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Essential 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.
The question that most businesses ask themselves is, "What price can my target group afford?"
The right question you should be asking yourself is, "What target group can afford my pricing?"
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 Essential 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 BEFORE PEOPLE!
Starting with your target group makes perfect sense when it’s time to develop compelling communications, and in fact I recommend the same thing in Insight #063.
But it’s the wrong place to start when you develop the foundational structure for your business. That’s because there’s a market for everything.
Don’t believe me? In some cultures people think monkey brains is a delicacy. Other people love the taste of chocolate-covered grasshoppers. And still others sit down to feast on donkey penis.
Whatever you have to dish up,
there's sure to be a market for it somewhere.What this means is that you set the price first, and then identify the target group who values it sufficiently highly 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.
Essentially yours
Who is Michel Neray and What's The Essential Message?
The Essential Message is about discovering your true differentiation and then learning how to communicate it in the most compelling way. But higher sales, greater alignment of sales and marketing and a stronger brand position aren't the only reasons why so many independent professionals, entrepreneurs and emerging companies rave about The Essential Message.
Clients also say that one of the biggest advantages of the Essential Message approach is how it helps them gain the confidence, momentum and resilience that can only come from being absolutely clear about their strengths and unique difference – as companies and as individuals.
The Essential Message was created by Michel Neray based on 25 years as an award-winning copywriter, an entrepreneur, a tradeshow pitchman and a senior sales and marketing executive. (He also rides motorcycles, does whitewater canoeing, and has his 2nd degree black belt in karate.)
For information about our corporate facilitation, copywriting and consulting services, or booking Michel to speak at your conference, please call 416 534-4766 or link to www.EssentialMessage.com.
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