I would like to share with you some pricing strategies for marketing your product or service.
People often ask me how much they should charge for a service that they are offering.
My answer to that question is always, “What are people willing to pay? What is the demand for your product or service”?
The demand is based on a lot of different factors, but primarily it is determined by the perceived value of your product or service.
If people aren’t willing to receive your product or service for free, than you need to reconsider how you are marketing and communicating that value.
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For example, if you want to be a coach, I would recommend that you initially offer your time/service for free.
From there, start at a price point, whether that’s $10 or $15/hour, so that you can test what the market is willing to pay.
I like to offer an initial discount when I first sell and launch my product or service.
Then, as I improve the product, receive testimonials from customers, and make it better, I can justify the demand at a higher price point.
Starting small is always the better strategy because it gives you an idea of what people are willing to pay. As the demand increases, then you can justify charging more money.
In my business, that is exactly what I did. I started coaching for free and developed my skills and experience. I charged $30/hour, and then I slowly increased it.
Now that there is an opportunity cost for my time, my coaching and consulting services are worth over $1000/hour.
Renowned business trainer, Kate Zabriskie once said, “Your customers' perceptions are your reality”.
No matter how amazing you think your product or service is, your success depends, in part, on how effectively you are able to respond to the ever-changing needs of your target market.
Hey, everyone. Stefan here from ProjectLifeMastery.com and in this video, I'm going to share with you some pricing strategies for marketing. Pricing strategies for marketing your business, your product, your service, your time, whatever it might be. People often ask, “Stefan, how much should I charge for my time, for my coaching, for my consulting? How much should I charge for this product that I have or this service that I'm providing?”
And the answer to that is always based on what people are willing to pay, what the demand is for your time, your coaching, consulting, or product, or service because that's how you know what you should charge for it. The demand is going to be based on a lot of different factors but primarily the value that people perceive your product, service, or time being worth. Now, to give you an example of this, let's take coaching or consulting as an example.
Start small at the beginning
First, what I often recommend for someone who's going to do coaching consulting is to offer your time, your service for free, or even a product or service. Offer it for free at the beginning, because if people aren't willing to have you coach and consult them for free, or to receive your product for free, then how are you going to charge money for that? How do you expect to charge $10, $100, $1,000 for a product or a service if people aren't willing to at least receive it for free? If people aren't willing to receive it for free, then you got to create more value and change the perception of the value and effectively market and communicate that value.
Then what I recommend that you do is maybe start at a price point of maybe $10 an hour, $20 an hour. Something just to get your feet wet and to see what the demand is willing to pay, what the market is willing to pay for that. I like to first start off products at an initial price at some sort of discount when I first launch it, and then as I improve it, get customer feedback, testimonials, success stories, et cetera, and I make it better.
Then I can justify the demand at a higher price point, but starting small is always the better strategy because that will give you an idea of what people are willing to pay, what the perception of the value is, and also again give you the ability to get feedback and improve it, get testimonial success stories, all that sort of stuff. As the demand increases, so let's say you're charging $20 an hour for your time, and then more demand, more people come to you and you're getting busier. Well, now you can justify charging more money.
Maybe you're going to increase your price to $40 an hour because your time has become more valuable. It's become worth more because there's a higher demand for it. After that, you can raise it to $50 an hour, $100 an hour, and it can slowly go up, and that's exactly by the way what happened to me in my business. I started off coaching for free when I first got started. Developed my skills, my experience, testimonials, et cetera, then I started at I think $20, $30 an hour, and I slowly upped it.
Now, because I'm way much higher demand, I'm more successful, my time is worth a lot more money because there's an opportunity cost for my time where I could spend it on other things that are going to bring more money. It's now worth over $1,000 an hour, which is unaffordable for most but for people that strategically are looking for consulting or whatever it is, I'm available for that. That's my strategy that I've utilized, but also it's going to be based on the marketing that you do, the perception of value which is very important.
Increasing the perception of value
You've got to always increase the value, the perception of value of your product or service. That could be through testimonials. That could be in terms of improving the benefits that your product or service provides, solving problems and meeting needs. Even depends on the market because every market, they're willing to spend more money on different things. What someone is willing to spend on gardening information is much different than what we'll spend on investing advice, real estate advice.
People will spend more money for that because there's more potential benefit and return that they perceive from that as opposed to something else. Every market is different, and it is useful to look at other products in different markets and do a comparison to see what the demand is and what the price point is and everything as well. But really, the simple answer again is what people are willing to pay, because again, if people aren't willing to spend much, then that basically tells me that you haven't done a good enough job communicating the value of it and effectively marketing it.
You can charge more money if you look at for example Louis Vuitton. A Louis Vuitton purse is $4,000. It only costs $15 to $25 to make that Louis Vuitton purse. It has the same benefit and feature that a $20 purse has. Some $20 purses might even be more durable, more spacious. Why would someone spend $4,000 on a Louis Vuitton purse versus a $20 purse? The difference is the perception of value, the benefits that are marketed through that, the brand of that.
People will spend more for an iPhone versus another phone. People will spend more for Coca-Cola versus the $0.25 cola that you can buy at Safeway. It's all the perception of the marketing and the brand, the benefits people associate to that. That's what's going to determine how much you can charge for your products and for your services. Hopefully this video was able to benefit you. If it did, hit the like button below. Subscribe for more videos like this.
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