Have you ever walked through a store, saw a display, and thought, “Wow! Someone would actually pay that much for that?” Of course you have. We all have. It is the internal pricing game we all play called …
“How Much Would You Pay?”
Unless you’re the only option in town, pricing is a game of finding that sweet spot in price that matches the answer most people would pay for your product or service. The better you determine that price, the better your sales and profits.
And before you think that lowering the price is the only way to go, remember that some people will look at a really low price and think, “What must be wrong with it?” You can cheapen the perception of your products or services by pricing them too low.
I knew a guy who sang at events. He was getting tired of the gigs. He asked me if I thought it was smart of him to double his price so that he would get fewer gigs and still make around the same amount of money. I told him to expect the opposite to happen. I was right.
His bookings doubled with the doubling of his price because people figured if he charged that much he must be really good. In other words, his earlier price was too low. Fortunately, the extra bookings along with the higher price re-energized his career.
I call this concept Perceived Worth. It is something we all do when shopping. We look at an item and determine its Perceived Worth (PW). Then we look at the price. If the price equals the PW and we’re in the market to buy it, we place it in the cart. If it is too high or too low, we hesitate. We won’t make the purchase until we can justify the price discrepancy.
If we don’t need the product, our PW for that item is zero, and we move on, but we’ll still play the Pricing Game to see if what we would expect to pay matches the price.
I NEED YOUR HELP
I tell you this because I would like your help on the PW of a service I have been asked to perform.
You may recall a couple weeks ago I gave you five Self-Diagnosis Tools to help you take a critical look at your business. Those tools were:
I was asked what it would cost to hire me to come to a business for three days to perform those five diagnostics.
I would like to know what you think the Perceived Worth would be to have someone like me do a complete diagnostic evaluation of your business using those five criteria.
I would visit your business for three days. I would need access to your financials (Balance Sheet and Profit & Loss plus your Average Inventory at Cost). I would need to see what Advertising you have done (and any contracts you’ve signed for advertising). And I would need a couple hours of your time over the three days to answer questions here and there.
At the end I would write up an evaluation showing where you were doing well, where you needed attention, and recommendations for what to work on next, including a priority of where to put your resources first.
Two Questions:
- What would you EXPECT to pay for such a service?
- What would you be WILLING to pay for such a service?
I am curious to see your responses. You may send them to me via email or PM, leave a comment on this blog, or comment on Twitter, LinkedIn, or Facebook.
-Phil Wrzesinski
www.PhilsForum.com
PS Even if you don’t own a business I am curious to see your response. I am trying to gauge whether there is a viable market for this service or not. I’d love to know what people perceive such a service to be worth. There are no wrong answers.