My first “real” business effort (other than buying rental properties) was doing what I called “marketing consulting”.
I was fresh out of college with a fancy degree in marketing and thought I knew all there was to know about how to market a business… that all of that book learning in college was going to pay off big.
When I got up to Portland and gave myself a year to figure out this entrepreneurship thing before I’d force myself to get a job, I started doing some marketing consulting for a mortgage company. Then later I spun that experience and results I was able to get them into another client… then during that client… took another… then I gave it all up.
More on what I gave it all up for in a bit.
But the “why” is more important.
You see, I had a “value problem”.
I knew that the work I was doing was great work. I knew that if a client would get X result… it could mean $XX,XXX+ in profits.
But what I didn’t put together in those early years was how to actually know what my services (or products) were worth…
AND more important…
how to be confident enough in them that I charge enough to make a great profit and still return a great return for the client.
In fact, I’d price myself so low sometimes… just to “get the business” (thinking the price was the main decision factor of these people)… then I’d throw in so much more stuff than I even proposed… that I was making far less than minimum wage. I would have been better off churning burgers out at the fast food line (financially anyway).
So I bagged the whole consulting business because I got my first online company (a publishing company) off the ground and it was earning far more in profits… with 10% of the work than the consulting was.
Fast forward to today. I’ve since sold my shares in a couple companies (sounds fancy, but they weren’t financial decisions… mainly passion and focus decisions)… and in the past 3 years… with my new way of looking at the world… my company Carrot alone is earning more than anything else I’ve ever done… and my workload hasn’t gone up.
Now rather than taking on a client at a $1k/mo retainer and pouring my heart and soul into it for hours upon hours thinking that if I slaved away that the client would appreciate that. Now I find out exactly what the client needs, the value it is to them and their life / business, place a price on it based on the VALUE I’M DELIVERING (not my time or how much I actually will work)… then I do one thing I developed that has put an extra $100,000 onto our bottom line in the past 12 months.
Want to read my “secret” for setting your prices for your products and services so you instantly boost your profits, reduce your workload, and work mainly with great customers you love?
Well… you’ll have to wait until next time (haha, just kidding).
Before I put something out there (this mainly works for products and services that aren’t commodities)… I put my initial gut for what the price should be based on the VALUE the product or service delivers to the customer.
THEN, this is where the magic comes in.
I look at that price again… and add on enough to the price that I start to feel uncomfortable. Uncomfortable that the customer may say no because it’s not cheap.
What has this done?
It’s been magic for both our online marketing strategy company (which went from zero in 18 months to well into the 6 figures in revenue quickly and attracted GREAT clients).. and for our local software company, Carrot, that we launched just under 3 years ago (which has surpassed the 7 figures per year mark already).
Now, the customers we attract tend to be awesome people, who value great things (they’re not bargain hunters), who value investing in themselves and their companies.
And our profit margins are much higher… while keeping the hours we work the same.
Try that out on your next product launch… or pitch for your service. Set your price based on the value the customer gets (deliver 10x more value than the price)… then raise it… enough to where you feel a tad uncomfortable that it’s too high. Then roll with it. You can thank me later.