Ep 128: How to price correctly and sell on value

Subtitle:

Have you ever been inside a store, picked up an item you thought was unique, looked at the price, and then put the item back on the shelf? This is a universal experience in all industries, and is particularly an issue in the agency world. How can we as business owners and professionals achieve successful value-pricing? In this episode, the guys discuss the concept of value pricing and how it can be applied to businesses. They emphasize the importance of differentiating your business and establishing yourself as an authority in your field. They also discuss the significance of positioning through branding, creating your own category, shifting your mindset, and more on this week’s episode. 

 

Summary:

In this episode the guys discuss the concept of value pricing and how it can be applied to businesses. Ken dives into the idea behind value pricing and the role that context plays in determining the price people are willing to pay. He explains that all the information you provide about your product or service is what influences the price people are willing to pay. The gap between the cost and the result is the value, and the more you can push those two factors apart, the closer you get to an irresistible offer. Brad talks about the importance of differentiating your business in a crowded market. He says that as a business or a product, you can only be the cheapest, the best, or the only one. Ken adds that to differentiate your business, you need to establish your positioning through branding and determine your superpower. Bob talks about the importance of establishing yourself and your business as the authority and how that ties into value pricing. He explains that becoming the authority means establishing your own category, creating your own language, and shifting your mindset. Ken discusses the value in becoming aware of the business you’re really in. He emphasizes the importance of understanding your industry and your competitors and knowing how to position your business within that context. He says that if you're not aware of the business you're in, you'll encounter problems. Ken asks, "How do you move to value-based pricing?" and discusses the truth that no one wins if you don’t charge enough money. He explains that you need to use information in psychology to create awareness of all the value around the service that you have. He also talks about how he uses budgeting and cost plans to illustrate to the clients that there is a reason for each part of the price and if they want a price drop, something will need to be cut. Brad talks about clients asking for a reduction in price and uses an analogy to illustrate how this can become an issue in the service industry. He says that it's like going to a doctor and saying, "Doctor, I need a hip replacement," without a proper diagnosis. He emphasizes the importance of establishing yourself as the authority to prevent clients from asking for unreasonable reductions. Bob discusses the importance of positioning yourself as the obvious expert. He says that you need to position yourself as the authority every single time; otherwise, you'll be seen as a commodity. He emphasizes that the difference between those who are able to do value-based pricing and those who struggle with a commoditized business and an hourly model is their ability to position themselves as an authority. Ken talks about the importance of removing your assumptions, beliefs, and preconceptions in order to be able to "charge 10 times as much for that." He emphasizes that you need to think outside the box and be creative in determining the value of your services.

Top 3 Curtain Pulls in this episode: 

 

1. Establish your positioning as an authority and expert. To establish your business as an authority and command higher prices through value pricing, it's essential to identify your unique value proposition and leverage it through effective branding and positioning. Customers are willing to pay more for businesses that they perceive as experts in their field, and by establishing yourself as the authority, you can attract more customers and command value-based prices for your products or services. “You have to get your positioning, we talk a lot about your branding, and like that kind of stuff. And like being like, what's your superpower?”

2. Become aware of what business you’re really in. Identify the unique value proposition that your business offers and how it can solve your customers' problems. Without a clear understanding of your business, it can be difficult to create effective marketing strategies, attract and retain customers, and set value-based prices. By becoming aware of the business you're really in, you can focus your efforts on your core competencies, differentiate yourself from your competitors, and offer unique value to your customers.  “If you're not aware of the business that you're in then I think there's problems.”

3. Determine what the value of your service or product actually is. Value pricing is creating awareness of the value of your service by using psychology. Budgeting can be used as a tool to explain that each part of the price has a reason, and if you want a price drop, something will need to be cut. This approach helps businesses determine the actual value of their product or service. “How do you charge anything for anything?”

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About The Guys: 

Bob Hutchins: Founder of BuzzPlant, a digital agency that he ran from from 2000 -2017. He is also the author of 3 books. More on Bob: 

• Bob on LinkedIn

• twitter.com/BobHutchins

• instagram.com/bwhutchins

• Bob on Facebook

Brad Ayres: Founder of Anthem Republic, an award-winning ad agency. Brad’s knowledge has led some of the biggest brands in the world. Originally from Detroit, Brad is an OG in the ad agency world and has the wisdom and scars to prove it. Currently that knowledge is being applied to his boutique agency. More on Brad:

• Brad on LinkedIn

• Anthem Republic

• twitter.com/bradayres

• instagram.com/therealbradayres

• facebook.com/Bradayres

Ken Ott: Co-Founder and Chief Growth Rebel of Metacake, an Ecommerce Growth Team for some of the world’s most influential brands with a mission to Grow Brands That Matter. Ken is also an author, speaker, and was nominated for an Emmy for his acting on the Metacake Youtube Channel (not really). More on Ken: 

• Ken on LinkedIn

• Metacake - An Ecommerce Growth Team

• Growth Rebel TV

• twitter.com/iamKenOtt

• instagram.com/iamKenOtt

• facebook.com/iamKenOtt

 

Show Notes:

[0:54] Ken opens this episode with a chat about how he is not a pet person. 

[1:41] Brad says that he’s so thankful for the guys and the time spent together on this podcast. 

[3:53] Bob discusses new AI voice technology and dives into possible future applications. 

[7:05] Ken introduces today’s topic “we're going to talk about how to charge anything for anything.”

[7:21] Ken dives into the idea behind value pricing as well as the role context plays. “All the stuff that you say, is really what influences the price people pay.” … “That gap between like, what does it cost me, and what is the result; that's the value. Everyone's pushing those as far apart as possible, and the  more you can push those apart, the closer you get to an irresistible offer.”

[10:40] Brad talks about the importance of differentiating your business. “As a business, and as a product, you can only be the cheapest, the best or the only.”

[11:22] Ken peels back some of the layers of value pricing by discussing the crucial element of positioning through branding. “You have to get your positioning, we talk a lot about your branding, and like that kind of stuff. And like being like, what's your superpower?”

[14:02] Bob talks about the importance of establishing yourself and your business as the authority and how that ties into value pricing. 

[16:25] Bob dives into the significance of establishing your own category, creating your own language, and shifting your mindset. 

[22:54] Ken discusses the value in becoming aware of the business you’re really in. “If you're not aware of the business that you're in then I think there's problems.”

[25:33] Ken asks, “How do you move to value based pricing?” and discusses the truth that no one wins if you don’t charge enough money. 

[33:55] Brad talks about clients asking for a reduction in price and uses an analogy to illustrate how this can become an issue in the service industry. “It's like going to a doctor and saying, Doctor, I need a hip replacement. And the doctor is like, how do you know that? So they come with their own diagnosis, and they're looking for a doctor to prescribe something for them.”

[36:14] Ken defines value pricing as “using information in psychology, to create the awareness of all the value around the service that you have.” He also talks about how he uses budgeting and cost plans to illustrate to the clients that there is a reason for each part of the price and if you want a price drop, something will need to be cut. 

[43:56] Bob discusses the importance of positioning yourself as the obvious expert. “You've got to position yourself as the obvious expert every single time otherwise, you're going to be seen as a commodity. that's the difference between those people that are able to do value based pricing and those who are struggling with a commoditized business and an hourly model.”

[45:57] Ken talks about the importance of removing your assumptions, beliefs, and preconceptions in order to be able to, “charge 10 times as much for that.”

[47:37] Bob wraps up by asking the listeners to, “Please like and recommend this podcast. We haven't asked you to do that in a while and to all you audio listeners, we do have a YouTube version of this. We haven't pushed that a whole lot lately either. So you can go to YouTube and just search up ‘agency exposed podcast’ and find us there.”