wipes out the Marketplace. Imagine if Seventh Level released a full comprehensive sales training program for 500 bucks. You'd basically bankrupt everyone. Now as long as you had the capital to do that. Because the reach that seventh level has is a huge amount of reach. Like 30,000 leads a month and I think like 60 or 70,000 clients like over the last two years. Plus the B2B is like you would ruin a lot of businesses, a lot of those small to medium sized, like training companies doing, you know, from sort of 10,000amonth to like 500k a month. They'd be wiped out and decimated. And then from there you could build the pricing back up having destroyed all your comp or like all your competitors. It's exactly what Michael Kors did. Now there's an argument that's probably not like not the move, but in fashion there's so many people, so who cares? But you always want people to widen the market. But anyway, that's going to get distracting. I can do another video that if you guys comment down below and you want me to explain the perfect level of competition, how that sort of economic theory works. It's pretty interesting if you're a nerd, so beware. Okay, so just comment down below. You know, perfect competition. And I will go ahead and do that. So you want to shop around, have a look and then you can choose to either undercut everybody or go premium. Those are really your options. So like you want to either add a ton of value and then like position yourself as the premium, be become the Hermes, become the Chanel. And so that's the way that you do that. And then, you know, if you can't sell it, then you need to drop your pricing because again, you're looking for that 35% close. So that, my friends, is a quick video. I think we've gone for about eight minutes now of exactly how you can price your products. It's a. It's a bit of a mystical realm, and you don't want to be tied to any particular way of doing things, but you do want to be malleable with your pricing, because it's an important thing, and you want to make sure that you have an understanding as to the value that you bring, the problems that you solve, and how much that's worth to solve. And then make sure that you're not outrageously pricing yourself, but also not massively undercutting yourself. So go out there, guys, do your thing, enjoy, have fun, and I will see you kids on the next one.