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E-ssential
Message # 060:
Do you have the Product-People-Price formula backwards?
If you’re like most people, you come up with a product or service, then you target the people whom you feel it would be most appropriate for, and finally, you set the price according to what the market will bear.
That’s fine, except it almost always guarantees that you’ll be chasing your tail trying to make ends meet -- because you'll be targeting the wrong people and chronically undercharging for the product or service you provide.
If fear of losing clients or pricing yourself beyond what you think you're worth is stopping you from increasing your rates, then you might as well stop reading this E-ssential Message now -- because this is really going to throw you for a loop.
But if you're working too hard and you still don't have enough money left over to cover all your basic costs, (like sales commissions, marketing, equipment costs and even the thinking time you need to do the best possible job)... then maybe you're ready for a radically new approach.
While there are several pricing formulas you can use, the most straight-forward one may be simply to turn the product-people-price formula on its end.
"Pricing first'
What this means is that you set the price first, and then identify the target group who is in a position to pay your price. That’s what allows you to deliver the quality of product and level of service that you would be proud of, without being stretched for time or attention.
Try this now.
Consider the product or service you are currently offering. Imagine increasing the price you charge for it (or your effective hourly/daily rate) by 20%. Would that change the type of client you could work with? Would that change the actual product or service that you would have to offer?
At just a 20% increase, the answer is, 'probably not'.
Now repeat this exercise, but instead of increasing your price by 20%, try 200% Then do it again and multiply your current price by a factor of ten! Are there potential clients who would be happy to pay that price? How would your product or service have to change to support the new price? Might it be, in fact, a totally new (and improved) product or service?
Still afraid to tinker with your pricing? Get over it.
You see, getting the Price-People-Product formula right isn't just about raising your prices -- it's about offering a higher value product or service to a higher value target group. And that's something that will have you and your clients smiling.
Cheers!
About Michel Neray & The Essential Message:
If you're a consultant, advisor, independent professional or emerging company who is tired of pushing so hard to get sales – and you're ready to learn a better way to differentiate, position and brand yourself, we can help. As expert copywriters, we can help you get the clarity you need and the business you want. That's what the Essential Message is all about. For information about our workshops, coaching, copywriting and consulting services, or booking Michel to speak at your event, please call 416 534-4766 or link to www.EssentialMessage.com.
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