Sometimes, it’s the result of realizing that you’ve actually been losing money because you’re not even covering your costs (never mind turning a profit). Other times, it happens when you’re trying to figure out how on earth to make your revenue goals … without killing yourself in the process.
Now, I’m a big believer in both value-based and premium pricing. But even I have experienced the simple truth that believing in it and feeling okay when you’re staring down a big number, wondering who will pay are two very different things.
It’s completely normal to feel freaked out about raising your prices and charging a premium.
But eventually, you have to decide whether to overcome that barrier or stay stuck where you’re at.
Ready to get unstuck?
Price Is Just a Number. It’s What You Tell Yourself About Price That Matters.
The first thing to realize is that resistance to premium pricing has nothing to do with the price itself.
[Tweet “Price resistance is entirely about what goes on between the ears.”]
For example, the first time I sent out a proposal for a project where the total price was more than $10,000, I sweated bullets. For hours after hitting “send”, I agonized over whether I was doing the right thing or not.
But as time ticked on, a magical thing happened: I got used to the idea. It started to sound and feel normal. I found myself habituated to the notion that I was a $10,000 consultant. In fact, by the time I actually heard back from the prospect a week later, I was so used to the idea that I actually felt I had probably underpriced.
Then there are the Elevate sessions that I currently offer as an intensive way to move past your roadblocks, level up how you deliver your message and create a bigger impact (and make more money). These sessions are laser focused, incredibly impactful, get great results and sell really, really well at $750 for 90 minutes. That’s a pretty ridiculous hourly rate when you come right down to it.
But did you know that when I first started consulting on courses, I offered essentially the exact same thing for $79?
No, I’m not missing a digit there. I really do mean $79. And in all the months that I had that offer available, I sold one.
But, just like in the $10,000 example above, I noticed something happened when I started to tell a different story with my pricing. Suddenly, the same product was a much easier sell at $750 than it ever was at $79. The new price – and associated messaging I had to use to justify the price – attracted a completely different quality of client. It was much more in line with my overall brand and message.
It even helped my clients achieve better results because they became significantly more invested in the process. Yes, you read that right: by raising my prices, I helped my customers get a better ROI.
Give Yourself a Dose of Shock Therapy
Now, you might be inclined to look at the above examples and infer that I don’t have a problem with risk; that I’m a huge “jump before looking” type person who doesn’t get scared by the prospect of 10X’ing my prices.
It’s not true. In fact, as I told Charlie Gilkey in this interview for the Productive Flourishing podcast, it takes me a long time to build up the gumption to “go for it.”
But when it comes to stepping up and owning your higher, premium prices, there is something I’ve found that can help, and that’s a little bit of “shock therapy”.
Here’s what I mean by that:
Take some time and go seek out people whose businesses are in the same conversation as yours. Don’t just think about competitors, but also consider those who are solving the same kinds of problems as you even if they’re using different tools to do it. As you do, actively seek out what the top of the market is charging, and what value they’re providing in exchange.
What you find will probably surprise you.
For example, my partner has recently started making handmade gemstone pendants.
When she made one at a class, the instructor said that it was really good (it was/is!) and it could probably sell for $30-$40. My partner was shocked because that price seemed outrageously high.
I, however, didn’t agree with her gut assessment and insisted that she do a cost analysis because that’s just the kind of person I am. It quickly became clear that at $40, she wouldn’t even be covering her costs or her time, never mind getting a profit (or pricing based on value!)
That’s when I suggested that we set out on a virtual scavenger hunt. We scoured the handmade, artisan market for pendants similar to hers. I think the highest we saw was $700, and it wasn’t even that nice! Many more were in the $80-$150 range.
A week later, a woman at work noticed her pendant and commented: “Oh, can you make me one? I’ll pay you — and I want you to charge me the REAL price, not something cheap.” We talked about it later that evening, and she told me that she “couldn’t possibly go lower than $80.”
Just a few weeks prior she had thought $40 was too high … but simply by filling her awareness with different input information, she completed a completely subconscious shift. All of a sudden a price that was 2-4X higher than a previously “exorbitant” amount, just seemed “right”.
The Truth About Pricing is Simple
Here’s the simple truth about pricing:
[Tweet “Price is almost always completely arbitrary.”]
It’s not based on some arcane formula, and aside from a few bad, good, better and best strategies, there aren’t really any rules.
Yes, you’ll have to change the story you tell your customers – and the one you’re telling yourself.
But really, pricing is a situation where often the best thing to do is just make the change and see what happens. The human mind is a funny thing – we can get comfortable with things that previously seemed uncomfortable, really, really quickly.
So if you want to charge premium prices, then charge premium prices.
It’ll feel scary at first …
… but you’ll get used to it.