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Value Based Pricing

So I just want to remind everyone where we left off, so at this point, you have figured out your materials and your labor in your overhead, so we've got three of the four pieces that you have to build into your wholesale price, so that probably leaves a lot of you wanting to ask the next question, right? How much profit should you add on per piece? You really want to do that math? I know, but here's the thing, this is the wrong question. So now is the time where we're going to make that shift from cost plus two value based pricing and what's going to happen for a lot of you because we were seeing it happen in the last segment is that you did that cost plus calculations, and suddenly you've hit a price that seems so much higher then what you've currently been charging, so you realize that you're really far off, so, you know, to kind of make it easier on yourself, you're probably thinking, let me just talk out a little profit margin will go from there, but what we're really going to dio ...

is dive into this value based pricing and that's gonna help us set the final price, so we kind of were actually working at your price from both, and so we started from cost plus we're moving up. But now we're actually going to go to our final retail price and we're going to move in so we're going to do with this way and the idea is that that our final retail price in our final wholesale price are higher than all of those expenses and all of those materials and labor that we talked about so we're going to set that final price on our value that's gonna come back teo are handy example of the melissa necklace so as a reminder if I was just doing straight cost plate cost plus pricing we'd be looking at all sale price of around thirty five and a retail price of around seventy nine but because I am doing value based pricing now what we're looking at is a retail price of one, eighty five and a wholesale price of eighty five so that is a significant increase so if I was selling at that cost plus price on ly I would be leaving money on the table every day of a week I don't like to leave money on the table I want all that money to come to me we were talking about that a little bit in the break we want that money to come to us that we could turn around and spend it it's great so we want to get that money we want to get more of that money we don't leave anything on the table but the reason that we had to start with that cost plus is because usually a lot of you when you jump into value based pricing for the first time, it's easy to get it wrong because value based pricing on lee works if you understand the true value to your customers. So if you really understand what it is that your customer values about the product and you position and compare your products to the right markets because it at the end of the day, we're going to talk about that customer value, but it's still always going to feel a little fuzzy in terms of how to put a number on it, so we're gonna have to turn to some marketplace comparison, and if you're looking at the wrong markets, this is where value based pricing can kill you. But we're gonna come back to that in a minute because I want to take a little detour from actually talking about numbers at all and talk about the value to the customer. So what determines aboutyou based priced the value to the customer, the market, place your products, aaron, and then the other products in your line and so that's. The third piece that actually makes all these numbers sort of get to go away is once you've set a few paste pieces, made sure that the prices air profitable at the wholesale level. And then you done your value based, you could just kind of as you add new products, you khun slot in those prices based on everything else in your line. So, you know, I've been showing you guys the example of the melissa necklace it's, the necklace that I'm wearing, I probably would have had to run numbers at all. I could have honestly just looked at it in relationship to my line, and in fact, I did that and that's why I came up with that final price. So once we get this right on a couple of products makes it so much easier to price everything else and everything new that you're doing so let's talk about that value to the customer. So as a maker, this is how you perceive value. You think about the hours in your studio, the time that your bench the cost of the materials? Yes, my bench really is that messy? I'm a metal smiths. So even though this is not technically a jeweler's bench, I will call it a bench for the rest of my life. It's my work table. So this is how we tend to think about value, right, we think, okay, I spent all this time, blood, sweat and tears all that stuff that's how your customer thinks about value some of you may recognize carriage until e s o this is what terra had to say about my work so she says mega nomine jewelry is this strong and durable as I am when I put it on I know I'm reflecting the beauty and confidence I feel inside so I put it on every day so I know from a million and a half conversations with terra that terror has no idea how my stuff is made and she doesn't care what she cares about is how it makes her feel when she's using it and so that's what I want teo get you guys to start to shift and think about is that the value to your customer comes from their experience of the product not how it's made what it's made from none of that really matters it's all about their experience so they might value how useful product is to them and uses a tricky word I think for those of us who are making things that are considered non essential right it's sometimes hard to put use on something like jewelry you I think monica, you guys haven't easier time saying like our product is useful but so I don't want you guys to get hung up on that useful piece of it doesn't feel like it fits in your brand because it's not the only thing that people value there are a lot of people who don't care about quote, quote function at all what they care about is maybe what your product says about them or more importantly how your product makes them feel and I know that some of you are probably thinking okay, this is great this is a class about selling into retailers like does any of this matter absolutely it matters because ultimately your products are still ending up in the hands of customers and customers are gonna walk into a store and those are the things they're going to think about how often am I going to use it does it work with what I have do I love it how does it make me feel like can I not leave the store without this because then I'll be really sad that's what they're going to think about they're not going to think about how long it took you to make it you know are you charging a certain profit margin it's just not in their brains because why would it be why would they need to think about that so we're going to start to think about the value to the customer and I want teo kind of share another quote from terra since we're talking about terror here we're just gonna we're gonna keep on rolling because this is one that one tear and I used to give pricing talks together a lot she said this and it really stuck with me because I think it's so key to makers so just because something is easy for you doesn't mean it isn't valuable to someone else that is super important to remember. So this necklace, the melissa necklace that we've been talking about I showed you guys takes twelve minutes to make it is super easy for me, it's like a get in, get out it's done so easy, but to someone who has no idea how to metal smiths something they don't know so it's completely valuable to them, not even because they don't know how to make it, but because of again that experience, the way it makes them feel that they can toss it on, and it makes their outfits seem totally done and totally easy and that's, what people are buying. So one of the things that is really important as we're thinking about this value to the customer, is that we have to increase the perceived value, right? So ah lot of times now we're saying, okay, our prices have to come up, how do I do that? So there we go. So how can you increase the perceived value of your prop? Not so we're gonna come back and we're actually define like what the value is for you guys, but how can you increase the perceived value? So first of all, as I mentioned, we're going to focus on customer use, not your process. Your customer doesn't care how long it took to make most of the time they don't actually care about the material if they're knowledgeable, they might ask about a material, but it's usually a deeper root question, and this goes for your store buyers, too. You're also going to sell on benefits and, more importantly, on emotion, not on features so there's this whole kind of thing in marketing, and we're going to come back to this in a future segment when we talk about defining your usp and talking about your products. But the whole idea is that new marketers say that you don't talk about features, talk about benefits, I think you were talking about benefits, you're not going far enough people in our fields, they don't buy based on benefits because the benefits are too difficult to nail down, they're buying on emotion because they're having emotional reactions to a product. So that's, what we're going to sell on and actually the way that we sell on emotion as we sell through story, so we're going to talk about that, but I wouldn't give you a really good example of someone who does a really good job of kind of putting this emotion first, so this is catherine catherine has a brand called the smallest tribe, ah, and this is something she posted on instagram, where she said I tried to make clothes so she makes kids clothes I tried to make clothes that are the comfy ist in their wardrobes so they can climb, run, jump, dig, etcetera all the things that little kiddos need to do to help them gain independence self confidence, resilience and a love of learning so they're pumped and primed and ready to go once they hit school do you know how much people would pay to have their kids become independent, self confident, resilient and love learning like all out of their clothes? That is such a great value to the customer and so catherine could probably charge whatever she wanted because what parent wouldn't pay for all of those things for her kids? And yes so katherine's ace in australia. So yes, her products are made in australia and they are you know they're made with eco friendly all of that stuff is also very important to catherine, but what she understands is that first and foremost parents want these things for their kids and you could apply this to you two people want this for themselves so that's how that perceived value starts to raise the price. The other thing that can help is to position your brand in a better way so a lot of times the same product branded one way feels like one price and branded a different way feels like a different price so I told you guys that story about how it my first trade show like people you know, they were like really those air your prices and yeah, those are my prices but part of the reason that they were asking that is because like booth looks like crap no wonder they thought my prices seemed high because there was no feeling of a strong brand to back that up then I walk into that booth, they don't ask me about my prices anymore they don't say like now, like I said now they're like, well, your prices a really reasonable that's great like we love it, so changing the context I can really help and this is something that as we're kind of working through your marketing materials, is we're thinking about your line sheet is we're thinking about your brand a lot of times it can be these really subtle changes obviously this is not so subtle that's pretty dramatic, but it could be these really subtle changes that really help kind of elevate the brand and then elevate that perceived value to the customer. So the perceived value is going to come both from you know the product and how it makes the person feel but it's also going to come from the brand surrounding the product so before we can really dive into a kind of setting those prices, I want to talk about what that value is so I want everyone to share and we'll start with our studio audience what value do your products provide to the customer again thinking really clearly about the customer use not your process not the materials what is the value that they provide and it's okay we're in a dive way more deeply into this when we talk about us p but I want everyone to take a first stab at it so what's the value that your products provide my convenience there's definitely the first and then second feeling prepared awesome luxury um and healthy coffee and I'm saying that because we often tell people that you don't need cream or sugar in her coffee you can have it as is it's literally that smooth so you want to promote a healthy coffee so how does that that idea like a healthy coffee how does that translate to their experience well um besides that they don't have to now go put cream and sugar hardbodies that's that's a good question um I guess they're experience would be a more positive experience and me is just were so concerned about our health I feel like and maybe that can help them along their journey to get better and because I have some friends that stopped drinking certain drinks because it had too much sugar had too much other things so I was just trying to find trying to find a way yeah still make it because it is a really nice, silky smooth coffee that doesn't need anything in it, so that's kind of the value um oh, and it's low ass it so that's so I'm just trying to bring out health world together in its awesome so and we'll talk about this more later. So uh and I think there's ways that we can actually take what are essentially benefits and really move them further along that the emotion in that story but I think that you understand that obviously for your customer it's more than like a quick cup of coffee, it's really about the experience of the coffee and it fitting into a certain my style than they have for sure I would say, like, safety in that I don't know how to describe this without going into what's in the soap that's what its safety because you know that it's all natural, all vegan and that what's going on your body is totally good for yu um but it's also with a sense of humor and so it's not the, um julie pippi that's begin yeah, different look so so that there's two great points there. So I think for you there's a sense of fun, this like, really kind of sense of playfulness and fun that's really important um I actually I don't tell you a story that I was I was working with someone else who was making soap and and I asked her just to give me a little bit of a background was making bar soap she was making liquid you know products and and so I said give me a little bit of background and she said well you know, I started doing this because I was depressed and I realized that a lot of the chemicals in traditional soaps can cause depression like you're selling happiness what you're selling like we want to talk about health and whatever but like you are literally selling happiness joy a better quality of life and so I think for you because you've already got that like you want it to be fun you don't want it to be this kind of like hippy dippy thing you wanted to have this sense of humor but then why do you want to not have the chemicals in your body and that's really why it's like the chemicals you know you're selling that happiness you're selling better health you're selling all of those things that how much would you pay to be happier come on like really so those air I think there's some really strong values that are gonna help you bring that price up I wanna get you anything add um I think to be organized and feel confident when you take your kids out that it's a dirty task yeah and you're ready to go and you're ready everything's yet to go thank you wanted I feel like you want to be put together you don't want to feel like that mom like right? You want to feel like the mom who has our stuff together and that's what you guys do I think uh helping women express themselves through color like accents of color so how does the color make them feel about themselves? So I think see it makes me feel joyful and more I guess unique in my expression like I can really taylor town feeling like there were blue because I wanted to feel like calm today but if I want to feel like really up by my were like yellow so it actually becomes like a reflection of your mood right? So when my customers say most is that you know, I'll I'll pick a product but my hoops there's something they were everyday they've been looking for him forever. We wear these every day with everything. So I guess I guess I'm selling, you know, like a polished convenience sort of get up in the morning, grab your right you know what you're wearing kind of signature look right that is and you and I kind of sell the same thing in terms of our jewelry in terms of the idea of what we're selling just really that idea of of ease so it's not a customer who necessarily wants to spend hours thinking about her looks she wants to grab go but still feel put together so really is that easy kind of thing happening and then we do it on completely office inspector we really dio absolutely because not for this is I think a really great thing she was that not everyone has the same taste in the same aesthetic so you're going to fit that need but someone is going to buy my product is probably going toe be different that nobody buys your product is because they want something different in their aesthetic but at the end of the day it still feels that same need and they have that same kind of value and um so we sell eh it's really like a celebration of the little ones in your life that are so unique that you don't want to give them something not a million other people can get so we're selling like I guess you'd say like a celebration of personality and uniqueness and also with how much we've been really advocating for work in the community were selling generosity is well like you're being a part of our vision and our efforts to help out in our community yeah, I think you're part of it is for you like you're selling this like certain like you could give your kid personality and it's not like the uh you know it's not a typical thing it's like here's here's my distinct a little person and they have this already have this personality that that you wanna show we joke that it's like what you know up to a certain point when they start picking out their stuff, they're really like an extension of your starter anyways, I kind of just like your personal already more of a e really? Yeah, so all right, like, let your kid reflect you way have online it's really interesting what people are saying because there I think it was earlier was saying if you don't tell the customer what the benefit is, they're just going to make one up, so why don't you make sure you're controlling and steering the story where exactly was really, really good insight into their so actually so I want to I want to add on to that to say that part of it is that most the average person can't really verbalize why they buy the products that they have bought, why they love what they have it's just not in our vocabulary to talk about things in that way, so what they're actually looking for is you to give them the stories because then those were the stories that they're going to tell daydream princes saying their greeting cards allow the customer to show their loved ones how special and meaningful they are through them and then threw handwritten sentiments but having a hard time wrapping that up into a few words or emotions, though yeah, so the so the greeting card one you know, there's a lot of different ones, depending on how you actually, you know what your card saying, what they do, so I'm it sounds like in this case, maybe the ideas, connection and connection in this really like connection care, I would say, because it's, not like I'd asked you often, even like I took the time. And I want you to know that that's really about caring for some people, you know, that they're green cards or about humor, like it's, maybe I want to make you laugh, eh? So there's a lot of different emotions that come in to play just heading on the kinds of greeting cards that you create. A few more lost manus saying my glass and jewelry gives people uniqueness be blakely, my jewelry enables my customer to be able to share their faith. Um, creative spirit. So there, yeah, yeah, people air it's an interesting question from jesse is so rude and I'm sure you're not jesse but that's a good handle. I'm saying that problem is how to how is their story different from any other company that makes a similar product that's what they're asking they're saying so they understand it with jewelry lines value etcetera but will they make is a guitar gear do they really need to be different from anybody else? Is that actually what they need to ah, you know, presenting yeah so that's a fantastic question because what we're talking about here in terms of value isn't necessarily what makes you unique from your competitors or from other people making your product and I think you know, tiffy and I tucker that we actually have it's the same value in the same need that where we are feeling for our customer so it doesn't have to be different than the person next to you because what we're really trying to get at here is how much will your customer pay for that value? What is that value truly worth to them? So in your guitar gear you know, maybe it's like they want to feel like the the amazing rock star even though they're like in there garage you know, jamming with their bodies so whatever it is it's not maybe going to be different from the next guy, but what is that worth to someone? What are they willing to invest to feel that way and that's where this kind of idea of value comes into play awesome. All right, so now we're going to get into actually looking at how to take that value and and turn it into a price that we can actually use, because obviously you can start to think about what people are going to pay. Tio yeah, you too feel happier and healthier, you know, so you can start to kind of put things on that way like, you know, what would you pay for a therapy session and like, this is so much less than paying for therapy or like having your diaper bag, we really organized this so much less than like paying a nanny to follow you around, eh? So you can start to think about what are the values of the alternatives, because suddenly that starts to make your price seems so much less and sometimes it's a little less tangible, so, like, if you can use your color to communicate your mood, maybe there's not an alternative like you're not going to carry around, a sign that says, hey, don't mess with me, I'm angry today, but maybe that kind of serves that purpose. I think there are plenty of people who use their clothing as a sign that says, don't mess with me, I'm angry at the world s o you know, so what is that kind of value to them? You know, if they weren't getting those emotional needs filled from your product where they be turning and what would they be paying? Because it's going to be a lot more than even that price that you guys came up with that feels super scary, but we do want to come up with some concrete prices, so now we're going to start to look at marketplace comparisons and marketplace comparisons are going to help us at least kind of fixing on some numbers because again, that value peace can be pretty scary in a little bit, not scary fuzzy fuzzy is a better word can be a little fuzzy, so the marketplace comparisons though on ly work if one you focus on market places that sell on value, not markets that compete on price. So we're not looking for places where it's that race to the bottom because we don't want to be in that race to the bottom because we know that our products provide way more value than just the price, so we're looking for markets that focus on value, not that compete on price, and then the other thing that we're going to dio is we're going to look for the high prices, not the low prices, because I don't care what the low prices are right, I don't want to be there, and I know I'm not competing on those low prices because I we're talking about value so the first thing that you're gonna want to do is take a look at marketplaces and make sure that you are in the right market places because price varies greatly for the same thing so I'm gonna give you guys a little example here so I went to neiman marcus is website and I searched statement necklaces because you know we're talking about statement uncle's here I want to see what was going on so the range here there is one that's ninety there's one that's like two sixty five my favorite is in the top corner the lawn von plastic it's plastic it's raffia the lawn on necklace which is one thousand nine hundred and fifty dollars I love that it makes me so happy every time I see it because what I see here is that there are people who will spend nineteen hundred and fifty dollars on a plastic necklace makes me so happy but in general it makes me so happy I love people who spend money so but in general what I see here are you know a something's over grand I'm seeing someone like the two fifty range but also you know for seventy five seven ninety so I'm seeing arrange that potentially byproducts could slide into actually I would be pretty I would be on the low end of this market then I went teo a certain big box that we all like to shop at that is not a market I wantto play with it's it's just I don't want to be there and that's fine because that's not what I'm trying to be then I also went teo at sea and it'll statement necklace search um I believe there's one that's four hundred but the average price is about forty dollars also not the marketplace I want to be in so it's really important that when you're doing these market price placed comparisons that you are looking at the right places and I know what you're thinking but I sell in etc but I saw a nazi so don't have to worry about that. First of all I can tell you that I've sold three hundred some dollar necklaces on etc so just because the majority is there doesn't mean it's not impossible but I also want you to realize that in selling to retailers you are going to be stepping out of some of the marketplace is that you've been in it's just a reality of the game but again, you know I could sit here and try to sell forty dollars necklaces on etc and that feels like a lot of work or I can sell these are my retail prices but I can sell necklaces that range you know even at wholesale from eighty five teo you know easily to twenty five up from there at wholesale and actually sell way more of them because I can go out, I can talk to stores, I can control my revenue stream all of those things that we talked about in the beginning so you can stay in a market like this and wait for the sales to come or you can price yourself into that market that's going to understand and appreciate the value of your products and then, you know, make more money being that market. So I also want to talk about this idea that there is, like a perceived price ceiling in certain industries because I know I know greeting cards is one of them everyone's going to say, well, there's there's a price point I can't go above that um I have a friend who does you know she hand dies yarn and we have this argument all the time she says to me, I can't raise my prices I feel like there's a certain ceiling I don't actually believe that there's a ceiling in any industry I really don't and so one of the things that I want you to just try on for a minute is like, what could you do to charge more? So lauren, if you wanted to charge three hundred dollars for a bar of soap, what would you need to do to do that? But golden it e glad you said that you remember material's almost never mattered to your customer so they're probably not gonna buy the bar so just because it has gold in it so there are lots of other things that I want you to think about, you know, is it packaging? Is that putting in a different store? Is it? You know, playing with all these different things? I'm not saying you have to charge three hundred dollars for a bar of soap but I think it's a fun exercise to dio what if I wanted to charge this crazy number even you know, in greeting cards you're looking at, you know, pretty slim high volume but what if you wanted to make a greeting card that retailed for twenty dollars? What would that greeting card? What would it have to be? What wouldn't dio know? So even if you think there's a price ceiling in your industry, chances are either aye there's probably not when you go looking around or b that's a perfect opportunity to break it because if no one else is at that price point you could literally own that market. So what I want everyone to do now is thinking about those examples I showed you of like the neiman marcus versus etc I want you to look on the internet and start searching for the highest price you confined for a similar product and we're talking about broad categories here, so in that example I showed you I just looked for statement necklaces it's not like I looked for metal statement necklaces or broad statement necklaces or steal statement necklaces I just looked for statement necklaces and you could see you know we got the lawn von plastic raffia two thousand dollar necklace that is awesome because two thousand dollars and they said it was so you know we're not searching for like really specific you're just searching for that broad category so I want you guys online to start doing a little bit of searching on and we're gonna actually turned to our studio audience because they already did this um and see what have you guys found in terms of what's the highest price so as we go around tell us again what you make and then tell us what what was the highest price you found for kind of your category or something similar? So we make a diaper changing clutch which is the pad a diaper pad but also kerry also has the storage included and the highest price point I found was one hundred forty five dollars and what do you sell us right now? Forty nine I love it. Yes yeah so we have the chez la take coffee and um for a sixteen ounce which is one pound it was forty two dollars and for forty two dollars and for a eight ounce which is a half a pound was twenty four dollars my twelve outs, which is a little hair less than a pound is fourteen, ninety nine. Yes, so I found a bar of soap for eighty four dollars. It was on sale today for eighty one thank you you guys are you're so we'll skip over to lindsey s o one of my most popular items are enamel stud earrings and in a search I found a pair for eleven hundred dollars they're made out of gold, but if materials don't matter, no matter how nice I sell them for thirty eight so all right, then some room to move up and so my most popular product, irma gold hoops and I found a pair very similar to mine for three hundred and twenty and you actually had a case where people were buying them at retail your old retail price and then marking them up, right? So you knew there was some room to go up? Yes, and so I have ah, infant and children's clothing are most popular products are the infant body suits and children's t shirts. And I was able to find some stores and like rodeo drive in beverly hills ls that I thought it was seventy nine and then I did another search and there they were suffered ninety eight and what are you selling it right now? Uh, between thirty and thirty six I love dan yellow is in the napkin business on she says she found the most expensive one out there were seventy five dollars for a single napkin hers are thirty four fifty so well under half price she says she actually sells them as a set at one thirty eight for then sicily margot is clearly in the necklace business on dh she heard most expensive necklaces one hundred but she's found a plastic necklace for nineteen hundred that's like the neiman marcus. Yeah, interesting awesome. So I know that as some of you guys are doing this and I really want encourage everyone to go out and do this research is you're goingto start teo in your head say, well, that can't be me, right? You're going to say, well, that that lawn vulnerable, yeah that's long on their like, and I came to say it right? Because I don't speak french, you know, they're like this a french fashion house that's been around for a million years and there's such a brand and so that can apply to me or, you know, like I can't you know, I'm not telling on rodeo drive, so that can apply to here are all of these things that you're going to start to kind of want to like, hedge back and say, that can't be me and so what what I always take from looking at those higher prices is I want to flip the question and say why can't that be me because to me with those high prices tell me is that there is potential in the marketplace that someone is buying and that they're spending a lot more money than even I'm charging now you do want to be careful here that you you don't really want to try to like split the middle because sometimes that that middle range is a hard sell so it's often better to cheat up than to try to kind of ride the middle so when you're looking at those prices obviously you know I'm showing you this example and you know it's not nineteen hundred dollars but I also have statements this is in my line that go up tio you know, five, ninety or so so this is definitely not the most expensive piece in my collection by any stretch of the imagination so you don't have to necessarily hit those high prices but you know, I'm lauren and I'm seeing that eighty dollars bar of soap then suddenly like a thirty or forty dollar bar of soap doesn't seem so crazy anymore right? Because you know that there are people out there selling that eighty dollars bar of soap so I want you guys to put on this why can't that be me we had what joe I need two d'oh teo get myself to that point, or even to approach that point, and I get it comes back to those two pieces, you know, communicating the value to the customer, hitting those kind of emotional triggers on ben, getting the brand up to where it wants to be. And I realized that not everyone wants to kind of think of themselves as a brand, um, you know, you might not you might say, like, I don't want to play that game, but here's what I've found, it takes way less labor work to be a brand than it does to be a walmart, right, like walmart makes money because it's like marjan, marjan, marjan and it's, super efficient and super I don't want to do that that seems like a lot of work, right seems way more fun to be long gone and sell chokers for two thousand dollars, right? That seems way more fun. So you ultimately you're in this because you want to be kind of this creative person and trying to hit that race to the bottom is not going to give you what you really want. So don't be afraid to kind of step up the branding, and it doesn't mean that you have to be a luxury brand, so no, I'm gonna pick on lauren again. So you're a brand is that, you know, you've got this that you want have this, like sense of humor and this kind of quirkiness, so you don't have to try to be like the luxury soap brand, but if you go back to that idea of, you know, I'm selling something that's going to make people like, happier, healthier and make it more fun for them. That's a value point two and so that's still increasing your branding and it's gonna help increase that price. Yeah, trapped from don may who's wondering how the value gets communicated when your pieces just sort of on display in a store. Yeah, so that is a fantastic question. And this is where it all comes down to context. So yes, it might just be on display in a store. But what else is going on in that store? What other brands was that store selling? What? You know what fixtures do they have? So when you're selling teo, you know, to retailers a lot of that and perceived value is going to come from the store, but they need to know through, you know, your line sheets. If you're doing a trade show through your booth, they need to know that your branding that matches up with their branding and their experience so you're not necessarily doing that final work of communicating the value, but what we start to see is this trickle down effect, so you know, you're branding influences how stores perceive you and whether they carry you or not, the stories that you tell the buyers about the value of your products, they then turn around and tell them to sales staff who turn around and tell them to the customer, so we're kind of going through the steps to help them and influence them so that in the end, they do communicate that value that basically a psychology and all of this that people do believe even if it's two identical products but one is considerably more expensive, they're going to believe this more expensive one is a better product. Yes, absolutely. And they're definitely gonna believe that the more expensive was, uh, better product and there's also kind of like a psychology and and just you telling people the value of your products so there's like a famous study where if you stick ten people in a room and nine of them are plants and the one person is supposed to pick out which line is shorter and which line is longer and every one of the plants tells you that the short line is the longer line the one person who's being studied will pick the wrong answer because everyone else in the room said no no no it's that one so you can perceive what people think about your products by telling them what they should think about your products if you tell them that the value is health and happiness if you tell them that the value is I feel like a more put together mom if you tell them that the value is that your kid reflects your personality and that it doesn't have to look like every other kid they're going to believe that because why wouldn't they? All right. So the last piece of value based pricing and we're gonna get into some fun gonna do a little pricing hot seat with some of our group here have your great is to look at the final retail price of your products in relationship to each other so we started this segment by talking about would you know what profit margin should I add onto my pieces right? But the truth is that not every piece is gonna have the same profit margin because your price differences need to make sense to the customer and so if we're always just adding a certain profit margin apiece that maybe takes you a little less time or uses less materials might become significantly cheaper even though the customer would say well it has this kind of impact so I don't understand so we want to actually make sure that when we're setting that final retail price everything makes sense so this is an exercise that I highly recommend toe everyone and what you're gonna do is you're gonna take your products and you're gonna get a table the floor some kind of big space and we're going to go you gonna lay them out lowest price to highest price based on where you think your retail prices are at this point and if you have retail prices in the past do it for that for now because it's going to help you see some anomalies and what we're looking for is does it make sense to the customer that this price is here and that that prices there does it make sense that this necklace is on ly five dollars more than that necklace no no I think this is a case where I say all right you know this like this necklace is double the length of this necklace that should be doubled the retail price if I was doing cost plus it's not really it wouldn't really enough double the retail price but it's double the length plus on top of that this is one necklace this necklace is long enough that they can double it or they can wear it long so it's actually two necklaces so that it definitely should be double right it's two necklaces that should absolutely be more and so you can see that this is actually an exercise that I did as I was designing this newest collection as I pulled out some of my old pieces and I set them up you know I sent mixed in these new pieces do they make sense? Is it going to be confusing to people and you have other people take a look at this two so like does that kind of pacing makes sense so and then you can see here I literally just did that math that we just went through where I you know, I did some kind of costing and then I sat down you can see there's a some layered post it notes I got it wrong the first time I to play around with it a little bit but I got to a price that made sense and you don't necessarily have to do this where you pull out your whole line if you're just designing one new piece just pop it in there so that all bronze necklace that was something new and so I just wanted to see so I popped out three other necklaces lined it up trying to make sure the pricing made sense so that is going to help us determine that value because if I know I've got one price right or kind of right in the ball park I can use this to make sure that the other ones makes sense to the customer the other great thing that looking at all of our pieces and all of our prices in relationship to each other let's us dio is it lets us create more range in our prices so a lot of times when I give pricing talks what I actually tell people or what used tell people it's just double your prices they're probably you're probably charging your your retail price you're wholesale prices you retail price so just double them but in reality there's actually a smarter way to do this and it's to think about moving your prices up on a sliding fail so maybe in your first scenario when you first did your prices your first product was thirty five dollars your second product was thirty eight and your last product is forty two and if I had done all of these necklaces and kind of a cost plus pricing system as we saw like materials times for the what this came out to forty two dollars so that's probably where I'd be if I was using that kind of system but what you can do is maybe you say you know what the thirty five dollar one is right maybe that's a pair of earrings thirty five dollars that feels okay but now I'm gonna slide the range up so my most expensive piece becomes not forty two but ninety five and then you know I kind of hit somewhere in the middle and these numbers could slide away more like after you did that research and you found that most expensive piece like maybe that product number three becomes one hundred and ninety five or maybe we stick a zero behind it becomes nine fifty right and then we slide we slide the range because what I have found is that most people do not put a big enough range in their prices because to a consumer then things just don't make sense if there's not that range they see like this is little this is big well why is this only like five dollars more? I don't get it and size isn't the on ly indicator of this but it is one way that customer's kind of look and get confused so this is an extra guys that I want you guys to work on um you know as we kind of move forward into the you know the next segments and stuff is I do want you to take some time to pull your products out and arrange them from lowest to highest sit down take a look. You know. Make sure that the prices there are working and then adjust.