What should I charge, what will people pay? Can I really charge that?
I have to admit that whenever I’m pricing anything I tend to feel into it. Does it feel good to me? How does it sound when I say it? I know, I know – it’s not very logical or business like.
However, I’m not just plucking a figure out of the air. My prices are based on testing to find the sweet spot that my clients love. Plus, once I’ve felt into my prices, I run it through my pricing system (which I teach I Sacred Selling Foundations) to check it’s in alignment and will generate a profit.
Psychological Price Points
When I was first starting out, I discovered that there are psychological price points. For example, in the online training & coaching world, these are:
But it might surprise you that after £500 it jumps right up to £997.
When it tips over £500 it becomes more of a considered buying decision and someone is as likely to pay £997 as they are £797 – so long as they can see the value in what they are purchasing.
I tested this out for the first time over 10 years ago at an event I was speaking at. I gave a 90-minute talk on sales and at the end invited people to sign up for a one-to-one coaching package with me.
Because 50% of all sales would go to the event organiser, I pitched my programme at £997 – double what I was charging back then.
I had a tonne of internal chatter: “It’s too much!” “People won’t sign up?” “Maybe I should charge £497.”
I breathed deeply, did my talk, and presented my offer.
I made 3 sales.
I was over the moon as it was a small event with about 25 people attending. I was very happy with a 12% conversion – at a price point that was double what I expected people to pay. What’s more, Rachel Elnaugh, of Dragon’s Den fame, spoke at the same event, and my offering outsold hers.
It taught me some valuable lessons:
- We don’t know what people are willing to pay – so it’s vital to test different prices. Often, it’s more than we think.
- It’s essential to take the steps no matter how scared we are.
- Charge an amount we feel great about receiving – that way we don’t feel resentful delivering it.
- The more invested someone is, the better results they get – my clients got amazing results from the coaching.
- Keeping it simple is key. With a one-to-one offering, it didn’t matter whether I sold 1 place or 10 places – we could get started right away and I didn’t have to go off and create a programme and enrol others to make it financially viable
But the lessons didn’t end there.
As part of the coaching package, I included a bonus masterclass: The Sales Conversation: From Cold to Sold in just one call
As I was delivering it anyway, it made sense to open this up to more people as a paid offering.
Enter agonising pricing decision no. 2! £47 or £97?
It was just a 90-minute masterclass – would people really pay £97? Would I get more sales if I charged £47?
I flip-flopped between the two prices for a couple of days until finally deciding on £97. As I was teaching a process that I’d used to sell £86,775 in 3 months, I concluded it was easily worth £97.
I had 17 people sign up – more than I anticipated.
Since then, £97 has been a sweet spot for my audience over and over – as has £997.
Now whilst this is just scratching the surface when it comes to pricing here are some key points to take-away:
1. Charge the maximum for each psychological price point – you’ll get the same number of sales, but each sale will be worth that much more – and that extra profit can make a big difference. This is the case whatever the price point. For example, I was speaking to a client recently and she was planning to increase her prices to £3495 for her flagship programme. I recommended she charge £3995 – especially as she’d never had a price objection. A buyer they would go through the exact same decision-making process whether it was £3995 or £3495, and a £500 discount would probably make little difference to a potential client. However, for her, it would be an additional £5000 – £6,000 in revenue– a big difference for no additional work.
2. If you’re flip-flopping between 2 different price points – go for the higher one. go for the higher one. A lower price doesn’t always generate more sales – indeed, higher prices often outsell lower price because we have an inbuilt bias that the more something costs, the better it will be. And if you need reassurance before charging more, read my blog: Are You Charging Enough?
3. Test different prices to find the sweet spot for your audience. As I was writing this article, I discovered that a price of £497 works better for me than £297. I sold the same number of places at £297 as I did at £497 – but there was a big difference in profit.
I hope this has been helpful. And if it has, I’d love to hear what impact it has had.