Pin the tail on the pricing donkey
How did you decide what to charge for your products and services?
Wait, don’t tell me — let me guess: you looked around at what others in your industry were charging. You found the highest prices and the lowest, then you picked something in the middle.
Or near the bottom if your confidence is in your shoes.
I know you set your prices like that, because when I started out, I did the same. So do most business owners.
It’s human nature: we’re not sure what to do, so we look around at what others are doing for a clue.
It makes perfect sense from an evolutionary point of view… and it’s a dumb way to set prices. Think about it: if we’re all doing the same thing, if we’re all looking at what others are doing, then doing the same, it makes pricing totally arbitrary.
Dan Kennedy, the godfather of marketing, put it like this: “Understand that everybody else has arrived at their price decisions through the same foolish process as you might now. It’s price incest, which works like regular incest: over time, everybody gets dumber.”
He’s blunt, is our Dan. He’s also dead right.
Here’s the big secret almost nobody will tell you…
You can charge whatever you like for your products and services.
The “going rate” is a dangerous myth that’ll keep you poor and frustrated.
“But wait!” I hear you cry. “All my competitors are around the same price range. I can’t possibly go against that, can I? Nobody will pay more, and my competitors will hate me.”
Okay, two things: first, people will pay more. Industry norms are meaningless to your business and I’ll explain why tomorrow.
Second: why do you care what your competitors think? They’re not paying you money, are they? Then ignore them. Let them get on with their business, and you can get on with growing yours.
At higher prices than them.
Which brings me back to the whole point of this email: how to set your prices. We’re going to pin the tail on the pricing donkey. Literally, because I’m all about making business fun.
Here’s what you’re going to do:
- Get a mahoosive piece of paper and draw a donkey on it. It doesn’t have to be a masterpiece, just a donkey-ish donkey.
- If drawing a donkey is your first stumbling block, you can use the cartoon of Derek the donkey above. Print him out.
- Then write some numbers all over it. Include “safe” numbers that don’t give you the creeping itches when you imagine charging it. And include horrifyingly high numbers that make your heart pound and your throat tight. And some numbers in between.
- Get a red pen.
- Then close your eyes — or, better still, blindfold yourself — and circle something on the paper.
- Whatever you circle (or the closest number) is what you charge.
I’m not kidding.
It’s as good a way as any to choose your initial pricing, and you’ll be pleasantly surprised.
You are not bound by what other people are charging, doing, and being. You can choose to have competitors who dictate how your business grows (or doesn’t)… or you can understand that you really don’t have competitors.
Your business is not the same as everyone else’s. It has you. How you structure your business, how you package your product, how you sell it, how you deliver it — all that means you can price it differently. If you make direct comparison impossible, you can charge whatever you like.
Most business owners live in fear of pricing, and fear is a bad place to be. Any business decision made out of fear is a poor decision.
Fear drives business owners to needlessly under-price, to avoid raising prices in time to avoid disaster (if at all), and to ignore opportunities to sell the posh version.
Fear leads to comparison. Comparison leads to discount. Discounts, as you’ve seen, lead to the Dark Side.
Instead, think carefully about pricing, and pin the tail on your pricing donkey.
Then sign up to my daily emails using the box on my site…
About the Author
Vicky Fraser
Please do share any articles from this site in part or in full — as long as you leave all links intact, give credit to the author, and include a link to this website and the following bio. Vicky is a gin-quaffing, pole-dancing, trapeze-swinging copywriter who writes about the perils and joys of writing, velociraptor training, and running a small business. She writes this stuff on her websites vickyfraser.com and cookiesforbreakfast.co.uk. She’s the author of one book (with two more in utero) and teaches small business owners how to write copy that sells, and how to be more fecking interesting. You can follow her on Facebook, Instagram, Twitter, Pinterest, and LinkedIn.
