It’s not about growth
Pricing is not about growth. It’s about profit. About getting the maximal monetary amount your customer is WILLING to pay. BUT, also, it’s about profit AFTER bringing your customer to a better place. If you don’t get this one principle clear, any pricing you’ll try won’t last.
Your price is arbitrary
Price, at the end of it all, is related to what the customer gets in return. It’s the acceptable amount of money they decide to pay in exchange for something. If you, as a customer, decide that this thing is important to you, and that the monetary value of it is X, you’ll be happy to pay anything less than X. “This seems like an arbitrary number.” And it is. Like anything else you’ll find in the world. It’s an arbitrary (made up) number, that comes from the mind of your customer.
Approaching pricing different
The one thing that can drive a higher impact in your business is your price. From all things, increasing your price (and charging differently) can improve the way your business does. There’s this McKinsey study from 20 years ago —yeah, that far back— where they show that a 1% increase in the price, would generate 8% increase in operating profits. Way larger of an increase if you’d get to improve your costs in the same 1%. Yet, the question remains in: what are you doing to price different —if…
Involution
When moving prices up little by little, it’s all about the seller (you). About their costs, their margins, their “compensation” on inflation, etc. It has nothing to do with the customer. It’s involution. Because it focuses more and more to the inside. The short term. The survival of today.
Pop Quiz
Can you charge different prices for the (very exact) same thing? For services. For productized services. For products. Let me know. 🙂
Low prices are the right message
Price is the representation of your promise. If you have a high price, the implied promise is that it’s of high value. It’s the right message. If you have a low price, you’re also sending the right message: of low value. The understanding of it is like a force of nature: it just happens. And fast. The question is: do you intend to send the message of low value or of high value? Either is ok. There’s a market for everyone. Are you making the right message?
Orders, orders, orders.
More often than not, there is a big focus on revenue as the thing to measure (success, growth, improvement). All of this nonsense of “Orders. Orders. Orders.” The thing is, to someone new into a business or sales, this misbelief is misleading. Instead of seeing revenue as a proof of concept and an enabler of cash flow, they see it as the end. And then fail. On top of that “Orders, orders, orders.” hides something unintendedly: you get to be an order-taker. Taking orders. Following orders….
Choosing revenue
Choosing revenue means choosing vanity. It means that what’s important is what goes into the business. The today, rather than the long game. It dilutes the way you make decisions, because it’s revenue over all. It dilutes your power to say no. It pushes you to comply with what your customer demands. And when revenue is not hitting the mark, you stench of desperation. So you get pushed down. To what they say. In fear. Revenue is not all.
You’re not a brand
The price you set is not a reflection of you. The price you set is not a reflection of your worth. It’s not a reflection of your effort. It’s not a reflection of your passion. It’s not a reflection of yourself. You’re not your price. You’re not a brand.
Defend your price
By agreeing with the objections. “It’s too expensive.” It is. “The price is ridiculous.” It might be. “Why so expensive?” That’s the price. “But it’s SO simple.” You’re right. It’s not your job to convince anyone —or to talk anyone into buying. Your job is to qualify early and bring those objections yourself at the beginning. The best way to defend your price is by making peace with your price. If you think it’s too expensive, they will too.