I recently heard a very intriguing story from Derek Halpern, marketing guru and founder of SocialTriggers.com. He was on the Foundr Magazine podcast with Nathan Chan and the last question Nathan asked was related to pricing. This is a topic of particular interest to me so it piqued my ears.
Derek told the story of how he loved his friend’s hair cut and thought it was one of the best haircuts he’s seen. Derek asked his friend…
“Hey, that’s a great haircut. Where’d you get it?”
His friend replied…
“Well, you know what? You’re right, it is a great haircut. But I gotta tell you, it’s not cheap.”
Derek had recently moved to New York (where everything is pricey), so he figured it was going to be like 50, 60 or 70 bucks.
Nope. His friend said…
THREE HUNDRED TEN DOLLARS! FOR A HAIRCUT?!!!
The moral of the story was simple.
Look at what you’re selling, look at what the market is paying for it, then make a strategic decision based on your objectives and the product/service your selling.
Price what you’re selling at what it’s worth. Don’t just compare your price on what everyone else is doing. Compare your price to the right people. If you’re a world class designer, don’t charge $1,000 for your design. Find out what other world-class designers are charging.
Derek also made the point to understand the value of what you’re selling. Why would/should people your product or service? What pain point are you helping them alleviate?
If you’ve ever heard Derek speak, you know he has a funny, “tell it like it is”, rough around the edges attitude. I strongly advise listening to the whole interview as they get into the power of email lists, why people are looking at social media incorrectly, and whether or not “content” is really king.[audio http://traffic.libsyn.com/foundrmag/FP025_Derek_Halpern.mp3]
Foundr Magazine has dozens of interviews (both audio and written) with the top minds in business (e.g. Richard Branson, Chris Brogan, Seth Godin, Mari Smith, Chris Guillbeau, Pat Flynn, Tim Ferris, and more). It’s a resource worth adding to your repertoire of education. Check them out at foundrmag.com.