The Gist Of This Episode: Are you struggling with knowing how to price your products and services? In this episode, Rachel outlines 4 steps that you need to do to price in such a way that will best fit your business.
What you will learn:
Why it’s important to know who you are selling to
The types of pricing structures and how to determine which one may be right for your business
Hey guys, welcome back to the Business Bites podcast. I am your host, Rachel Brenke. Today we’re going to talk about pricing because we are in business to make money or perhaps you have a bigger humanitarian goal, but in order to reach that goal, you have to make money. What do we do when it comes to pricing? I feel like many entrepreneurs, especially solo business owners or those that haven’t been in the game before or very long, fall into this trap of believing that, oh, I’m new I need to price myself low. Or, oh, I just, there’s so much out on the market. I’ve got to be the cheapest in order for everyone to buy into me. Or just simply put, you don’t have the confidence to be able to charge whatever your product or service is worth.
Now, a little caveat for this episode, I’m probably going to be focusing a bit more on services and potentially digital type goods. It can cross over to physical goods, but just understand that when I start talking bundling and doing different things, it may not necessarily apply to you, but a lot of the principles of determining what kind of volume they’re going to be, are you going to be high price, low volume? Are you going to be high volume, low price? Are you going to meet in the middle? And also who you’re talking to, who you’re selling to, and kind of some creative psychological ways that you can make the sales that you need to do.
Now, as I think about it, this probably will apply to everyone. You’re just going to have to write these principles out that I talk about and remember, you can always find the show notes at rachelbrenke.com, so if you need to go through and look at this and perhaps we’ll even craft up a quick checklist for you and stick it in the Business Bites Facebook group. If you haven’t joined, please make sure you get over there because we have a lot of good information and friends and a lot of great entrepreneurs that are contributing to discussion.
But let’s get back to this pricing stuff. As you guys know, from many of my past episodes, I’m not a big fan of quote unquote selling. I prefer to serve than sell. And because you do sell through serving your audience, your customers and just those that have a problem and you have the solution. And here’s the thing with this though, I really want you guys to fight this fear, fight lack of confidence. It’s quite overwhelming when you start looking and doing research on what other products and services are out there. And that’s really where we’re kind of going to start here. Step number one actually was to make sure we identify the customer avatar of who we’re going to be talking to in unique selling proposition.
I don’t want to spend a lot of time and it’s quick bite today going into that, so make sure you check out episode 12 rachelbrenke.com/epi12, Magic of a Client Avatar. And we’re also going to have related episodes will be linked in these show notes. But this way you guys are able to really drill that down because here’s the thing. In order to serve, to sell, in order to serve and results in selling that creates profit for you, you’re going to have to talk to the right people. You’re also going to have to have the right initial selling proposition. Because here’s the thing, as I move in and talk about pricing here in a second, a lot of it is rooted in psychology. You can’t jump the gun and just simply have a product or service, attach a pricing, attach a structure without going through the very first step of identifying your client avatar, the second step of the unique selling proposition.
Again, episode 12 will get you guys started with all of that. It is probably our most popular episode because it is the foundation for everything, even legal stuff that you also get here with the Business Bites podcast. One and two done. We’ve already taken it off the table because you guys have paused, you’ve gone to listen and now you’ve come back for point three.
And I’ve already given a little insight or a hint of this a little bit ago. This is where you kind of have to decide and it goes along with your client avatar of the person that you’re trying to engage or to sell to. Are you, and also maybe your life circumstances, but are you wanting to be high volume, lower price? And this could work well if maybe you are selling tangible goods or digital goods. Do you want to be high price, low volume? More than likely this is where a lot of those that do service based businesses are going to end up being, especially maybe in a service based business now and you’re feeling super burned out because you’re probably going for low price, high volume, and you’re realizing, oh man, I can make the same amount of money by doing smaller amounts of work. That would be higher priced, lower volume. And then of course we have the middle range, middle volume, middle pricing.
And I just want you guys to keep in mind though, you don’t have to just pick one of these volumes and be stuck with it. You can always change. As your business grows and perhaps as your client avatar evolves and your products and services evolve, you might change the volume. This is step number three in this pricing, is identifying the volume, but understand that it’s not concrete. It can change. Maybe your life circumstances will change and you’re wanting to then change also how you’re going to do your sales.
With that, we want to sit back and think what of these structures fits best for the product or service I’m providing which speaks to my client avatar and can meet the unique selling proposition for that client avatar and also our life circumstances? How is this going to fit in with our life? And lastly, the brand that we want to convey. I’ll give you guys an example here a bit. Over at TheLawTog®, which is one of my brands, the legal resource for photographers you guys can check it out at thelawtog.com, a lot of it is digital goods primarily. I do have some physical blocks in teaching, but my digital goods are contract template forms, which you also have at Rachel Brenke, TheLawTog is just the most robust one that you guys can take a look at right now, especially if you’re in eCommerce or trying to see what we’re going to talk about step number four here in a minute when it comes to bundling into your pricing and all that. But over there they’re digital goods.
I created these contracts and most of my work is done on the front end. This is developing the contract, obviously went to law school, passed the bar, run a law firm, yada yada. But also it’s developing the contracts with the specific type of photographer, having multiple photographers review it, multiple lawyers review it, and there’s a special dance to how we have to create a template. We don’t want to put too little and we don’t want to put too much. It’s got to be just right, like the three bears and the porridge. It’s got to be just right. And so there’s a balance with that to know that there’s a lot of upfront work that needs to be done.
I also want to take into consideration that, well, yeah, I’ve done the work so anything after that, it’s kind of like a windfall. At that point, and you guys can also translate this to manufactured goods as well. Most of the work is done up until when it’s ready to ship. And then shipping is relatively easy. Delivery is easy. You could take the mindset of, all right, well I’ve already done all the work and put the investment in it, so why would I be high volume low cost? Well, that’s when we want to take also into consideration the brand that we’re putting out there. I have very specifically positioned myself in the photography industry as the legal go to to go to. I’m also the only lawyer photographer that is very specialized to photographers. For those reasons, with very little competition, I can pick any of these, high volume, low price, middle middle or low volume, high price, but I’m balancing that also with the mission in the brand that I want to portray.
If I did low price, it would speak this mindset or this perception to the audience that maybe the product’s not that great, that it’s bare bones, which it’s not because I’ve put a lot of time and effort into it. It also would be doing a disservice to me because I’ve done a lot of the brand value and positioning to demand more of a middle or upper price. Now I also compare that or contrast rather, to I don’t want to be so high price that people then have an option of going, well I’ll just go to a lawyer anyway because if I’m going to have to purchase contract template form and make edits, well if I’m already going to be spending a very high price, if this is I have chosen high price, low volume structure, then I’m going to be eliminating a lot of my potential customers because then it’s factoring against what their alternative option is. Sometimes high price, low volume is not always the best option.
I’m just sharing this with you guys because you can see how I’ve got to this middle range. If I was too low it would have an element of they’re not good, it’s fly by night, can’t be taken as seriously and it really would be devaluing to the brand overall. But high price would alienate a lot of people, which actually another point I should make on that. Not only would they then choose to only go to a law firm and not partake in the services and the templates that I have, which by the way, just as a side note here, having the contract template forms from Rachel Brenke, FitLegally, TheLawTog, all my brands, because I am in those industries, you’re going to get a more well rounded contract template.
We still always advise you to have an attorney look it over, but oftentimes what happens if you just go to an attorney without them having any knowledge of the specific industry you’re in, you may get a good services agreement, you may get a good document, but it’s not going to be as well rounded. You’re going to have to doing a lot of edits and revisions later on and that can cost a lot of time and money and energy and heartache.
Anyways, so back to what I was saying, middle ground is where I’ve identified. Again, like I said, if I went too high in pricing, even though I think I could demand it by being a industry dominator over there and a really well known brand, I could alienate people because then they’re just going to decide, well I got to go to an attorney anyways. But also it would kind of undermine the mission I have for my business. I’m wanting to meet the needs and help photographers specifically in this example, to be able to have a legally protected business. And oftentimes pricing is a great barrier. And I understand that it can be cost prohibitive, it can be very overwhelming to try to go hire an attorney. This is kind of a stop gap to assist them, help them save money in the long run, like the example I just gave, you have a better well-rounded contract. And so if I price myself way too high, even though the market relatively could sustain it, I would be undermining one of my core missions and the values that we hold at TheLawTog.
I got transparent there on my own brand to give you guys an example of how you want to evaluate each of these levels. Again, high volume, low price, make a lot of money, but you’re going to be pumping through a lot of stuff. High price, low volume could be great if you’re really wanting to put out yourself as a luxury brand, which is fabulous. Sometimes that fits very well. On my consulting services side, time is money. My time is extremely valuable so I do high price, low volume and it’s because I’m meeting also a different need and meeting a different client avatar, which was step one we talked about here. I’m meeting people that are more serious in their business rather than beginner business owners that just need a little assistance.
Now, last point on this with pricing. And this is not be in all end all of pricing, but these are really good structures you guys consider. Number four and and I hope that you guys are able to translate this across. It may not be applicable to you if you only have one or two products, but if you’re someone that has multiple products and or services, look at doing a structure of bundling and having tiers. Think of it this way. You go to fast food restaurants and what are you always asked? What size do you want? But they don’t specifically say that. They say, “Medium or large?” Even though there’s a small, why is that? The small is the baseline minimum that they want to make and fast food is just the most bad visual example. These guys could also look at this when you go to regular restaurants.
When you go to purchase electronics, your base, your smallest collection, your smallest package, your smallest bundle, your smallest product is going to have the minimum viable products that you need to meet the needs of this client avatar and to convey the quality of what you are providing, but it’s going to be the minimum. This is the minimum to help you achieve your goal’s finances, your medium and large, so you have small, medium and large, small is the minimum, medium and large are just going to be kind of quote unquote upsells, they’re going to have more sophisticated upgrades, they’re going to have other options there and you’re driving people up this ladder from small, medium, to large.
Another for a visual example is Starbucks. Look at the visual differences of the cup. Where do the majority of people fall? Grande. Why? Because the tall looks way too small and the venti looks way to diagonal and big but they all fit and meet the needs of the person that is buying into it at that time. But many people fall into the grande. And so for me, if you’re sitting down and thinking about a product or service, everything that you’re wanting to give or just generally sell, that you think that absolutely need to have, you’re going to put in the medium, you’re going to put in the middle.
Your small is going to be very minimum viable product. You can look at this at TheLawTog, our base bundle is very basically a contract and a model release. That’s it. It doesn’t have anything else. It is enough. It’s still fits the needs of many, but it is not really all the documents that they need to have. Our middle, our medium, our grande, is where the majority of people are going to fall. They’re driven there because it’s the middle option. It’s not too big, it’s not too small it’s just right like Goldilocks. And it’s going to sit and have additional documents in there that we’re going to help serve their business. And then of course the large, the venti have all these extra good to haves but aren’t necessarily really legal necessities right now at the time this avatar is buying.
This is how I want you guys to look and approach having options because when you have multiple options, you’re also putting it into the consumer psychology that they’re then getting to make a choice. As opposed to the choice being, should I buy or not? It’s shifts from, a yes or no to A, B or C, small, medium or large? Tall venti and grande. Tall, grande, venti, got that backwards. But you guys know what I mean. You’re taking the objection off the table because they’re already there and then they’re making a decision based on the offerings. Where if you only have one offering, you’re sticking them into this yes or no and then you have a 50/50 shot of them saying no. When you start having multiple options, visually conveying what you guys can see an example. And actually we’ll screen cap TheLawTog stuff and stick it into the show notes for this episode also so you can take and see a visual example looks like.
You can log on to Apple. They do it as well. Look at the Starbucks card. The Starbucks coffee cup. You guys can see a visual example there as well. You should be doing the exact same because it’s psychologically going to take away from yes or no, should I buy or not? To, which option am I going to buy? We are already beyond the time for our regular Business Bite format, but I wanted to bring this to you guys to really get you going. Again, the steps of that, client avatar and unique selling proposition. Determine the volume level and work through the process just like I did with you guys with TheLawTog. How do I determine how’s this is going to impact my brand? And then also make sure you’re offerings are psychologically grounding people. The minimum is the minimum amount you want to make, that smallest package and then it’s changing the decision from yes or no to buy, to which option to buy.
All right guys, I’ll see you guys in the Business Bites podcast group. Can you also please leave a review on whatever podcast platform you’re listening on? It really will help the show and we’re coming up on a 100 episodes and we’re going to be doing a really large giveaway, so make sure you stay tuned and please keep working to get your business protected and on the right path and go serve, oversell. Get this pricing in there. You guys can do it.