Lessons

Lesson Info

Pricing Recap

So I just wanted before you begin I want to recapitalize from yesterday and yes, they were I don't get a chance to finish everything and we're talking about pricing and there's a lot to the psychology pricing so I'm only going to focus again on the marketing aspect so every part of the step before the client facing meeting so we've talked briefly about pricing as a barrier because any barrier creates value value creates the luxurious experience and when I say luxurious experience I'm talking about appreciation for your work because otherwise people don't value you and that's one of the biggest issues for creative artist how do you create value for work so pricing is a barrier but the same time discounts can move barriers and I'm going to talk about how there is an exception to that rule there's almost exceptions to everything every rule but the main thing was that we we talked about sarah's story and as a quick recap she wanted teo build up your portfolio so she gave away free shoots a...

nd because of the lack of barriers she took it she was being taken advantage of and she asked me how I would have presented it and I gave her four different barriers so first one was everybody has to email me first I mean I'm emailing you all first for the option for the chance of me shooting it, sending me a photo of the kid so then I can cole and decide who's more appropriate senate short description which is just a barrier and has really no purpose to the whole you know progress of her shoot and lastly of the thirty she will pick five as I talked as you mentioned last night last week yesterday barriers can be anything is the strategy but the tactics can be anything in terms of what makes it difficult for acquisition if you recall you have to be easily accessible but not easily attainable and limitation in terms of its spots or slots is a form a barrier so that's what I presented to sarah and made someone more sense after that so when it comes to pricing we can talk about pricing segmentation because we we mentioned how different audience members might have a different price point and how do you increase or decrease that reach but this is imply one hundred percent it's just imagine if you want a lower tier for example imagine that you're shooting at a range of two thousand dollars or four thousand whatever that may be it could be any number but you're only eighty percent booked and you want that little bit bit more business and you're willing to shoot at a lower rate this way allows you teo teo take advantage of a bigger market without but you have to discount the same time so how do you do so without really doing so an example I gave yesterday was on it in their plane in the cabin every single passenger probably has paid a different price for the same quality of the flight same destination same time but how is that they're able to charge different prices without everybody getting pissed off because if I sat next to someone else and I tell him I paid two hundred he paid or she paid five hundred that's really disturbing because it's over more than twice the price but we'll talk about how we can do so and but before that I want to present how other companies are doing its first so let's look at black and decker first oh yes well you're black and decker the brand okay so the power tool and is generally speaking for not the pro in just the regular pro sumer users which is fine I have a black and decker that's totally cool but what is the upgraded version of black and decker it's a hard question but for the pro construction people they generally vouch by the walt the wall is like the industry standard but the thing is is that black and decker and the walt are the same company so they own both companies they're able to market to the moor pro crowd as well as the consumer crowd so this way you can have a bigger market share so honda is the same thing anyone when I guess everyone guessing acura correct so ankara is the next one, but again both of them are owned by the same company toyota lexus so yeah they're getting getting it same with gone you're for t's red kin and kills these are actually all sane all owned by l'oreal but if you notice that they're different price points the four nine nine versus the twenty three nine nine versus the forty eight and even yesterday we talked about the psychology of odd even pricing if you call nine nine cents means it's a great deal it's really cheap or great value however you want to see it so this is in way indicative value you almost expected to be oh, the first two are great prices but the same time if you want to have that whole prestige pricing, you take out the decimals I mean take out the tenth and hundred did I'm sorry tenth and hundred digits so then it just becomes a flat rate, so forty eight dollars so that's the most expensive uh, pricing point. So when it comes to differential pricing, you're really delivering the same product, same quality, same everything except a different price, but you can't really do so for certain all insist because it can be perceived as discrimination for example, if you charge you know, for one ethnic or one gender one type one price and another that's very legal not I mean there's no degrees of lead in the legality but it's illegal either way so make sure you don't cross that line but there are ways how you can do so based on preferences and pricing budgets so if we think about differential pricing there either come many companies do this already the very first examples coupons and mail so if you go to chipotle that's one of my brands are like you can pay seven dollars for burrito or salad bowl but you can get a coupon for two dollars off that in a way is discounting or price discrimination the people who are willing to cole through the mail look to the millers can get a coupon same thing with happy hours because during certain hours of russians they have lower business lower traffic so they're willing to give away give products away at a lower price in order to attract customers same thing with three museums for examples there are certain places where they offer free access during certain hours the net moma you know every place mocha you name it they all do it and in fact I was but there are some drawbacks for doing so when I went to one of these free museums in london it was it was an interesting experience because as they always free because again we were always people reverse toe loss we don't want to lose when it comes to free there's, nothing but game, but in reality your you know, as a consumer yourself, you have to weigh the options because I had to wait in line two hours in the rain because it's london, and once I got in, it was sweltering because so many people in there I couldn't play with all the cool toys and that's science museum, so you have to weigh the options, but nevertheless, if you want to create irrationality where people just want to have something, offer something for free. So in a way, when we talked about strategies and tactics free is the strategy tactics is what you can throw in, so even I'm going back into pricing even your pricing packages. If there is one package that you want to push for more, remember, people become irrational the moment there's something for free, so put something for free just for that package, so keep that in mind. Last one is movie tickets, matinee versus senior, first chop children, prices, all different prices, same movie, same quality, same everything, but they're able to do so because people who weren't going to go in the first place, such a seniors who might not be working and may not have all the time in the world or the attention span or whatever the case or it energy to want to watch a movie they're just busy or children who may not have the money to go to the movies or I don't whatever the reason, maybe they may not be so as inclined to watch a movie, which is why they have incentives and for those certain hours it's not going to be booked anyway these air something cost for a business they're already paying for the rent there repaying for electricity you might as well fill it up with some people even a discounted price. So if you think about your own businesses you vory sunk in the costs for your camera equipment your website whether you have a customer, not your still paying that hosting costs that camera's still depreciating as equipment you need to utilize it somehow even if it's for free doing charity shoots, whatever the case, do something with it so when it comes and I promise you that this is the last graph I have in this life when it comes to and again I'm oversimplifying when it comes to a supply and demand graph, the orange part is or yellowish orange is where you're probably point pricing point is and if you want to go to a lower tier, you're taking advantage of a different market share and I talked about how you could do so especially yes they're using a husband and wife team you can increase or decrease or it could be husband, husband, wife, wife or partner partner team whatever the case that's always there warning one person you can have that person charged more while the other one one charges less but you khun put them together as a combo package at the same time we also talked about social versus market norms one having all the contracts and paper and menu while the other one talks about all the creative so the thing is how do you not piss off your customers paying top dollars all while charging less so if what I've come up with is an idea how you can service a certain tear people all while looking selfless so for example my fiancee is a teacher so if I were a photographer I would say and I'm trying to pretend I'm charging eight thousand dollars and I'm only eighty percent booked I could take on five more weddings at five I'll take it you know? So I would say because my fiancee is a teacher and I do not believe that they were paid enough and I really want to give back to teachers so if there are teachers out there I am perfectly willing to shoot your wedding at a teacher raked but member this counter moved barriers so how the y at a barrier back to create the value I can put a limitation to it for example I only have room for five slots so only five teachers a year can take advantage of this and also nitsuko not only do I seem selfish for helping teachers I also get to lower my pricing point without the people are paying a thousand getting pissed off at me why you charging them five and I have to pay eight their teachers and they all of course you can't get pissed off teachers or you can also use fireman I mean any type of group that's noble selfless and things of that sort and if you really really want to push it even further remember rule number two you cannot sell directly to someone else unless it's tied to a selfless cause so in a way we're already taken advantage of this but if you even throw in one additional thing ten percent of proceeds go towards a teaching foundation or fireman's foundation that is going to make it a powerful package already without even really having to push the product I hope that makes sense okay perfect now the last part about pricing that want to mention before we get into blogging practices and in search engine optimization is priced benchmarking price benchmarking is a strategy in itself it's allowing you to compare everything to something else remember how we talked about esoteric items wine, coffee, beer we don't know good versus great but if you give me two cups and I drink both I can probably tell you which one is better but I can't tell you which ones like how expensive it might be so light point here is do you include unattractive things so then it can make that something else that better I mean, in a dating realm that's what sort of a wingman? Wingman and other okay, you get it so you you want to go to clubs and parties with someone with people a little bit and I'm not saying that they're people are beautiful either way but you bring people who are just a tad lower than you so it makes you look you know, cure maura shark more smart, handsome whatever case that's how benchmarking works it's a comparison game and we don't really understand until we compare and down really I like to use them like I sees all about psychology but he can uh you can apply everything what he does in psychology into business and I'm gonna give you one example so he had a he went he was ah looking for a subscription for the economist magazine and I have this video on that link I gave liketo fears dot com slash secretive life you can watch it there are but I can just regard you take or re enact his entire experiment it's really cool so he was trying to get subscription for the economist magazine and there are three options web subscription for fifty nine dollars print subscription for one twenty five or prince and web subscription for one twenty five and of course it was a mystic on the economists and so he had contacted them and then they immediately removed it but he was very, you know, curious about this phenomenon so he experimented with amati students and of all the students that this was the return that or this is a percentage that came back but before that I won't ask you girls which one would you have picked considering all of the technological needs you have now microphone um I would have either picked the web subscription or the print tim webb okay, but if you have the choose, I have to choose one. Um it doesn't matter, but I just I'm just curious. Yeah, now I'm I'm trying I probably would print pick that print and web but it's just me I like tangible things sto okay, boy, I would go with the print and web because it feels like a better deal or I'm getting something for free okay? Getting something for for your better deal makes sense I would go for the web by itself yeah, because I mean, personally, I don't these things, but like I would never go for the print subscription because, well, why would go, why would I do that? So if I wanted print I would definitely do print and web because they're the same price one as well I would go for the web I read everything on my kendall and I can't as much as I like the real paper it piles up at my house same here I'm also trying to be environmental so I tried to go but sometimes you know activity is really important to but I like that no one picked prince subscription so that's good and that was the whole point to because when he had conducted this experiment sixteen percent of people picked web subscription thankfully no one picked print alone and eighty four percent picked print and web soul his experiment and the next question down al really asked was if no one picks print subscription you should just remove that option right? It only makes perfect sense so when he removed it everything changed because you have member we talked aboutthe soda experiment when you have two packages you khun I can push you to go up or down based on just the numbers and this was exactly what happened sixteen turned to sixty eight percent for the lower tier because fifty nine verse is one twenty five all sudden it makes more sense it but that's what that is a lot of money and eighty four percent who went for the combo deal went to thirty two percent so this entire strategy about this is anchoring it's benchmarking something so you need to almost intentionally create something unattractive so something else we look better so when it comes to packages and I know gets his going to cells but you're very lowest package or whichever package desire for people not to want or you do want him to want you make the other one the less attractive one. So, for example, for this price you get two items before only five hundred more. You get like ten more pieces it's almost eighty silly question or silly action to not upgrade. So you have to think about in that mentality. But if you really want to get into more about like all your pricing packaging, you know that I got some tips on there soto furious dot com such parsing and check it out so before then I want teo before we move into a blogging practices and ceo I want to leave it open for any questions about pricing before we move on. We don't have any any questions? I have a comment here from ezra eckman this is kind of off topic, but I thought it was funny, okay, as I said he's using our hunger, which is generated from his images to create urgency associating with his message, thereby increasing value and drive by good business model only a little bit making everybody hungry I know what how many questions about pricing so unless you ladies do ok you know I'm when they used as much as ross example when we talk about urgency there how do you create urgency? Because urgency creates makes people buy cause if you really think about it I mean maybe post it to you first before I before I answer I think you can create urgency through teimour time limitation so like a lot of photographers do like holiday many sessions and you have to book by the end of october to get the deal I think that's how even create urgency that's one very phenomenal like perfect way of doing it same thing with cells you know you go to macy's you only have one day sales to yourselves with the case or north from the half your semiannual sales you only have time limitation and if you want to take advantage of something you have to do it now with its this time frame there's this short window and after that the deal's gone so try to if you want people to act in um make sure you have urgency somewhere installed into the self pitch because otherwise you can buy today by tomorrow by next week next month next year there would be no urgency to book you right now and then let alone pay you up front by the album so even if you think about album sells for those who still sell albums, you can think of it this way most of time album pages are very expensive how we upgrade our up to sell these prices and you designed some large album most of the time they don't want they can't afford the whole thing, but for us it costs only like twenty bucks more for page but we're charging a hundred or something as an example, so if we cannot if we designed say up to fifty pages and they only say o our budget is only about thirty five instead of having to take out fifteen pages you khun tell them you know what? It takes me time to have to be designed to but in fact it would be smarter to use the whole market versus social norm because it takes my designer time remember take it, pull it push pull yourself away from the project since it takes my desire time, mohr time and money for myself to have to redesign it with fifteen pages less and you're perfectly content with this too, right? I said, yeah, I love exactly how it is, but I just really cannot for fifty pages then how about this? We make a compromise, I'll pay for the basic cost, so for only two hundred dollars more we'll upgrade the whole thing so it's only two pages two hundred two times one hundred and then we'll give you the whole thirteen pages for free, as long as you can decide within the next two days or two days. And then all of a sudden she's getting or he's getting his great deal. You're getting thirteen pages for free or equality. Thirteen hundred dollars, thirteen times one hundred. And it is urgency, like I can get the whole fifty at a very great deal. Everybody's happy instead of having to wait a whole year later. For those who have shot weddings, clients can take a long time to design album and that's. One thing I hate to have waiting, lingering in the back of my mind, so use urgency. How, whenever and however you can, that creates calls to action, and we're going to talk about cost action a little bit. But it creates action, by the way.