In this clip we're going to talk about pricing secrets for your product or
service. But before we do, don't forget to follow us.
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So let's talk about pricing.
So pricing first and foremost is the number one lever you can pull when it comes
to growing your business faster, right?
If you price your product at $99 versus $1 million, what's better to $1 million?
Probably right on. The question is, well,
who's going to actually pay $2 million? Um,
so you have to think about your audience first. So in terms of pricing secrets,
the first thing I want to say is this, I would almost never charge hourly.
If you are going to charge our leads, set your, your, your hourly rate,
like really, really high, maybe $5,000 an hour, $10,000. I'm just, that's,
that's a really high amount because at the end of the day it's hard to scale
when you are just charging by the hour. If you're by yourself,
if you have a team, sure you can scale, you can delegate things to your team.
Sure. Right? Um, but for yourself,
you probably want to make sure that you are charging, um,
not on hourly,
but maybe you're charging on like an annual contract or a monthly contract or
ideally you're charging on value, right? So, you know,
if you help a company make $1 million and you know, they pay you, uh, uh,
let's say they pay you $100,000, so 10% of that is that fair? Sure. Right?
Most people are gonna say that. So if you think about it that way,
that's going to help you. Um, in terms of pricing and what I can say is this,
in the past people, it'd be like, how much do you charge per hour?
The problem with charging per hour is you're getting scrutinized for
every single hour. Um, and you know, they're, they're looking at you as like,
Oh, you know, you didn't do that much for this hour.
You didn't do that much for this hour. Um, they're trucking you on time as well.
It almost feels like, it feels like you're kind of trapped. Right?
So that's how I felt in the past. And that's why I think I'm,
you've got to get away from charging a, from the hourly game.
So the book I would recommend is called, um,
win without pitching and that allows you to charge based on value.
If you can get them in the mindset of saying, hey, you know what,
I want to work with you for the long term. Um, I don't want to just do, um,
you know, I want our incentives to be aligned.
So if we do a really good job for you, then at the end of the day, you know,
you pay as a percentage of it or maybe there's accelerators,
maybe they pay you $5,000 a month and then, um, if you hit a certain goal,
maybe they give you an additional 10% bonus, something like that.
You can get really creative with the deals that you're doing. Um,
and you don't want to,
you don't want to just kind of set your pricing based on how the competitors
doing it and you don't want to do that. Don't copy your competitors.
I remember back in the day, you know,
all these companies would just copy other companies charging $49 a month or $99
a month from on the software as a service world.
And you find out that those prices are not sustainable. At the end of the day,
if you charge based on value,
it's good for both sides and then you're gonna work harder because you're going
to be paid a a much harder or much higher amount if you don't pitch it based on
value, you're going to be seen as a commodity versus everybody else.
Here's another secret for you. One of the reasons why I'm, you know,
I'm so focused on creating content and you know,
doing the market school podcast, doing um, these youtube videos or you know,
even writing content or speaking at conferences as well,
is to build a brand to build credibility.
Because what happens at the end of the day,
if I think about the business that we get, you know,
50% comes from the content that we, 35% comes from networking or speaking.
And then, you know, we have 15% that comes from podcast.
So almost all of that is coming from inbound that we're creating, right? Um, we,
we don't do much outbound. In fact,
we get so much traffic that we've weaponized that traffic to make it go, um,
you know,
become our outbound machine and building a brand for yourself that's very
defensible. That is your moat. Um,
and if you think about the Oprah's of the world,
do you think about the Tony Robbins of the world?
You think about the Coby Brian's or the Michael Jordans of the world.
They have built very big brands and they're very good at what they did
initially. And then they built businesses around that because they have a brand.
People like to do business with people where people like to do business with the
logo, like,
like they want to do business with a brand and that's how you can command
premium price. That's how you can defend yourself. Because you know,
when people come to, he's like,
why should I pay you that much when everyone else is charging this much? Sure,
the other people might be better,
but they want to work with a brand that they trust, a brand that they know.
So that's another pricing secret for you.
You can command a premium if you create a brand. If I, if you think about this,
uh, here's a, here's an example for you. The power of brand. Well, Shaq,
so Shaq, basketball player played for the Lakers,
played for a bunch of other teams,
but what he did was he started seeing a bunch of companies that he liked. So,
uh, ring the doorbell company. Um, he reached out to the CEO and said, hey look,
I'd like to be your spokesperson and I like to have some equity in the company.
And that's, that's, that's power brand. And then, uh,
ring actually sold for over a billion dollars to Amazon.
And that's the power of brand. And then you think about Michael Jordan,
the basketball, greatest basketball player of all time. Guess what?
He owns the Charlotte bobcats. Now that is again the power of brand,
the power of relationships, right? You think about, uh,
the clippers who owns the clipper. Steve Balmer from,
from Microsoft used to be CEO of Microsoft. Um, I'm sure you know the,
the power of, you know, a bunch of other owners wanted to bid,
but he got in there because you know, he's Steve Bomber and he surely his name,
his Brad had some pull around that and is able to get him to the things that you
want. Give you another example, Warren Buffet.
He's able to do deals very creatively because people know him to be a guide that
a guy you can trust. I'm a guy that has integrity, right?
That is his brand and people come to us all the time. Like, Eric,
I love this stuff that you're talking about. I love the way you approach things.
Like I want to work with you.
And that's the tower brand because people come to you and eventually,
because I'm putting all these deposits, like making this, this, this cotton,
right now I'm putting deposits in.
Eventually I'm going to be able to withdraw all those, the, those, um, you know,
those deposits, um, at the end of the day and you know,
I'll be able to cash in on them. Just thinking about that long term,
like I mentioned earlier, you think, you think long term, um,
when you think about like when you work with a customer,
it's not just I'm going to work with you on a monthly basis or hourly basis.
I'm going to try to work with you on value and they're trying to work with you
for a couple of years and if you can get them to sign an annual contract,
here's the other thing, your cash flows are going to be protected more. Okay.
And then it's much more predictable that way. Cause everyone,
if everyone comes in on different contracts,
your cash flow is not that predictable.
And all of a sudden like let's say a bunch of people leave you and you're going
to have to end up either firing a couple of people or reduce your expenses
significantly. So that's the other problem.
Like if you don't protect yourself from a pricing standpoint are going to be in
trouble.
The other thing I'll add to that is every single year you should be reevaluating
your pricing. Like, you know,
should you be increasing your pricing for your customers?
A lot of SAS companies offer as a service, companies do that.
A lot of 'em services company to do that too because their expenses have
increased. They've added a lot of overhead.
So they might take their prices from $500 a month to $750 a month,
$2,000 the next year it gets more and more expensive.
What do you think the greatest law firms in the world are so expensive?
It's because, you know, as they've gotten more and more popular,
more and more demand,
they have to increase their prices because to kind of match that, right? Their,
their, their, um, their ability to fulfill is, is kind of diminished.
So that increased their prices, right? Obviously if they had no clients,
they had to decrease their prices.
But that's what you're able to do when you build yourself to a certain level.
And you just got to constantly reevaluate your prices. Cause if you don't,
you're going to be left behind.
There are a couple of resources I want to share with you as well.
So earlier we talked about the book win without pitching and um,
there's a company called ProfitWell. Um, Patrick Campbell. He has, um,
creates a lot of content around pricing. Um, and I think it's really smart,
you know, be being, so for them,
they printed a brand around teaching people how to price the best.
And that's all they do. That's their brand. They give software away for free.
That is their brand.
That's how they go about doing things and they build everything a inbound at
the end of the day.
So those are just a couple of things around pricing in general.
Those are kind of pricing secrets. The only thing I'll say too is, you know,
around pricing, um, the more you can bundle things together, the better. Right?
So instead of saying you're just gonna get into software thing, if you say,
I'm gonna give you the software on to give you this other software and I'm going
to give you some kind of supporting things around that,
you can bundle it together to make it as this new offer.
So constantly think about tweaking your offer, right? In marketing, you know,
you might give people an Ebook, you might give people like, um,
maybe like a video or something like that.
But if you could bundle like an offer together,
that's going to be much more enticing for people to come in.
That's going to help you grow for the term. All right?
So I do want to share a story around a pricing mistake that I made in the past.
And so here's the pricing story for me. What I did, um,
the early days when I took over single grain was I looked at another agency.
They're charging $1,000 a month for services that we were offering.
So what I did was I was like, oh yeah, we can charge a little more than that.
So I just,
I anchored at $1,000 cause I looked at other agencies that were charging around
that amount and I'm like, okay, we're going to do $1,500 a month.
And I thought like, I was the bomb, I was awesome.
And we picked up a bunch of clients but then they're all,
they're all like locked in at 1500 a month.
And then a year later I reevaluated my pricing and this is for our, our,
our paid media services. And we started charging 3,500 a month,
started charging $5,000 a month or a percentage of ad spends.
And people were okay with it.
Like you increase the prices and people are okay with it because they knew that
they were getting a lot of value from the service.
So that's basically what happened. And uh, from there, you know,
even to this day, we kind of hover around that range,
but I think we're even thinking about increasing the even more because we're
adding so much more value and we think we're different.
And we've also commanded brand presence too. So looking at this over the years,
I'm taking over a single grain.
I didn't have much of a brand at the time personally. Um,
now it's grown to like a, you know, a decent size. And then I'm also,
the work that we're doing now is so much more high level,
especially if we're working with like a SAS company or a like a like a big tech
company. We have a lot of those clients, right?
We are able to command higher prices because we specialize in that area and we
have a brand in that area. And um, also we, we,
instead of doing month to month contracts, we now do annual contracts.
So all this is,
all these learnings have been condensed into kind of where we are now.
And that's allowed us to continue to scale and to continue to be the company
that we want to be. So pricing, again to reiterate, um,
I've given you a lot of stories. Give me a lot of tips to do, but, um,
it is the biggest lever that you can pull and I recommend that you spend
at least a couple of hours a year thinking about it,
probably even a little more than that. Um,
because it is gonna affect your bottom line and how quickly you're gonna be able
to grow. So don't stop here on your pricing learnings.
I have another video for you on something similar. Check it out, check it out.
And also don't forget to rate, review, subscribe,
and leave a comment below if you agree, disagree with me.
What are your thoughts are around pricing. We'll see you tomorrow.