<aside> <img src="/icons/cash_purple.svg" alt="/icons/cash_purple.svg" width="40px" /> Welcome to Pricing Your Offer

In this video, we’ll show you how to price your offer. You’ll see pricing models that work in difference niches, how to increase your prices over time and pricing strategies you can use to generate the highest possible profits. Let’s get into it.

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Pricing Theory 💵

Price is one of the biggest levers you can pull to increase revenue and profit and one of the easiest levers to pull as well, which is why it’s so important to focus on.

Increasing price requires a tiny input (i.e. very little work) that produces a massive output (I’ve seen instances where it increased revenue by 30%+ instantly).

When Warren Buffett bought See’s Candies, the only thing he chose to control was the pricing—and he’s increased prices for 50 years in a row (as much as 17% in one year).

That’s how important pricing is in a business.

The key thing to understand is that demand is not linear (economics 101).

Just because you increase price it does NOT mean that demand will drop in a corresponding amount. You could double prices and only see a 20% decrease in demand (at times even less).

For example:

• Price A: $5,000 | Close Rate: 20%
• Price B: $10,000 | Close Rate: 16%

In this instance, if we take 1,000 sales calls we will close 200 sales at Price A (resulting in $1 million in cash collected). However in the second scenario, if we took 1,000 sales calls we would close 160 sales at the new Price B (resulting in $1.6 million in cash collected).

We did, let’s say, one day of work to train our sales reps on the new pricing and made $600,000 in return. Not bad for a day’s work, right?

I have also seen instances where increasing price actually increased conversion rate!

For example, I saw an Amazon FBA webinar where the price was increased from $997 to $1,997 and the conversion rate on the webinar went from 2% to 3%.

The reason this happens is that price is a signal for quality and people assume that the higher the price the better the product and therefore will often be more interested in buying than at a lower price. This is how luxury brands generate demand.

This is an economic concept called Veblen Goods. With strong marketing, you can easily fall into this category and charge high prices.

Initial Pricing 🏁

When you’re setting the initial pricing your offer (the price when you first launch) you want to enter the market on the low end with a low-cost value proposition.

However, you MUST have a medium-term goal of being the most expensive and premium solution in your market by far, so that you can get an LTV advantage on your competitors.

A good process to do this is to:

1. Look at what your competitors are charging for their offers
2. Offer the same deliverables as they are for ~50% of the cost
3. OR solve a smaller problem than they are for ~20% of the cost

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IMPORTANT → You do NOT want to stay at this price for long. Being a “more for less” proposition is a bad long-term strategy. Your goal is to get some wins on the board and close clients quickly to get momentum.

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Over time, you want to figure out your unique advantage and charge a premium price.

For example, we entered our market at $3k and over time we will be increasing to $10k+ as we improve the product and get more results.

Over time, you should increase your prices as you:

1. Collect more results & testimonials