how to price a product so I got a great
question for one of my YouTube viewers
Eduardo
love you guys and in order wrote in to
say hi Evan I have a question for you
what happens if you found the product or
service that people need as extremely
valuable but are having a hard time
deciding how much to charge people for
thanks Eduardo so this is a great
question and one that every entrepreneur
has to go through when you’re launching
your product your service and I’m going
to give you three tips a lot of people
will look at pricing based on your cost
right you look at will it cost me $50 to
make it so I’m going to sell it for $100
and make this margin it’s the wrong way
to look at it because you have to think
about the value first point is value a
customer cares about what value they’re
getting from it if you’re trying to sell
me something I don’t care that it cost
you 50 bucks I may only look at it as a
$40 product and that’s the maximum that
I’m going to be able to spend on it so
your cost doesn’t matter here for your
pricing your price you should look at
the value that you’re adding to your
customer how much value can you bring in
there the more value you’re going to add
the more money you’re going to make the
more you can charge for your product or
service okay business that one of the
most important rules is adding value you
want to make a lot of money quickly you
need to add a lot of value to your
customer quickly so think about how you
can add more value how you can make your
customers lives easier and what that
time savings is worth to them or what
the extra bonus that they get from using
your product or service is worth to them
then that’s how you figure what you’re
going to charge ok so think about value
added instead of cost based way of
pricing your product okay number two is
your audience you have to understand who
your audience is and what their budget
is and there’s two ways that companies
usually goes either going after low low
quantity but high price ticket or big
quantity and low price ticket so you
look at cars okay you have Ferrari you
have Honda they’re both selling cars but
they’re selling to different audience
their audience have different budgets
and so they sell different vehicles to
them and
it’s not just about a different price
point it’s a different car completely
right when you buy a Ferrari versus a
Honda Civic you’re getting a different
car okay it’s not the same car and they
understand who their audience is and
what their budget is so if you’re
selling to Ferrari those guys are
spending tons of money on it but they’re
getting still value for their dollars
right they’re they’re buying it because
they feel like they’re still getting
good value and then when you buy a Honda
Civic it’s a completely different
audience but the people buy a Honda
Civic they’re still feeling they’re
getting value for it so you’re pricing
that according the value but
understanding your target audience and
then you build your product or service
to kittu that market so you have to
understand as a company which direction
you’re going to go in do you want to
work with a few clients who are paying
you good money and that’s how you’re
going to grow your business or you want
to hit a ton of people mass-market this
thing and that reflects having a lower
price point for your product or service
number three is stage of business you
have to think about what stage of
business you’re at right now you a pure
startup or duty have a reputation of
being established because there is a
bias against start-up entrepreneurs
because it’s riskier it’s riskier
dealing with startups as a customer it’s
harder to deal with a start-up
entrepreneur than it is a more
established business why you look at so
I don’t know what you’re selling say
you’re selling machines or equipment if
I buy from you I want to make sure that
you’re still around in five years I need
someone who’s going to maintain my stuff
if my machine breaks down I want
something to come and fix it or give me
a replacement if I’m more than your Jif
starting you’re not going to be around
in five years then it makes it riskier
for me to buy from you say you’re
selling a service if you’re a consultant
as an example I want to look at well who
you work with the for what other
companies like me have you helped the
answer is nobody you’re just getting
started
then it’s risky for me right I’m
probably going to say no it’s harder for
me to get to that yes because you don’t
have the track record so matter what
you’re selling there is a bias against
the pure startups because you don’t have
that track record of experience it’s
riskier for me to work with you than
somebody else so typically you’ll find
that there’s a
a price reduction that comes with
startup entrepreneurs so you start by
having a lower price because you need to
get your name out there you need to get
a portfolio and you need to get some
traction some momentum to show that
everything you say works actually works
right so you have a lower price point
and then as you get more experienced as
you get better as you can add more value
and demonstrate that you can increase
your prices a big challenge though for a
lot of entrepreneurs is we stay stuck at
that low pricing too many entrepreneurs
underpriced themselves and what I want
you to do is think about how can you
start increasing your pricing okay
you’re adding a lot of value just not
charging for and test it test working
with a 10% increase and another 10%
increase and see where you’re starting
to get pushback from your customers
because a lot of times the customers who
can’t afford to pay that little boost in
revenue those are not your ideal
customers they’re not your best clients
are the ones who give you the the
hardest the hardest time they don’t work
for business to you they don’t
appreciate your value and you work to
make them happy and they’re never happy
and they’re not giving you a lot of
money
every entrepreneur almost can increase
their prices and it will help their
business so test it test and start
working with more ideal clients if
you’re in the brand-new startup stage
you don’t have anything launched yet
then fine
it may even be free just for you to get
some experience and build up a portfolio
and build up a client list get people
giving you testimonials but then start
increasing your prices don’t be afraid
to constantly check and test your
pricing and see where you can increase
it to the point where you’re getting
feedback from your customers saying hey
this is our limit one quick example so
part of what I do is I work with brands
I work with brands who are trying to
reach entrepreneurs or create content
for them help them with our marketing
campaigns the very first one I did they
said Evan we want you to write a 300
word blog post for our site we’ll pay
you 500 bucks to do it you can link back
to your site I’m like I get a link back
from a big site they’re gonna help
promote me and they’re going to pay me
500 bucks to do it I’m in why not but I
didn’t just do what they asked for
I didn’t just just write that 300 word
I wrote 1,500 words and I made a video
and I promoted it and did way more than
anybody else did that they hired and I
slowly started increasing my prices
because I was adding a lot more value so
wasn’t just tracking $500 now it’s
$2,500 you want me to write a blog post
to your site it’s $2,500 that’s what I
charge that’s where I’m getting some
some resistance now from clients that’s
where I’ve gotten to but I’ve increased
my prices five times I’m just talking a
small 10% increase five times increase
in the pricing because I added more
value and it continuously increased it
they went from 500 to 1,000 to 1,500 to
2,000 to 2,500 over the course of about
a year and a half by testing my prices
and I could still be that guy stuck at
500 bucks
where meanwhile could be charging 2,500
dollars and that’s where a lot of you
guys are you’re under pricing your
products so remember it pricing is
important remember to think about
charging based on value the value that
you’re adding think about your
demographic your target audience on the
chicken a four and what their budget is
and think about your stage of business
and if you’re just trying to attract
clients to get started or now if you’re
really trying to grow a big company
start making them serious revenues don’t
be afraid to test your pricing believe
so as you’re watching the video please
give it a thumbs up below let me know
what you think leave a comment
underneath asking a question like video
response underneath and if you like more
videos you want to see more like this
click on my face to subscribe to the
channel thank you so much I’ll see you
soon
question for one of my YouTube viewers
Eduardo
love you guys and in order wrote in to
say hi Evan I have a question for you
what happens if you found the product or
service that people need as extremely
valuable but are having a hard time
deciding how much to charge people for
thanks Eduardo so this is a great
question and one that every entrepreneur
has to go through when you’re launching
your product your service and I’m going
to give you three tips a lot of people
will look at pricing based on your cost
right you look at will it cost me $50 to
make it so I’m going to sell it for $100
and make this margin it’s the wrong way
to look at it because you have to think
about the value first point is value a
customer cares about what value they’re
getting from it if you’re trying to sell
me something I don’t care that it cost
you 50 bucks I may only look at it as a
$40 product and that’s the maximum that
I’m going to be able to spend on it so
your cost doesn’t matter here for your
pricing your price you should look at
the value that you’re adding to your
customer how much value can you bring in
there the more value you’re going to add
the more money you’re going to make the
more you can charge for your product or
service okay business that one of the
most important rules is adding value you
want to make a lot of money quickly you
need to add a lot of value to your
customer quickly so think about how you
can add more value how you can make your
customers lives easier and what that
time savings is worth to them or what
the extra bonus that they get from using
your product or service is worth to them
then that’s how you figure what you’re
going to charge ok so think about value
added instead of cost based way of
pricing your product okay number two is
your audience you have to understand who
your audience is and what their budget
is and there’s two ways that companies
usually goes either going after low low
quantity but high price ticket or big
quantity and low price ticket so you
look at cars okay you have Ferrari you
have Honda they’re both selling cars but
they’re selling to different audience
their audience have different budgets
and so they sell different vehicles to
them and
it’s not just about a different price
point it’s a different car completely
right when you buy a Ferrari versus a
Honda Civic you’re getting a different
car okay it’s not the same car and they
understand who their audience is and
what their budget is so if you’re
selling to Ferrari those guys are
spending tons of money on it but they’re
getting still value for their dollars
right they’re they’re buying it because
they feel like they’re still getting
good value and then when you buy a Honda
Civic it’s a completely different
audience but the people buy a Honda
Civic they’re still feeling they’re
getting value for it so you’re pricing
that according the value but
understanding your target audience and
then you build your product or service
to kittu that market so you have to
understand as a company which direction
you’re going to go in do you want to
work with a few clients who are paying
you good money and that’s how you’re
going to grow your business or you want
to hit a ton of people mass-market this
thing and that reflects having a lower
price point for your product or service
number three is stage of business you
have to think about what stage of
business you’re at right now you a pure
startup or duty have a reputation of
being established because there is a
bias against start-up entrepreneurs
because it’s riskier it’s riskier
dealing with startups as a customer it’s
harder to deal with a start-up
entrepreneur than it is a more
established business why you look at so
I don’t know what you’re selling say
you’re selling machines or equipment if
I buy from you I want to make sure that
you’re still around in five years I need
someone who’s going to maintain my stuff
if my machine breaks down I want
something to come and fix it or give me
a replacement if I’m more than your Jif
starting you’re not going to be around
in five years then it makes it riskier
for me to buy from you say you’re
selling a service if you’re a consultant
as an example I want to look at well who
you work with the for what other
companies like me have you helped the
answer is nobody you’re just getting
started
then it’s risky for me right I’m
probably going to say no it’s harder for
me to get to that yes because you don’t
have the track record so matter what
you’re selling there is a bias against
the pure startups because you don’t have
that track record of experience it’s
riskier for me to work with you than
somebody else so typically you’ll find
that there’s a
a price reduction that comes with
startup entrepreneurs so you start by
having a lower price because you need to
get your name out there you need to get
a portfolio and you need to get some
traction some momentum to show that
everything you say works actually works
right so you have a lower price point
and then as you get more experienced as
you get better as you can add more value
and demonstrate that you can increase
your prices a big challenge though for a
lot of entrepreneurs is we stay stuck at
that low pricing too many entrepreneurs
underpriced themselves and what I want
you to do is think about how can you
start increasing your pricing okay
you’re adding a lot of value just not
charging for and test it test working
with a 10% increase and another 10%
increase and see where you’re starting
to get pushback from your customers
because a lot of times the customers who
can’t afford to pay that little boost in
revenue those are not your ideal
customers they’re not your best clients
are the ones who give you the the
hardest the hardest time they don’t work
for business to you they don’t
appreciate your value and you work to
make them happy and they’re never happy
and they’re not giving you a lot of
money
every entrepreneur almost can increase
their prices and it will help their
business so test it test and start
working with more ideal clients if
you’re in the brand-new startup stage
you don’t have anything launched yet
then fine
it may even be free just for you to get
some experience and build up a portfolio
and build up a client list get people
giving you testimonials but then start
increasing your prices don’t be afraid
to constantly check and test your
pricing and see where you can increase
it to the point where you’re getting
feedback from your customers saying hey
this is our limit one quick example so
part of what I do is I work with brands
I work with brands who are trying to
reach entrepreneurs or create content
for them help them with our marketing
campaigns the very first one I did they
said Evan we want you to write a 300
word blog post for our site we’ll pay
you 500 bucks to do it you can link back
to your site I’m like I get a link back
from a big site they’re gonna help
promote me and they’re going to pay me
500 bucks to do it I’m in why not but I
didn’t just do what they asked for
I didn’t just just write that 300 word
I wrote 1,500 words and I made a video
and I promoted it and did way more than
anybody else did that they hired and I
slowly started increasing my prices
because I was adding a lot more value so
wasn’t just tracking $500 now it’s
$2,500 you want me to write a blog post
to your site it’s $2,500 that’s what I
charge that’s where I’m getting some
some resistance now from clients that’s
where I’ve gotten to but I’ve increased
my prices five times I’m just talking a
small 10% increase five times increase
in the pricing because I added more
value and it continuously increased it
they went from 500 to 1,000 to 1,500 to
2,000 to 2,500 over the course of about
a year and a half by testing my prices
and I could still be that guy stuck at
500 bucks
where meanwhile could be charging 2,500
dollars and that’s where a lot of you
guys are you’re under pricing your
products so remember it pricing is
important remember to think about
charging based on value the value that
you’re adding think about your
demographic your target audience on the
chicken a four and what their budget is
and think about your stage of business
and if you’re just trying to attract
clients to get started or now if you’re
really trying to grow a big company
start making them serious revenues don’t
be afraid to test your pricing believe
so as you’re watching the video please
give it a thumbs up below let me know
what you think leave a comment
underneath asking a question like video
response underneath and if you like more
videos you want to see more like this
click on my face to subscribe to the
channel thank you so much I’ll see you
soon
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