Think about the last thing you “splurged” on: Why did you buy it? How did it make you feel? What story did it tell you? What story did it tell about you? What part of your values or personality did it confirm?
When it comes to the things we care about, we rarely make decisions based on price. Price might be a factor but it isn’t the make or break detail we worry it is as designers, idea people, and business owners.
If you create things that you want people to care about, you have to use price as an opportunity to tell a story not just pay your costs or your salary.
Price isn’t just what ends up on the tag. Price isn’t the only thing that determines whether something is affordable or too expensive. Price isn’t even the determining factor in whether someone decides to buy something or not.
Getting the price right for your products and services is important. But if you’re basing your prices solely on how much it costs you to create, how big or small it is, how complex or simple it is, how much you’d like it to be affordable, or what assumptions you’ve made about how much people are willing to spend, you’re missing the pricing boat.
I’m often asked for rules of thumb when it comes to pricing. Beyond a few calculations, an imperative to price for profit, and gentle urging to analyze the market, I don’t have any. There is no magic formula for getting to the right price for your new product or service.
There is, however, an awful lot of strategic work you can do to determine whether your pricing strategy is going to succeed or fail. You need to know who you want to have buying your product and what they expect to pay for something like it. You need to know what problem you’re solving and how resolution of that problem can be quantified. You need to know who your customers aspire to be and what community they want to fit in with. You need to know how you want your business to be positioned and how it is already perceived.
And beyond knowing all of that, you need to choose. Most pricing struggles come down to trying to be too many things to too many different kinds of people (kind of a universal life problem, isn’t it?). Of course, if your whole business is a little wishy washy, you’re going to have problems pricing.
Use price as a way to make a statement about the strategic direction of your business and then follow-through with every other aspect of your business. You’ll feel more confident about what you charge—and so will your customers.
P.S. Makers & designers: I’m teaching a very special 1-day workshop on CreativeLive called Pricing Your Craft. You can watch live, FREE, on August 17: RSVP here for some extra special bonus materials including my exclusive Cash Flow Plan. Don’t miss it!