3 Secret Pricing Tricks Guaranteed to Make you More Money
Consultants, how much does it cost to work with you?
If you sell your services at a single set price, get prepared, because your business is about to level up.
It’s no secret the most successful companies give a variety of options to appeal to a broad spectrum of customer’s financial situations.
But what you may not realize is those price points are planned to subconsciously direct people to spend a set amount, whether they realize it or not.
At a spa, there’s a wide range of services between the 15 minute facial or the all day relaxation package.
You’re not just stuck with the option of lawn seats or VIP passes at a concert.
And many consultants, don’t just limit their services to the one hour phone call, or the $30,000 full-service training package.
Multiple price points with benefits and add-ons at each tier gives your client more options, and if you’re strategic about your price points, you can very easily guess what the majority of people are going to go for.
Secret #1: Use Tiered Pricing to Play Ego against Logic.
Imagine for a moment you are considering buying SEO software.
You plan to blog regularly. Perhaps every day, at the very least a few times per week, and this software promises to boost your blog’s visibility by evaluating your articles for keywords, and give suggestions to improve your Google ranking.
You know you will use it at least a few times per week, and are estimating you’ll spend between $35 and $45 for it.
A click later, you see that the pricing options are:
Which do you choose?
If you said “professional,” well done. You did exactly what they wanted you to do.
Now despite the landing page design being very pointed in where you should click, you would have likely came to the same decision (the design just got you there sooner)
Why?
Their multi-tiered pricing creates a war in your brain between your primal instinct and your logical response to options.
The logical response says, “I’m one person… I clearly won’t need 300 evaluations a month. That’s far too much.”
But the primal instinct says, “I need more than the bare minimum to survive. I’m going to grow. I’ll need more next week. I need to stockpile, to prepare, ‘just enough’ won’t be enough.”
So why does simply offering more options create this response?
Because with a single price point a purchase decision can be either accepted or dismissed with a simple“yes” or “no.”
But when you bookend the choices, suddenly your customer is involved, however briefly, in imagining different scenarios for each level of ownership.
They start thinking, “What if the cheapest option isn’t enough?” They start seeing themselves as being unprepared because they bought the lowest-priced item.
Others are more optimistic.
They envision themselves achieving more and therefore justify paying more. They see themselves becoming more successful because they haven’t limited themselves to “just enough,” have room to move and grow.
Either way, the purchase has drama and more emotional investment when there are a limited set of options.
You can create these same subconscious, survival-based thought patterns in your clients by switching your pricing from a single option to offering different levels of pricing for your services.
Switching to a variety of options vs. a single price point is the first and most important step in guaranteeing more purchases.
Secret #2: Give A Lot More for Slightly More Money.
To the majority of people, the two central options will be where their attention focuses immediately.
For these groups, the highest and lowest prices are briefly considered and immediately dismissed as being “too much” and “not enough,” which means the battle is in choosing between the the lower-middle and the higher-middle pricing options.
These folks spend the most amount of time on their purchase.
They take the time to time debate the pros and cons of spending the extra few dollars per month, or per level, so set pricing to make it simple for them.
Do so by offering a value multiple times higher than in the lower-priced option, without changing the price by the same ratio.
Back to our SEO example, by purchasing the Professional package for $47 per month, a customer will receive four times as many evaluations as they would for the next option down, the Publisher.
But the Professional price is not the Publisher price, quadrupled.
Instead, it’s not even doubled. It’s an affordable step up with an immense added benefit.
Make it painfully, starkly clear that the higher-midrange price is where the really good deal is found.
Logic will win out in nearly all cases, as clients justify to themselves the great bargain they just got by buying from you.
Secret #3: There’s always someone who only buys the best.
We all know someone who enjoys spending money.
It’s more than a necessity, it’s a symbol of their self-esteem. When it comes down to it, money equals status and self importance, and that matters a great deal to a large percentage of business people.
You may never know it, but even Joe Handyman in the flannel shirt is saving his dollars for the creme de la creme of cars, tools, and blueprints.
Some folks who are pennypinchers at home will indulge on their business, because their work is their passion, and that is how they justify high-cost items.
Your highest price point should be something that seems indulgent.
The folks who want the best, who gauge value based on cost, won’t take you seriously if “just anyone” could afford it.
They are out there, and some have already passed you by.
It’s all about the implications made by their purchase, and because they feel that more money means better quality, and they want only the best.
In your pricing structure, include a best-of-the-best, enterprise-level price point and you will convey the sense that you and your services are more than worth their time.
On the flip side, you want your lowest price to be reasonable, profitable for your company and helpful to your clients, but ultimately not a huge gamble on their part.
Thrifty clients want to feel that if their investment is a total waste of money, they haven’t lost too much. They want to get just enough because they plan to be frugal with their usage and get every bit of functionality or information from you or your product that they can.
Bonus Secret: It’s not that difficult.
Offering your services on a tiered price structure isn’t as difficult as you think.
Consider what it would take for you to go above and beyond all expectations, I mean everything you do and roll that up into one bundle to create your highest price point. Remember: it should offset a considerable amount from your next highest price point.
From there, take out the additional services that go above and beyond, leaving a really good option. This will be your third highest pricepoint, and likely what the majority of your business will be.
Then for the last two subtract services until you are left with just the very basic service at the bottom.
For Example: Let’s say you design websites, your structure could look something like:
(From MenswithPens.ca)
| WordPress website including optional integrated blog | |||
| Custom-designed business logo | |||
| Customized social media section in sidebar | |||
| Attention-grabbing opt-in/sign-up section on website | |||
| Custom-designed Twitter page to impress followers | |||
| Custom-designed Facebook page that fans will love | |||
| Custom-designed newsletter design to stay in touch with readers | |||
| 5 pages of copywriting for your website pages (Home, About and three pages of your choice) | |||
| 25-page ebook: Full design AND content custom-written based on your outline and notes | |||
| Members-only site-matching forum. Great for courses and community building! | |||
| Professional site-matching business card design | |||
| Retail Rate | $4,999 | $6,799 | $12,999 |
Of course, there is no “Copper” package, but it’s easy to see how a simple wordpress setup could be the bottom tier option in this scenario.
A final word of caution: when factoring in the different values per cost, do not make the disparities so clear that one group or another feels taken advantage of. Your product or your service must be justifiably worth the cost, at any level.
Your turn…
How can you use a tiered price structure in your own business? What services do you offer right now that you might be undercharging for?
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Great information as usual. I took your advance on the optional selling. will let you know.
This post is exactly what I was looking for, pricing is so important, it can mean the diffrence between making the sale or not. You must be careful, pricing to low will make your product seem cheap and not of high quality (not always, but in most cases).
One powerful pricing technique I have learnt is what ever the price you charge, give customers at least 10 times the value in return.
Charging a price that makes people think “thats abit expensive” but they still purchase is exactly the price that seperates high qualty customers and people who think they need your product.
Great post, thanks.
Duane
Happy it came to you just in time!
You’re right too, pricing too low will undervalue not only your product, but it can diminish the value of the industry as a whole.
I remember first starting out in online marketing, and thinking “if I price low, I can get more clients” which to a certain extent is true, but there will always be more noobs than seasoned professionals, and because the lower priced people tend to saturate the market, it diminishes the value of the industry as a whole. If a company gets burned by someone simply because they were amateur, it makes it twice as hard for them to trust another person in that industry again.
And over delivering is really just a great idea. That’s what gets people wanting to refer you and continue working with you
This Post is right on the money Tommy!!
The bottom line is people love having a choice when making a purchase.
Also, this explains how to get the price you want for your products/services for your online business.
Very helpful post.
Thanks Jon,
I’m glad you liked it
Right up my alley Tommy! Have been doing IM consulting for about 6 months and still have yet to find the sweet spot as far as price, because the business are so diverse along with their budgets.
A few questions. In the first pricing illustration, is there a plugin for that where I can change things around or is that a flat graphic design html or photoshop image production?
Opened my eyes to a few things I’m not doing that I should be doing.
There’s landing page Software that I use that does something pretty similar to that called Premise(aff) that I use and absolutely love, there’s actually a template that you can create pricing pages specifically, and it rocks.
I would say your best bet is to do a combo of both though, insert your own images with the plugin to create something truly unique.
Hope that helps!
You said a few questions though, is there anything else I can help with?
Oh yes, one more question. It seems a lot of newbies are starting their own practice and really under cutting the price point. However I am new to the consulting world myself and do not want to charge peanuts. So, how do you make yourself look professional when you do not have a lot of clients to showcase?
First, sorry for not getting back to you sooner.
There are a couple of things you could do. When I started, I found jobs on getafreelancer.com and took the work for wicked wicked cheap. I mean, I wasn’t getting paid crap, but it gave me something for the portfolio that allowed me to say “this is what we did”
The other should do whether you’re working with freelancer or not is to write yourself a detailed strategy map and determine how all of the different pieces of the puzzle will work together.
When you’re pitching, the way everything works in tandem should be obvious to your prospective client. If it doesn’t instantly make sense, you need to remap until it does.
Also, something I’ve learned along the way, they will always ask you for a proposal. Don’t give them one, not unless you’re getting paid for it. Politely tell them that a proposal will only give them the outline to do what they’re looking for, but without the right person behind the wheel, can quickly become a sketch to disaster. It’s like saying “theoretically, because an 18 wheeler has gas, break and a steering wheel it’s like driving a car” while the principals are the same, it takes a special kind of driver with specific training to actually operate the machine.
hope that helps and feel free to ask if you need help along the way.
Hey Tommy! Good to see you here. I’ve always heard that you offer tiered pricing to try to sell the middle option, but I never fully understood why. Thanks for clearing things up.
Whoa! These tips were awesome. I hadn’t looked at pricing from this perspective and I’m sure there are a ton of people who will be willing to pay top price just because that’s the type of person they are. Almost like “If you offer it, they will buy!” Great post, Tommy.
Great advice, as always Tommy. Great job on the illustrations you’ve included, too. This information will stick in my mind and be easy to apply.
Thanks for the great article. Very helpful. I’m off to apply it
As always Tommy, learning so much from you, though as yet I've nothing to sell. I'm loving blogging and perhaps it will take me to the point where I can put your advice into practice. Congrats on the paid writing gig – you deserve it!
good post abt this type of issues
Always add things to higher packages that are easy for you to throw it, it looks like you’re adding a lot of value, but in reality they are easy things to do, for you.
Amen.
Perfect timing on this post as well as the other one with pricing table examples! I am literally working on these right now, was stuck, and a friend shared this post without even knowing what I was working on. Thanks for the insights and examples!
It’s funny how fate can bring people together that way huh?
these tips rock! GOod Job
Hi Tommy,
Wonderful article. Makes you think in ‘Silver, Gold & Diamond Style’.
Will certainly work on it!
Thanks.
Vijay
aisleofmiracle.blogspot.com