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I told you I was wearing this.
I told you I was wearing this.
Well, one of us has to change. Irene writes, “I want to create digital products based around my blog content, and I’m having the scaries about slapping a price tag on it. The content I provide is top-notch and one-of-a-kind. People pay to come to my classes and private sessions, so I figure, why shouldn’t I be able to charge for it online? My question is, how do I figure out the best price to charge for this content?” Great question, Irene, because so many people ask me this, what do I charge? And it’s a very big topic that I could talk about for days. Since I don’t have days, I’m going to give you a few steps to get you started and help you find your product pricing sweet spot.
Step number one is you need to understand your big picture positioning. Here’s what this means. You never price your product in a vacuum. You need to look at the big picture of your business and see where this product fits in. Is this an entry-level product that you want to feed into higher-priced offerings, or is this your premium flagship product that you really want to charge a high price for?
But we can’t stop there, because you also need to think about your broader positioning. Here’s what I mean. How do you want to position your whole business in the marketplace? For example, do you want to be like Walmart that has super high volume and lower prices? Or do you want to be like Bergdorf Goodman? They have much, much higher prices and fewer customers. Your answers to these questions will help you strategically price your offering, and then you’re ready for step two.
Step number two is you want to quantify the results that you’re promising. To do this, you’re going to use something I call the mattress method, which I’ll explain in a minute. A few years ago, we were at Sleepy, shopping for a mattress, and I really wanted the Tempur-Pedic. Now, that runs about $3,000, which is way more expensive than any other mattress, so I was having a tough time paying that much for a mattress.
Then, the sales guy said something that really clicked. He reminded me that I spend over a third of my life in bed and that the quality of my sleep affects my productivity, my health, and my good looks. He said, “What’s it worth to you to sleep well over the next 10 years?” And I thought to myself, great effing question, dude. Well, since sleeping well essentially makes you richer, healthier, and prettier, I’d say a whole hell of a lot. All of a sudden, that $3,000 started to look like a steal. The mattress method is when you deliberately translate the value of your product and service into real life currencies like time, money, love, or health. Ask yourself, what result are you helping people achieve, and how can you translate that value into even more time, money, love, or health?
For example, let’s say you’re selling a program that helps women stop fighting with their husbands. A real result that you should be able to get is saved marriages. Now, that sounds like something you can’t put a price on, but actually, you can. Let’s say you take women through your program in just two weeks. Now, most couples, when they go to therapy, spend an average of $200 per session and they’re usually in therapy for at least six months. You could estimate that an alternative to buying your program is spending over $4,000 and six months in therapy. Or a worse alternative, a $20,000 divorce. That’s the average it costs in this country, according to an organization called Marital Status. Girl, you could potentially be saving people $20,000 if you can help them save their marriage.
Now, I’m not saying you put that breakdown in your sales pitch, but you could. Either way, it’s a very effective strategy for figuring out what your offering is really worth to your customer so you can price it accordingly. As I said earlier, this is a complex topic that’s tough to cover in a wee little video, but these pricing strategies are solid as a rock. Oh, take that shirt off. And are enough to get you started. Thank you so much, Irene. That was a great question. I appreciate you asking it. Now, here’s what I want you to do now. Use the mattress method to take the results of what you get for people and quantify it and show me what you got in the comments below. Do the work right now. I know you got it in you, and I can’t wait to see it.
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Elsa, please style me. It’s coming out. Here comes my squirrel!