Podcast Episode

TRANSCRIPT

Hey, hey, and welcome back to the podcast! I hope you are ready to tackle a big one today, because we are diving into the topic of pricing, and pricing, as I'm sure you can imagine, is crucial for your business. But here's the deal. Pricing is one of those things that many business owners struggle with. It's tricky, right? It's emotional. It can bring up all your stuff. And honestly, it's where a lot of people get. It's where a lot of people struggle in their business.

Now, maybe you are setting your own prices on what people think, or you're pricing based on comparison to other people in the industry. Or maybe you're just adding like a 5% increase once a year and thinking, That'll be enough. But I want to tell you that today. It's a little bit deeper than that, and I want to give you some really great tips and strategies about what you can do to nail. Your pricing isn't just about covering the cost of what it is that you do or guessing kind of what feels right. A lot of people will be like, Oh, does this feel right? I'm guessing. $97. And I'm like, Wh, $97! Where did that pricing come from? Have we got a strategy behind it, or are we literally just throwing it out there and seeing what happens? So I want to. I want you to understand that there's a full psychology around pricing. And once you understand that, you can completely transform your revenue and your profit. Have you ever seen those people that will be like, Oh, I make half a million dollars in my business"? And then, when you actually look at them, well, you probably don't get to actually sit down and look at their numbers and things like that. But in the background, I can tell you that there are businesses that turn over a lot of money. However, they don't have a lot of profit, and they won't tell you that they won't tell you what their profitability is, but they'll just tell you how much they've made for that year or that month, or that launch, or whatever it is. So in today's episode, I'm going to break down some of those common mistakes that business owners make with their pricing. You may be making some of them, too. And that's okay, because you may not know any different. Or you may have been told how to price based on your industry or something along those lines. But I want to give you not just the psychology side of it today, but also some really good actionable strategies that you can use as a starting point to price with confidence and to price for profitability. And if you've ever wondered whether you are charging too much or too little, or you may be leaving money on the table, then this episode is for you. So let's dive in. You and I both know that pricing is extremely important. Pricing and profit are well, mainly, profit isn't a buzzword. It is literally the lifeline of your business. If you don't have profit in your business, you will have to push and hustle so hard, or you'll end up closing your business down because there's just not enough money in it. So without that profit, will you not just be underpaying yourself? But you're limiting your ability to grow, to reinvest, to provide the best possible experience for your clients. and where I see a lot of people get stuck is that they either undervalue themselves or they base their pricing on fees instead of strategy; they base it on what their industry what the industry baseline is, and that's not the best way to do it either, or they get stuck in tat cycle of, Oh, yeah, I price it like this. And it's always been that.

So we'll just roll with that it's good enough instead of pricing for that profit. And, as I said before, pricing can feel really, really uncomfortable. You're asking people for money. It's forcing you to put a number on the value that you're delivering, and it's hard if we don't fully believe that in that pricing and have the psychology and strategy behind it. We're very much putting pricing on our worth. but you cannot price your worth. Your worth is who you are. It's your inner ability to know exactly what you stand for. So I don't want you to. I don't want you to get stuck in that I price what I'm worth.

I want you to look at it from a price based on the value that I offer. And so I want you to think about how you can price not just to serve you, but to serve your clients as well. And I want you to have that pricing sorted so that you can show up as the expert, deliver amazing results, and attract the kind of clients that are ready to invest in what it is that you do. So I want to go through, and if you've been listening to the podcast. For a little while, you'll know that I like to tackle the mistakes that I see happen. Because if I can show you what the mistakes are, and if you can identify that, maybe you're doing them in your business as well, then I can show you ways to fix it. So mistake number one that I see people do is that they price based on what their competitors are charging, so they'll be like, Well, I don't want to be the cheapest. I don't want to be the most expensive, so I'll just kind of price somewhere in the middle, and this is one of the most common traps. If someone like them will literally look at people, their biggest competitors, and be like, Okay, so business A is charging $500. Business. B is charging $700, so I'll charge 5, 5,600 and see how we go. But here's the problem. Your costs, your margins, and your goals are not going to be the same as your competitors.

Their pricing might not even be working for them. And here you are basing your business and the profitability of your business based on someone else. It's freaking crazy, right? And now that I've pointed that out, I want you to actually stop and think to yourself, how did I come up with my pricing? Did I just throw something out there? Did I throw it into a Facebook group and ask, How much would you pay for certain things like, How are you actually doing your pricing? And so, instead of copying, fous on your numbers. What are your costs? What's your time worth? How many hours are you looking to work within your business? How much money does your business need to operate? What is the value that you are delivering to your clients? And when you price based on your unique values, your unique selling points, you are no longer racing to the bottom, racing to he just get clients; no matter what, we want to make sure that your business is making profit, making money. It is supporting you and your lifestyle and your family, if you've got one. Right? Okay, that is my 1st rant. My second rant.

Mistake number 2 that I see is people forget to include all the costs that happen within their business. So some people will think, Okay, if I'm charging on an hourly basis, then I'll charge a hundred dollars an hour, and I, the business owner, or the person doing the hours, will get a hundred dollars an hour. If you've been in business for a little while. You know that that is not accurate, right? We need to incorporate the cost of your business. So taxes, software marketing time. Gst. all of it. And so when you don't calculate those costs, you end up eating into your profit without even realising it, or you end up in that wheel of like need. More cash can't pay expenses. Need more cash. Got to get more sales. Then the money goes out into the expenses. We want to make sure that we're actually calculating all your costs, and it's not eating into your profit. Your profit should be a standalone business number in my business. Every single dollar that comes in. I know where it's going. I know its job, and my business also supports charities that takes a percentage of that profit. I allocate that profit out from a legacy point of view. But that's irrelevant, right? The profitability is already there within the business. It also means that when I sit down and do my numbers. I can see the profitability of the business without even having to do a whole heap of calculations. It's already sitting there. It sits in a separate account. It is my expenses that sit in a separate account, my GST. Sits in a separate account, my taxes sit in a separate account, and you know why I do that, because I then know when I look at the business overall, the business is standing on its own 2 feet. I can't do that unless I have nailed my pricing. Okay, that is rant number 2. Can't guarantee that there won't be another one.

And the 3rd mistake that I see people make, and this one can hit a little bit close to home for people, and if it hits you in your heartstrings, I totally understand it. I want you to do something different about it, though. Don't just go. Don't just acknowledge it and not do anything about it. But what I see is people undervalue undervaluing your experience and your expertise. When we undervalue ur expertise and our skills. It affects the way that we can deliver to our clients. If you're pricing based on how much time it takes to deliver some deliver something or how much time you're spending with people, its really doing a disservice to not just you, but your business, and your business then impacts on your clients. So your cliens aren't paying for your time, right? They're not paying for the hour that they spend with you or the half day that they spend with you. They are paying for your time. They are paying for your expertise. They are paying for the results that you provide. Okay, the results that you provide, or the amount that you save them, depend on what it is that you do. But let and let me use an industry that I see people struggle with on a regular basis, and it tends to be in the design or creative space. So say, for example, you're a designer, and it takes you 2 h to create a logo. that or a logo or copy, or a website that literallytransforms someone's brand, transforms their brand, brings more clients in, and changes. The way that they do business up-levels their business and increases the value of their business, so that the value of that logo, or that copy, or that website that you are designing isn't tied into the 2 h that it takes you to design it. It's tied into the impact that it will have on the business for years to come. It is tied into the increase in revenue revenue that you're potentially driving for that client's business. Right? Tha's the difference between value-based pricing and pricing on a per-hour type strategy. And you've got to figure out what is going to work best for you and your business. But I just want you to be clear that we're not pricing based on our web pricing based on our expertise.

You have probably spent years and years and hours and hours. and probably a whole heap of money on fine-tuning. What it is that you do, and fine-tuning what makes you that industry leader. Don't just base your pricing on how many hours and an hourly figure. and not incorporate your expertise into that. So mistake number 3 is undervaluing your expertise and your skill. Set mistake number 4 that I see is when people just throw their pricing out there, and there's no testing or adjusting. Your pricing. Pricing is never set in stone. What you price and what you charge one person may change to the next person based on their company, their structure, and what you need to do. So it's not set in stone. A lot of people set their prices, and then they never revisit them. They never go back and do the tracking and check in on whether their pricing is working for their business, whether it's there's enough profitability within those pricing frameworks to deliver.

And I ant you to think about your market, which is probably constantly evolving; your costs change. I don't know about you, but the cost of my business has increased. I don't know what the percentage is without having it in front of me, but think about the first time you 1st started your business to where you are now. right. Your costs I can guarantee you have changed. Things have gone up. Youmay need new tools. Your experience has grown; your pricing should reflect all of that. So think about testing different price points to see what works, and don't be afraid to, like, increase and raise your prices as you deliver more value as your expetise grows as your the results that you deliver increase. Make sure that you keep coming back. And look at your pricing mistake. Number 5, and this is one that I see all the freaking time when people offer too many options. Right? I obviously am highly trained in sales. I've been doing this for a very, very long time. I understand the psychology of it inside and out, like it just becomes second nature to me because I've honed my craft so well.

But choice paralysis is real, right? If I'm talking to someone. And I'm like, Hey, Susan, I'm interested in getting this, this, and this done in my business. And we're having this conversation. I'm like, Yeah, I really like Susan. This is fantastic. She understands me. She gets exactly what I'm needing. And then we go into talking about pricing now a lot of the time. What happens is when people talk about pricing, all their stuff comes up right. They might get a little bit nervous. They may get the sweaty palms they may get, you know, a little bit hesitant about talking about money. And so they will go. Well, we can do with this option, and we could do it this way. We could do it this way. We could do it this way, and this way is $100. And this way is 1, 59. And this way is 210, and this way is 450, and in my head I'm like, Whoa! I don't know. There are too many options here. If you are offering 6 different packages, or 10 different price points, or 3 or 10 different options on one package, it's too much. Your client is going to be overwhelmed. Your client will sit there and go. Great! I'll think about it, and then they'll end up choosing nothing. You know why? Because they're in overwhelm. They're confused. They're like, This is too hard. I'll figure it out later, and then what they'll do is they'll go back later and be like, Oh, yeah, I still really need to figure that out. I'm still having that same challenge. And so they'll go and find someone else because you haven't nailed it. and in their mind they're like, Oh, that's right. I spoke to Susan. But, Susan, I don't know. Something just wasn't right. Let me go and find Sally and see if Sally can help me. But a lot of the time. It's not necessarily that you can't help them. It's that we're giving them too many options, and they're overwhelmed. So instead, stick to 2 or 3 clear options. Really, really clear options.

If I could highlight the word clear, I would, but you're listening to me, so I can't. So, 2 or 3 clear options and using strategies like price anchoring to guide your clients towards a best fit, or having some charm pricing in there, like, and I'll I will go through these strategies, and I'll give you aew tips around them. But I just want you to think about it. Reduce your options and have a strategy for your pricing. Now that I've gone through the mistakes, I want to give you some really good actionable strategies that you can use to help level up your pricing. So I mentioned charm, pricing, and charm. Pricing is when we use a number at the end of the price. So things like sevens, nines, fives, and you've probably sent it all across businesses. Coles were worth a lot of people using charm pricing. So instead of saying something's $50, we call it $59, or it's $55; it's not $50.

The reason why this works is because the way that our brain interprets that information is very different. And so we say, $50 is more expensive than the $49, although yes, it is. But it's only by a dollar, right? It's not going to break the bank. But the way that our brain processes that information goes. Oh, $50, no, $49. Yeah. So charm pricing is about not having a round number on the end of your figures. Okay, so that's 1 strategy you can use. The second strategy you can use is what we call price anchoring, and that's introducing a high anchor price to make your other options look cheaper and to show a better value. Say, for example, if you are offering a VIP, if you have VIP clients that you work with, and they may be, I don't know, $10,000 to work with you. So when you're talking to someone, you're like. So if you want to work with me one-on-one,. It's $9, $9, or $5, or alternatively, you can come into her sales club for $197 a month. That is a huge difference right now. Brain's like, Wow. I don't know if I want to pay the 10 grand. But $200 a month is definitely feasible for me. So using that price anchoring can work really well. Another way that I see people do. It is when and I'm giving you this example. based on what I know that people have experienced. They may not be consciously aware of it, but youwould have seen it. And so, if you go shopping and you go into a clothes store, a lot of the time they have a sales rack out the front, and it says only $50 or 50% off just on that rack. Right? So then you start. You go up, and you go. Oh, I'd like to have a little look, so you start flicking through it, and then what happens is you enter into the store. and in the store is where the full-price items are right. And so you go all right. So I start looking at those sorts of things to get you through the door. But then you end up going. Okay, what other options have I got? Okay, the other way. I see price anchoring happen is that they will put a really beautiful designer piece in the middle of the store and price it extremely high. And then you go. Wow! That's $10,000, or that's $5,000, or $200, or $500. The actual price is irrelevant. It's the psychology behind it. And so they'll have that big price that anchors everything in the middle and then everything else around. It will seem cheaper.

That, ladies and gentlemen, is the price anchoring the other way. You'll see it happen, and the way that I like to suggest to my clients is that when we spoke about those 2 or 3 options, price anchoring will happen either side of it. So make your highest package intentionally premium. So the middle one or the lower one feels like a no-brainer, right? That's another form of price anchoring. So that's another strategy. Another strategy you can use is called bundling and unbundling. This is one of my favourites because it means that I can deliver a whole heap of value by bundling up what I do, and it gives really good value to my clients. So bundle-related products. So you bundle those related products to increase the value of what it is that you do. But you can also unbundle things to cater to clients who have specific needs or are wanting specific options. So I recommend using bundling in high sale periods, things like Christmas things like Black Friday offers. They're really great to do bundles with, and then you can unbundle your services, depending, as I said, on what specifically people need and the other tip. The final tip that I want to give you today around some pricing strategies is to have regular adjustments occurring within your business. So instead of making huge price jumps, you know, up 15% every few years or every 2 years, you're like, Oh, I haven't done a price increase. And my business needs more money, so I'll increase it by 5, 1015, 20%, or whatever that looks like. Instead, I want you to think about how you can you increase your price. One or 2% every 6 months, so that it's not as noticeable a noticeable jump for your clients. because the best way to upset your clients is to get them paying a certain amount one day and then increase dramatically the price dramatically for the next month. Right? Have small increments as you go. And you actually need to plan them into your business. Don't just be like, Okay. Today I'm randomly going to do a price increase because my expenses are going through the roof, or I need more money, or the business needs more money.

So I want you to think about how you can you do regular adjustments within your business on your pricing. And you can also use a strategy around that, right? So you can do marketing campaigns of like, beat, beat the price, rise, or get in on a lot. What I've seen some people do is get in on 2024 prices in 2025. That's just another marketing strategy around their pricing. Okay? So now that we've gone through all that, I want to give you a quick action plan to start pricing for profitability. Step number one is to review your current prices. Are they covering all your costs? Are they supporting your business well enough? Do you have profitability in your pricing? And does your pricing reflect the current value that you deliver? Okay, so we want to know they're covering your costs. You've got profitability, and that they reflect what it is that you deliver.

Step number 2 is, I want you to identify one or two different pricing strategies that you want to test, like charm, pricing price anchoring, bundling, or whatever that is that you feel like will suit your business and will work for your clients. And then step number 3 is, I want you to commit to reviewing and adjusting your prices regularly. Okay, so if you have my annual planner, you would have in certain months that you are going to adjust your pricing or reassess your pricing. It doesn't mean that you need to increase it, but it needs to be an actionable business step that you take on a regular basis. Pop it in your planner, pop it in your calendar. Think about where your prices are sg at. And if you want a step-by-step guide to nailing your pricing, I have a pricing-for-profitability framework that all my clients use to make sure that there is that profit in their business, and it's sitting in her sales. Hub. So all you need to do is go to mareekirkpatrick.com forward, slash hub, and it'll be sitting in there for you. There's a video on how to use the framework, and you will have everything that you need to make sure that your pricing is on point. There's profitability in it, and it is growing your revenue. Okay, so, mareekirkpatrick.com forward slash hub! It's $47, and I guarantee you you will make that money back tenfold, just based on the information that's in there.

Now, that is a wrap on today's episode. I know I got a little bit ranty. I'm not even going to apologise for getting ranty anymore, because I know that the information that I'm delivering to you is change will change the way that you do business if you implement it. So I hope you are walking away today with some really fresh insights and some practical strategie on how to take your pricing to that next level. If this episode resonates with you, screenshot it and share iton. Instagram. Tag me @Mareekirkpatrick. I'd love to hear what pricing strategies you are excited to try, what pricing strategies you're currently choosing, and what it is that you are going to be implementing over the next 6 to 12 months within your business. If you've got any questions. Please reach out until next time. Remember, pricing is a science, and there's a psychology behind it. So you have what it takes to master. Go out there and make some profit.