Just a few weeks ago Chris Lema released a book all about pricing called The Price is Right.
If you want a one sentence summary:
It’s a one day read with the knowledge that will help you change your business life long.
Want a second sentence?
I’d still feel I got value of the book at $79.99.
Pricing is hard
Pricing is hard I know it. I’ve been at this freelancing thing for years and I sometimes still have no freaking idea what I’m doing with my service pricing.
Yup that feels a bit scary.
While the book focuses more towards the product pricing models that are out there (one time vs subscription pricing…) there is a bunch of great advice for anyone looking to get a better handle on pricing.
Here are some key takeaways for me.
Anchor with stories
How much value does your product really bring. I said I’d have paid $79.99 for Chris’s book but how could I possibly justify that?
Better knowledge of pricing and being strategic will allow me to make hundreds more as I release products and get intentional about pricing segmentation.
So at $79.99 I can see easily that the book will help me make $1000’s extra.
Would you pay $100 to get $1000?
Segmentation
There is no one price that everyone will pay since everyone uses products differently.
Take Gravity Forms for example they have 3 pricing tiers.
- $39 for personal use
- $99 for business use
- $199 for developer use
Personal use lets you use it once on a site.
Business use gives you 3 sites.
Developer is unlimited.
Most of my clients purchase the personal license and are 100% well served by it since they only have one site.
A particularly ambitious client of mine with a few blogs has the business license.
I use Gravity Forms all the time and have the developer license. It saves me $199 worth of time a year just in not having to wrangle the keys to GF from my clients.
Want to learn more about segmentation Read The Price is Right.
Freemium doesn’t work for membership
Chris tells us a story about a business that went from $0 as an ‘intro’ price to $1. They saw a 30% drop in users.
That was 30% of people that valued the content so little that $1 was not worth it. Why on earth would you waste your support time and server bandwidth on people that have no intention of ever giving you any money?
That may sound a bit harsh. Heck I’m giving this away for free and I give away lots of free content. About 1% of you actually give me any money for the products I release.
So do I want to kick the other 99% off? Nope.
I’m just going to tailor my content and effort what that 1% wants and forget the rest of you. That 1% is the most engaged anyway and as I gain more readership 1% of 100,000 becomes 1000 people.
1000 people buying something from me in the future at my average price of $40 equals $40k. 1% is nothing to scoff at and it’s where I’m going to put my investment.
The 1% (okay maybe 10%) of your best clients is where you should put your biggest investment in with as well.
So that’s some key takeaways (and really some free content out of the book sorry Chris, sort of).
I encourage you to go get it and really dig in. It was absolutely worth the price.
photo credit: nan palmero via photopin cc