A huge point of friction that people have in all types of non-commodity businesses is: how much can I charge for my thing?
When you’re selling a gallon of milk, this is a much less complicated question. Even if you’re selling gluten-free soy milk, it’s still fairly straightforward how much the market will bear.
But when you’re doing creative work, technical consulting, marketing, SEO, or any of the wonderful things that y’all do on the regular when you’re not clicking three buttons to build a new website inside of GridPane… well, it’s a different story.
I’ve recently gone way down the “pricing” rabbit hole and I can tell you an irrefutable fact: there are no universal irrefutable pricing facts. There is a lot of art. There is a lot of science. And the rest is all testing and data.
I strongly recommend checking out someone much more experienced than me in this context, and you can do so here: https://www.pricingio.com/book
Get on his waiting list for his book and then thank me later.
But there is hope: there are all kinds of really strong indicators that you can likely start following today that can improve your bottom line and the overall strength of your business.
Here’s a really good one that has become abundantly clear to me: if all of your prospects are saying “Yes!” to what you are proposing to them… then you can safely raise the price.
The market is telling you something when this happens. It’s telling you, “I would have comfortably paid more for this.”
You want some price resistance. You want some of your prospects to NOT buy. If everyone is taking your offer, then you’re leaving money on the table.
Now you could make an argument that when you’re first releasing a new offering to the world at large that you want to try to generate some volume, some quick sales to fund the future work. Great! This is what we’ve done here at GridPane with phenomenal results.
But very quickly you have to recognize that you’re giving out too much value in exchange for too little upside. This means you’re both devaluing yourself to your customers – their perceived value will be lower and they will, even if just subconsciously, think less of your offering. And you’re also failing to capture badly needed revenues that can fuel future growth and help you not just survive but thrive in your competitive landscape.
If you’re seeing this in your business, fear not. I’m guilty as hell of making exactly this mistake, over and over and over again.
I want my GridPane fam to get SO much value out of what we’re creating… that I literally shoot myself in the foot in the process. The purpose of a company is to organize people and processes together to deliver a good or service. And people consume those goods and services in exchange for their money.
If you don’t do a good job capturing the value that you create, you’re actually destroying value. And you’re greatly hindering your ability to continue to innovate and grow and, ultimately, to create future value which both you and your customers can splash around in.
So what do you do?
You raise your prices. And you let the market tell you what they think.
If you’re still getting north of 70, 80, or 90 percent of your prospects taking your offers, you raise your prices again. At a certain point, here comes some of that art/science/bullshit/guesswork… let’s call it 64.879%… when roughly two-thirds of all prospects are saying yes, now you’ve established a good price for whatever it is that you’re selling.
Allow me to demonstrate: We launched our first Agency pilot cohort back in September, at a prepaid annual price of $5K. And… roughly 95% of the people I spoke with about it signed up.
Because… of course they did. It’s basically our Enterprise tier, with Whitelabel, and all kinds of insane bonuses, and it’s roughly 40 cents on the dollar. It’s too good of a deal. So, I’m fixing it.
We’re now launching a new cohort, pilot group 2, and I’ll be speaking with prospects about it in the coming weeks. But those people will not get the same price and the same offer as everyone who dove into the first cohort.
And then after that cohort is completely launched, we’ll make Agency publicly available and the price will go up yet again. To something approximating, what I believe is the “right” price. But that will also change in time. And bonuses will not be included. And every six months we’ll revisit things and try to figure out what is “right” at that time.
Keep in mind: this isn’t about extracting “maximum” value out of every single customer. This isn’t about bleeding your customers dry. It’s about a continual effort to get closer and closer to what the market feels is a fair exchange for your goods and services.
People who do business with you are, through their payments, telling you they are getting good value, good returns, good time savings, quality work, wonderful art, needed support. Whatever it is, they’re telling you it’s worth the money to them.
But if they never tell you “This is too much” then you’re stifling your own business. You’re decreasing the likelihood that you can continue to do business with all the people who are saying yes to you.
So look at your win/loss rates. Look at what percentage of business you’re closing. If the conversion rates are super high, don’t pat yourself on the back and crown yourself “Master Closer, King of All Sales Behemoths!” Because what you’re probably seeing is a failure to capture your REAL value.
And if you do too much of that for too long… the problem will automatically sort itself out. But in the very worst possible way.
Wanna talk more about it? Want to see what the new price and the new offer is for the Agency plan? You know where to find me.