Pricing 101: Why talk about pricing?
Original post on wellmode.com.
This pricing 101 blog series is targeted at entrepreneurs and small business owners but relevant to anyone.
Don’t like talking about money?
I feel you. You likely rather talk about your products or services, and what you can do for your customers. But at the end of the day, your company is a business providing for yourself and the people around you. And even if you don’t really need the money, getting compensated for your efforts creates a sense of self-worth and accomplishment.
Then why is it that we rather not talk about money and shy away from pricing?
For one, because many of us are driven by passion, not money. We don’t believe money is what should matter in life, and we probably don’t want others to think money is what motivates us. There are undeniably more important things in life, but having too little money can leave us stressed and unhappy. A study in 2018 showed that happiness increases with income up to a certain level (~$105K in North America). Anything above this point leads to lower levels of happiness and wellbeing. Whether you believe that holds true for you or not, making enough money to have no stress and having spare time to spend on things that are important to you isn’t a bad thing right?
A second reason we feel uncomfortable with setting prices, including demanding a certain salary, is that asking a certain price for our products or services or ourselves, makes us put a number to our worth and the value we bring. This can trigger an insecure voice in us, asking whether we really believe we are worth that. As a result, we tend to sell ourselves short. But you are bringing value to the world, and that must come at a price. My finance professor used to say: “there is no such thing as a free lunch”. Everything has its price and whether we are consciously paying with money, or unconsciously with say our data, we pay. So, don’t be shy to charge a fair price.
Are you all set with your prices and asking yourself why bother rethinking those?
Because slight improvements in your pricing can help you increase your earnings significantly. It will also force you to think about who you want to serve, and how you want to serve them. Who is that customer that really benefits from what you’re offering? That customer who is willing to pay for what you have to offer? Think about when you buy something from honest and hard-working businesses. If I like what I get in return, I’m happy to see them thrive and help them make a living out of it. That’s how the economy works — we support each other by buying each other’s products and services.
So rather than just looking at what others do, let’s take a closer look at your options. In this pricing 101 series, I will discuss common misconceptions, conscious and unconscious customer behavior, and a roadmap to (re-)defining your pricing strategy. I’m warning you now that this blog will not tell you exactly what price to ask, since it will be different for everyone, but I will give you the tools and considerations to keep in mind when setting your price.
In this pricing 101 series, I rely on concepts learned in MIT Sloan’s pricing course, taught by Prof. Tucker. If you’re interested, most of her lecture notes are available online.
More in this series:
Pricing 101: Why talk about pricing?
Pricing 101: Shortfalls of Common Pricing Strategies
Pricing 101: Customer Behavior
I’d love to hear from you. So don’t hesitate to ask questions or comment below.
Are you a wellness entrepreneur (e.g. a yoga or pilates teacher) wishing to create more and better online content? Are you a student looking for a unique wellness series to do at home? Check out wellmode.com!
