Pricing

Articles by Lynn SwayzePricing

What High Ticket Gurus Don’t Tell You About Pricing. (But I Will)

freddie-collins-309833-unsplashPhoto by Freddie Collins on Unsplash
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If you’ve followed marketing consultants for any length of time, you’ve probably run across the numerous high ticket offer gurus out there.

At this point, almost everyone has jumped onto the “high ticket or bust” mantra.

 

You know, the ones who say that:

👉 Low ticket offers, or ascension marketing, is “dead”

👉 Low ticket customers don’t have “skin in the game”

👉 You can’t build a business using multiple product lines

 

And frankly, it’s easy to see why this is so damn popular.

 

🔥 For one, it’s profitable to sell to those who can afford a high ticket price…

🔥 And second, it’s nice to only spend your time with those who’ll treat you well…

🔥 And it’s great to work with those who are ready to implement…

 

But most of all, it’s much easier to run a business off a single core offer (or group program) than it is to customize projects for each client.

Unfortunately, there’s a catch to “just price higher” and it’s one the high ticket gurus don’t mention very often.

Changing only your pricing, without also changing THIS (which I’ll reveal in a moment), is guaranteeing you’ll get even fewer sales than you did before.

Which is why you’d be wise to keep reading and then take heed to what I’m going to tell you today.

You see, all pricing exists in what I call the “Pricing Goldilocks Zone”.

👉  Price to little for the person you’re targeting, and they won’t buy.

👉 Price too high for the person you’re targeting, and they won’t buy.

There’s a finite range you’re working with.

So if your product sold like hotcakes at $500, but then didn’t sell at all at $2500… you’ve stepped out of the zone.

Or if you usually sell $15,000 packages and couldn’t get a soul to nab your discounted offer… you’re also stepping out of the zone.

But wait, there’s more. 🙂

The REAL TRUTH is that this “pricing happy area” is based on eleven unique factors. (That’s the “thing” I mentioned earlier.)

And like planets in a heroic journey, each of these factors has to be in complete alignment in order for your marketing campaigns and offers to truly work.

Thankfully for you, I lay them all out in detail in my soon-to-be-released book, The Eleven Marketing Factors.

Interested enough to be first in line to get your copy? (And maybe even be one of 15 who’ll get a FREE copy?)

Opt in to the insider’s list by sending me an email at copywriter@lynnswayze.com. I’ll personally reach out when it’s ready… AND I’ll rush the condensed 3-page version as a thank you for being so awesome.

Price to Win: Why Price Objections Are Never About the Price….

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Have you ever heard the following from a customer…?

I can’t afford this.
Your [product/service] is out of budget.
You are too expensive.
I’m going to go with a cheaper option.
If you’ve seen or heard any of these, then this post is for you.
Here are the sobering, heart-stopping truths about price psychology…

Truth #1: Price issues are never about price.

When I first started freelancing, I had a hard time selling myself. I kept getting caught up in the usual things that tripped me up… namely, I kept focusing on me and my skills, my experience, my background.
Thing is… no one cares about that. No one cares about me personally. They don’t care how I do my copywriting, or what I used to train for it, or any of that stuff.
They don’t care about the technology.
They don’t care about the tools you or I use.
They don’t even care about the superiority of a method.

Your customers only care about how wonderful their life will be once their problem is solved.

The only thing your customer wants to be sold on is how great their life will be post-solution. They don’t want to know how you did it, really. Even if they’re buying a how-to guide, they don’t want to hear you talk about how you produced that lead magnet using a voice-to-speech software and then published it via a premier publishing company and then shipped it via Samcart. They don’t even care if it’s 30 pages or 150. They want to know how well whatever it is you’re offering will tie into their results.
There are three things you must prove:

  1. You are trustworthy
  2. You understand their problem exactly
  3. Your service / your product can solve their problem better (read: faster, more ROI, less work) than doing nothing, buying from a competitor, or doing it themselves

So if your entire pitch was about you… 
…how you would technically execute the solution
…your years of experience or certifications
…how much passion you have about the job
Instead of about your prospect’s end result…
…the kind of life he will live using your product or service
…how easy he would solve his problem using your service (as shown through testimonials)
Then you are likely losing sales.
 

Truth #2: There are three reasons people use price as an excuse

There are only three reasons that people have when they use price as an excuse.

Reason 1: They cannot actually afford your service.

Sometimes, people will look into your service because they do have a problem, but they’re still in research mode.
They don’t know anything about you or your price or what you do.
Sometimes they’re just looking.
They may not be ready to buy. So if they say they can’t afford it…maybe they literally cannot afford it.
Or maybe, they’re not your ideal buyer.
If you’ve built out a buyer persona and you’re targeting a specific customer, then your price will fit that buyer persona. By definition, a person who cannot afford your service is not your ideal buyer. Period.
Stay top of mind with this person (through retargeting, lower-price hands off products, and regular email marketing) but DO NOT lower your price because then you’re lowering your value.
They will not value you more because you gave them a discount.
Therefore, do not lower your price to win a sale.
If you really think this project or customer is a good fit, the best thing you can do is to continue to offer proof.
Offer hope that will get them thinking about their life after hiring you. Plant that seed.
Let them see your product as a sure investment in their future.
So let’s say someone cannot afford a product, but you know that they will make the money back quickly. If you can absolutely guarantee that they’ll make money, make sure that you’re reducing their risk so it’s a no-brainer that they will no matter what make that money back very, very quickly. Make sure you’ve highlighted your guarantee. Offer them payment plans.
But don’t ever, ever reduce your value by discounting.

Reason 2:  They do not value your service or the end result.

Some prospects want results without investing anything. They expect the moon but don’t respect your time or expertise.
These prospects haven’t done their research about what you do or how you help.
They don’t know how much work it takes to become an expert in [whatever you do] like you have.
They don’t know (or care) how long it takes you to do what you do.
And they certainly don’t want to invest in their own end result.
So they want to 10X their income but don’t want to put in the 10% it’d take up front?
In my mind I’m pretty sure they don’t want it bad enough.
Let’s take a look at my own story, shall we?
So far I’ve invested $25,000+ in my copywriting training, in website building, books, etc. I want to be a full-time copywriter that makes millions for my clients more than I’ve ever wanted anything in my whole freakin’ life. Is $25K worth the seven figures I’ll make? Hell freakin’ yes.
Your prospects should be the same way. If they want the moon, they better be willing to pay for a rocket ship.
If you see these prospects…RUN.
These types of clients and customers are terrible.
They…

  • Will question you constantly
  • Will redo what you’ve done or disrespect your time and effort
  • Don’t actually know what they’re talking about but will talk down to you anyway
  • Will ask for refunds unnecessarily
  • Will complain constantly about the very things others gush about
  • Won’t recommend you to others or provide a referral

The best thing to do here is not sign them up.
And if you can, figure out what attracted them in the first place and disqualify them faster and earlier in the sales process.

Reason 3: You have not proven how what you do ties into their results and how it’s worth what you charge.

The good thing about reason number three is that it’s in your control. Unlike the other ones which rely on your prospect, this one you can fix.
So if you’ve built a buyer persona and know your prospect well…. You shouldn’t have this problem.
If prospects who have the budget and value the outcome are not choosing you it’s because you haven’t sold yourself well.
What do you do?
 Go back through all of your sales materials, your website, and your proposal and pull out every selfish, I-focused bit. Pull out all the feature-only content and rewrite it so that every “feature” has a so what attached to it.
Because remember, people buy for emotional reasons and justify with logic.
 Honestly, this is why copywriting is so freaking hard and is so expensive. Copywriting which pulls the emotional strings and sells without turning someone off is very, very difficult.

Truth #3: Price is a marketing strategy, so use it like one

Your pricing tells the world more than you think. It tells the world what you think of yourself. And it tells the world who you help.

First, pricing tells the world what you think of yourself

If you believe actual core that what you do is valuable and will benefit your customer then it is your obligation to sell it and if you believe that what you do is valuable and you will charge a price that is commiserate with that value when you charge to low you’re saying that you don’t believe that it’s any good.

Second, your price tells the world what you think of money.

If you’ve never made more than $1000 a month in your entire life, you’re going to feel shame selling a product or service for $1500 or $3000 or $10,000. Have you only made $250,000 as an entrepreneur? You’d likely choke at pitching a $350K project.
Your price reflects your own inner barriers if you let it.
This is why most of the top names in the industry raised prices incrementally….
…and also why each of them will recommend mindset books such as “Think and Grow Rich” and what-not to new followers.
Your mindset is everything.
Pricing fails happen when you get stuck on yourself.
Most people price to please themselves instead of the prospect.
Let’s say you sell to enterprise customers:
Do you think a company like Microsoft or Dell is going to take you seriously when you charge $150 per white paper…. Instead of the $1500-$7000 the industry charges?
Or $15 per hour to consult on business marketing?
The answer, of course, is no.
Your client knows that if you really understood the market….
and really understood the amount of work it took to produce a white paper….
And you really knew what a good white paper could do for a company’s lead generation efforts…
That you’d charge a good rate for it.
While you personally might not be able to afford to hire someone at $3000 to write a lead magnet, it doesn’t mean that your prospect can’t.
By focusing on you and your limitations instead of who your prospect is, what their budget is, and what their expectations are, you are missing out.
Your pricing must reflect the your ideal buyer’s expections.
Note, that you won’t meet everyone’s expectations. You shouldn’t!
Your goal is to sell someone very, very specific buyer a very specific outcome. That outcome… that happiness… has a price tag.
Find it, prove it, and then own it.
Remember, your price is not about you.

Third, your price tells the world who you help.

Let’s go back to the example of Microsoft. If you are a white paper writer, your market is pretty wide. Companies of all sizes need white papers written:

  • Small startups just barely launched
  • Enterprise IT companies who make millions in revenue
  • Software Development firms who’ve been in business for 25 years
  • Etc…

Now, if you price at $10,000 white paper you are essentially saying that you only work with clients who have a big budget and who get big revenue out of the lead magnet that you generate. You’re also saying that you’ll only work with clients who deeply value and need what you produce.
See how that works? It’s not about how hard or easy it is for you to write it. It’s about the results and how your customers perceive you.
Your price should be one way that you disqualify bad leads so you can qualify good ones.
Your price is a marketing strategy. Use it as such.

Articles by Lynn SwayzePricing

Why I Don't Ever Recommend Hourly Billing

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Table of Contents:
I. Why do we engage in hourly billing?
II. Why don’t big names engage in hourly billing?
III. What’s the risk of hourly billing?
IV. Price Anchoring
V. How to Sell Using Price Anchoring (Quick 3 Steps)
VI. Conclusion & Resources


Why do we engage in hourly billing?

Tell me: What do all the “gurus” say you should focus on when you go about pricing your services? They talk about pricing per hour.
It’s not your fault. You believe it because when you started working, you were paid per hour.
A “job” = exchange of hours for money.
So then when we go out and start software consulting companies, marketing consulting companies, freelance businesses, etc.,…. we think about hours. Even when many bill “projects”, they still compute the price based on the # of hours it’d take and charge that.
Example: 3 x $100 an hour = $300 for a logo
Nooooooo…….. 

Why don’t the big names engage in hourly billing?

Look… there are consultants charging $50-100 an hour and there are consultants charging tens of thousands per day. Don’t believe me? According to my copy of Dan Kennedy’s Magnetic Marketing*, Dan charges something like $19,000+ per day to fix their marketing and build a direct mail funnel.
Why don’t they engage in hourly billing? They don’t because they would never get as affluent as they are charging hourly rates. I mean, some of these guys charge tens of thousands just to speak at an event. How do you think it would sound if they actually talked to people about what they made per hour?

What’s the Risk of Hourly Billing?

There are three risks associated with hourly billing: Commoditization, Profit Loss, and Inefficiency
Commoditization
The thing is, when you charge by the hour, you’ve essentially made yourself a commodity. A commodity is something that’s just like everything else. So when you say, “I’m a consultant who does X and charges Y!” Well, your client is only thinking about the rate. They’re not thinking about why you’re different or the results you’re going to bring compared to what anyone else can bring them. They’re only thinking about the rate. So they’re going to compare you to the next person who does X but charges Z, and they’re going to pick the cheapest one. Or, they’ll go with you until they decide they don’t want to pay your fee anymore.
Profit Loss
And then there’s the profitability ceiling…
Here’s an example where hourly billing goes wrong as applied to profitability:
Let’s say that you are one of the tens of thousands of IT consulting firms who charges between $100-$150 an hour to do IT stuff. (Software development, network infrastructure, whatever.) Now, when it was just you there was a lot of money to be made. You were bringing in 200K a year and had negligible business overhead (let’s say $12K a year for office space and training and such.) Great.
But you wanted to make more money. How did you do that? Well, you got more contracts at $100-$150 an hour, but you outsourced some of the work for $50 an hour. So now you have people underneath you making $100K a year and you pocketed the remainder.
The problem? As you hire people, you expenses go up and your profits go down. Now you have to hire people to do all of the business stuff, like accounting and sales and HR.
And the only way to make more money? Take on more contracts and hire more people. You can’t charge more, because that $100-$150K is the market rate for what you do. Your clients know that what you do is a commodity and can and will go elsewhere if your rate is too unjustifiable. So you just keep taking on more clients, hoping that eventually your costs will stabilize. Or maybe you pay people less, taking on more junior employees. Or maybe you make your employees work more while pocketing the rest.
Either way, it’s a quick train to burnout land.

In short: your profitability has reached its ceiling. Congratulations.

via GIPHY
Instead, what this company (and I swear there are tens of thousands out there like that fictional one I described) should do is focus on the end result they’re creating and point pricing to that. Instead of making only $200K for a year’s worth of work, they could anchor at $250K… $350K… $450K… and actually make a profit that doesn’t revolve around billing employees at 4x what they’re actually getting paid.
Efficiency
When you know that you have 10 hours to do a job and you’ll only get paid if you sit there for 10 hours to do it, do you think there’s any incentive to work faster or get better at what you do? No. It puts you at a moral dilemma. If you weren’t paid by the hour, you could buy tools or do things in such a way that you get your client’s work done faster and better. Instead, you are tied to hours because otherwise you can’t pay the bills. So will you buy a tool that will do the job better, or get the job done quickly so the client can reap the rewards quickly?
The answer is no, you don’t. Instead use up the hours you’re allotted because that’s the only way you make money.
There are only three ways to make money at that point:

  1. Charge only what time you spent, but over time be forced to take on more and more clients once you’ve reached the per-hour ceiling. (You become more efficient so your per-hour becomes less profitable.)
  2. Charge what was quoted, whether you actually used all that time or not. (Cheating and lying to your client – that’s bad mojo.)
  3. Take all the time allotted to do the job, and never break away from the working-all-the-time wheelhouse you wanted to get away from in the first place. (At this point, you might as well go back to your j-o-b.)

Instead of all of that drama, you could just price according to the project’s value, do the job in the time it takes, and deliver value quickly so your client can reap the rewards. No killing yourself, cheating yourself or your client, or being inefficient. Just work you want to do at a rate that pays your bills.
Sounds good, right? Then let’s look at price anchoring and how it affects your billing.

FREE course -> “Charge What You’re Worth” by Brennan Dunn

Price Anchoring

Price anchoring is the idea that the first piece of information you receive about something will create a bias that colors the rest of your experience. This is why it’s so hard to change your prices with existing clients, and why you have to anchor it to something else (e.g., your posted rates are now significantly higher than they’re paying, and you don’t want them to feel like they’re getting second-rate work from you because they’re paying less. Etc). 

How to Sell Using Price Anchoring:

Look at my previous post on pricing for more details, but here’s the shortcut version:

  1. Find out what their most painful problem is
  2. Discover and discuss what that most painful problem costs them or is worth
  3. Talk about your pricing in relation to solving that problem

The best way to achieve this is to price per project. What value are you giving in exchange for your fees?

Conclusion

Summary:

  1. Hourly billing reduces your total income and makes you a commodity
  2. Price according to value, not to yourself or market rates
  3. Use Price Anchoring to your advantage

I want to add something here: Something magical happens in your head when you stop thinking about hours. The first is that you become more efficient. The second is that you stop working so darn  much and you stop sweating it. If you’re bringing the value and end result you promised your consultants, then you’re doing your job. Who cares if it only takes you 20 hours? That’s your business. And if it takes you a ridiculous amount of time to do a job? Well, that’s your business (/problem) also.
The results are what you’re promising and what your clients pay for. Anything else is just a golden handcuff and a focus on the wrong thing (e.g., labor instead of the end result).
You want both you and the client to be on the same page and focused on getting a very specific end result. 
Got it?
Now go thee forth and make more money!

via GIPHY

If you found this post helpful, you should get on my mailing list. And please… share this with someone who needs kick in their pricing booty.
Useful Resources:


* this is an affiliate link. Just do some Google searching for the title if you’d rather those pennies stay in Amazon’s/whoever’s pockets instead.

How to Figure Out What You Should Charge

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Table of Contents:
I. Why is Pricing So Hard?
II. Pricing is all Mindset
III. It’s Not Your Fault
IV. Price Anchoring
V. How to Sell Using Price Anchoring (Quick 3 Steps)
VI. Conclusion & Resources


 

Why is Pricing so Hard?

One of the most burning questions I had when I first got started in consulting was, “How much do I charge?!” I would go into cold sweats every time I thought about raising my rates to even close to what I knew I could charge.
Maybe you’re like I was. If you keep asking the same thing, you’re not alone. So many copywriters, consultants, and even service providers I meet ask the same thing. It’s a difficult thing to price correctly, and the reason is because you’re thinking about it all wrong.

Pricing is All Mindset

Pricing really is more art than science. There really aren’t any magic numbers that work for every person, market, or problem. Let’s look at the consulting realm:
There are consultants charging $50-100 an hour and there are consultants charging tens of thousands per day. Don’t believe me? According to my copy of Dan Kennedy’s Magnetic Marketing*, Dan charges something like $19,000+ per day to fix their marketing and build a direct mail funnel. Why such variability in what is essentially the same service?
The truth is, making more money as a consultant is entirely a combination of mindset + price anchoring + confidence. And the confidence in your rates is probably the most important of all of them.

It’s Not Your Fault

Look, it’s not your fault. What do all the “gurus” say when they talk about pricing your services? They say something like this:

“Price what you’re worth!”

But “Price What You’re Worth” leads to a line of thinking that goes like this:

  1. Last time I worked for a client/had a job, I made $X per Hour
  2. In order to pay my bills, I need $Y per Hour.
  3. The other guys I’m competing with charge $Z per hour, therefore I have to charge Z.
  4. I can’t get work quickly despite advertising my rates, so I must be too high. I’m going to charge closer to $X.

Yiiiiiiiikes people. This is bad. This is why we get that race to the bottom that every freelancer warns about. It’s bad mojo and it’s killing your business.
The truth is, there’s a better mantra you have to use when you price. Are you ready?

It’s simple: “IT’S NOT ABOUT YOU.” 

Seriously, stop thinking about you, your worth, your skills, your experience. Your prospects don’t actually care about that beyond the value of a story, which is what it takes to get them interested in you in the first place. Otherwise, it’s meaningless to most prospects, who by the way don’t know you from Scott down the street.
Instead, focus on them. Their problems, their goals, their pain points, their awareness level. Heck, even their budget, which is likely a h-e-double hockeysticks level above your own  meager need-per-month.
Have you ever read the book, “How to Win Friends and Influence People?”* It’s a great book, by the way, and one you should grab immediately. The gist of it is pretty simple, and it goes like this: In order to be interesting, you have to be interested.
That is, people enjoy talking about themselves. They enjoy it so much that they’ll think you’re the greatest person since sliced bread if you’ll let them ramble. People are craving to be heard and understood. You taking a few minutes out of your day to do it will mean the world to someone else. And that’s how you create relationships.
So when you’re marketing, you had better be talking about them. Don’t talk about yourself. Talk about the problem that you solve. Which brings me to the next point: price anchoring.

Price Anchoring

Price anchoring is the idea that the first piece of information you receive about something will create a bias that colors the rest of your experience. This is why it’s so hard to change your prices with existing clients, and why you have to anchor it to something else (e.g., your posted rates are now significantly higher than they’re paying, and you don’t want them to feel like they’re getting second-rate work from you because they’re paying less. Etc). 
P.S. Eric Yu talks about the three benefits of price anchoring. I highly recommend you hop on over there when you finish with this post.

How to Sell Using Price Anchoring:

  1. Find out what their most painful problem is
  2. Discover and discuss what that most painful problem costs them or is worth
  3. Talk about your pricing in relation to solving that problem

For example: as of July 2016, I charge $5000 per month for my consulting and copywriting. It’s a terribly low number for the results I bring, but we all have to start somewhere, right? When I sell my services, I always anchor it on the goal revenue I’m going to bring them as a result of working with me. I point to what I’ve done for other clients (usually 3-4X my retainer) as proof of the ROI.
Then I point to what else they could spend their money on, which wouldn’t get them the same ROI. E.g., hiring an expensive “graphic-designer-slash-marketer” at $60K, who doesn’t know direct response like I do. Or a six figure CMO who doesn’t guarantee her work like I do. When I’m telling a customer (and looking them square in the eye) and guaranteeing that I’ll bring them from $100,000 annually to $250,000+ annually or I’ll work for free until I do
well… that $60K in exchange for “guaranteed” $150K+ they didn’t know how to get starts looking pretty cheap, doesn’t it?
This is why your landing pages, sales letters, etc have to have benefits. This is why any copywriter you hire will rip out your “features” and “years of experience” wording right away. This is why the big time consultants barely talk about themselves.

Here’s a free Freelance Rate Calculator from Brennan Dunn

Example: Look at Ramit Sethi’s about page – everything he talks about  relates back to solving your financial problems. He only shares enough to prove that he’s just like you and that he understands what you’re going through.

Conclusion

Summary:

  1. Pricing is hard because you’ve been misled by everyone
  2. Price according to value, not to yourself or market rates
  3. Use Price Anchoring to your advantage

Now go thee forth and make more money!

via GIPHY

If you found this post helpful, you should get on my mailing list. And please… share this with someone who needs kick in their pricing booty.
Useful Resources:


* this is an affiliate link. Just do some Google searching for the title if you’d rather those pennies stay in Amazon’s/whoever’s pockets instead.

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