March 2, 2025 • 38 mins
We dive into the complex world of pricing, addressing how service providers can find effective pricing strategies that reflect their value and meet client expectations. Peter Giordano III shares his insights on the psychology of pricing as well as practical steps to boost profitability.
• Common pricing challenges service providers face
• Understanding value versus cost in pricing decisions
• The concept and benefits of gateway offers
• Psychological tactics for effective pricing
• Various pricing models: hourly, fixed, and performance
• Strategies for overcoming pricing objections
If you've found value in this episode, drop a comment and let me know what your biggest pricing takeaway was from this episode!
Join my events community for FREE monthly events.
I offer free events each month to help you master your business's growth through marketing, sales, systems, and offer strategy.
Join the community here!
Are you tired of prospects ghosting you? With a Gateway Offer, that won't happen.
Over the next Ten Days, we will launch and sell our Gateway Offers with the goal of reaching booked-out status!
Join the challenge here.
Join the Tiny Marketing Club >>> Join the Club
Come tour my digital home :) >>>Website
Wanna be friends? >>> LinkedIn
Let's chat every Tuesday! >>> Newsletter
Catch the video podcast on YouTube >>>YouTube
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Tiny Marketing.
This is Sarah Norblok, and thisis a podcast that helps B2B
service businesses do more withless.
Learn lean, actionable, organicmarketing strategies you can
implement today.
No fluff, just powerful growthtactics that work.
Ready to scale smarter, hitthat subscribe button and start
growing your business with TinyMarketing.
Speaker 2 (00:23):
Pricing your services can feel like throwing darts in
the dark.
Too high and you scare peopleoff.
Too low and you're leavingmoney on the table.
So how do you find the sweetspot?
Today we're breaking it downwith Peter, a pricing strategist
who helps consultants andservice providers price with
confidence and how to maximizetheir profitability.
(00:48):
So we're going to cover how toturn intangible strategy into a
tangible value, when to revealyour pricing and how to use
psychology to make your pricingmore persuasive.
Plus, peter sharesgame-changing insights on
gateway offers and biteablestrategy approach.
(01:08):
So if you want to charge whatyou're worth and have your
clients see the real value andfeel like they're getting a
steal, then this episode is foryou.
You are listening to episode126.
I am Sarah Noelle Block andthis is Tiny Marketing.
Speaker 3 (01:26):
I'm Peter Giordano III.
I am a pricing strategist and Ireally help consultants and
other service providers who sellstrategy to really nail their
pricing.
It's really hard to equate somequantifiable value.
So one of the first things Iwill say and one of the things
that I solve is really trying toas closely distill to a
quantifiable value as possible,making it tangible even if it is
(01:48):
intangible, and being able tohave a conversation with the
individual on the other side totalk about value.
And it's not perfectly purelyvalue-based pricing, but it is
being able to try to get tosomething that is tangible,
making it more real.
And you talked about thegateway offer in episode 108.
We talked about my gatewayoffer 10K in one day which was
(02:08):
literally designed to do that,which was to break off a piece
of strategy to make it tangibleshort-term right, like in lower
price and lower risk, so thatpeople can actually more easily
buy it, so it's easier for youto upsell or to convert over to
your signature offer.
Speaker 2 (02:27):
Yeah, that is exactly how a gateway offer works is.
The idea is to pull them inwith that strategy, because
you're teaching them how you canget from A to B and then moving
them toward the next project.
I think strategy works reallywell in bouncing off of what you
said, when you're making ittangible, value-based, and I
(02:50):
want to say biteable, instead oflooking at a massive strategy.
Creating biteable strategiesthat accomplishes one goal and
then moving on to the next goalcould be an easier way to sell
it.
Speaker 3 (03:06):
Biteable strategies.
Speaker 2 (03:07):
I literally just came up with that right now.
Speaker 3 (03:10):
That's what happens.
That's what happens when we'retalking Just random things,
excellent things, yeah, no.
But biteable strategies, is youwant?
Even let's relate this topricing, right, let's relate
this pricing.
And the reason why I thinkwe're talking about this
actually I know why we'retalking about this is that
strategy, all these things beingintangible.
Price is tangible, like we arehumans.
(03:32):
Literally everything has aprice tag on it.
Even if it's free, everythinghas a price tag on it.
We know what price means, likemoney, we we can viscerally like
, we feel it, like we know it,it it's tangible to us, and so
the moment that price comes up,it grounds us.
Every time it just grounds us.
You solve my pain, you can solvemy problem, you can really just
(03:55):
totally speak to me, but themoment that price comes up, we
want to compare.
That's just what we do.
We compare something versussomething else, and so it's like
being there's a differencebetween messaging the pain and
messaging the problem, andmessaging for attention versus
the messaging around price.
And so it's when we talk aboutstrategy is hard to sell, and
really getting to those biteablestrategies and even getting
(04:16):
more tangible and more real isit makes it easier to compare
against price If we're able tohave a conversation in a fit
call or a discovery call thatbasically can get somebody to
estimate their value of aproject, for example, like if
they can get to say I reallywant a scoped project to make me
a hundred thousand dollars andI know this is really vague, but
(04:39):
that is a tangible reason ofvalue, right?
A hundred thousand dollars, andnow you can price accordingly
to that number.
Now you've been able toactually set aside a comparison
apples to apples.
Speaker 2 (04:49):
That is really smart.
So when someone books mygateway offer, which is a
strategic spark in that formthat they fill out at the
beginning of it, it asks themlike what's their revenue now?
What is their lead gen goal?
Where do they want to be nextyear?
Are they getting enough leadsnow?
What is the true value of thestrategy I'm giving them?
(05:11):
How much money do they plan onmaking from it?
Speaker 3 (05:15):
Yeah, you're either pricing the scope or you're
scoping the price.
In all honesty, I went on inthe first conversation in
episode 108, which is like themost simple sustainable business
strategy is what?
Right, your price is above yourcost, but your value is above
your price.
So value is always greater thanprice.
Price is always greater thancost.
That's a sustainable formula,right?
(05:37):
Being able to iterate on thatthat is really it, and being
able to quantify your valuablevalue makes pricing much easier.
Our ultimate goal is for theclient themselves to be wow,
that was a bargain in you, tofeel unbelievably well
compensated.
Right, like that's what we want.
Speaker 2 (05:53):
So what I'm hearing so far is that when you're
deciding on price, you need theprice to hit the sweet spot
where they feel like this is asteal and you feel like you're
well compensated, and theyshould.
The client should be able toequate it to a certain value, so
(06:15):
it's easy for them tounderstand why it costs what it
costs and why it it should costthat much a pricing strategy is
much more than just how much tocharge, and we've been focusing
in on the value should helpinform us to know what to charge
.
Speaker 3 (06:32):
But there's much more to that right there in.
From a pricing strategyperspective, there is like when
do you reveal the price right?
How do you use behavior,economics and psychology to
anchor the price in a differentway?
How do you make sales,economics and psychology to
anchor the price in a differentway?
How do you make salesobjections more palatable?
How do you actually positionyour service as it relates to
(06:54):
price?
How do you make every singlesale from a financial lens
profitable?
Speaker 2 (06:58):
All right, let's pause there, because I want to
deep dive on a few of thosethings that you talked about.
So one when should you revealit?
Should you have your pricing onyour website, or do you wait
until after the discovery call?
Speaker 3 (07:11):
I knew that question was going to come up.
There are multiple answers tothis and I don't want to be just
that.
It depends type of person Icurrently have.
Speaker 2 (07:17):
It depends is coming.
Speaker 3 (07:18):
That's because it's a strategy, right?
So here's what I would say is,if pricing is also a filter,
right.
If you show somebody your price, it's on your website and they
choose to book a call, they'vealready subconsciously equated
some version of value.
They know that there's possiblyan affordability, right.
So now the conversation changeswhere you're focusing in
(07:39):
specifically on scoping what andso forth.
So I would say, in a sense,that if you do have your prices
on your website, you know what,when a good moment to do that is
if you are jam-packed withclients right.
You want to use pricing as afilter.
Or if your strategy is to usepricing as a filter, right,
Because your time is now of theessence, like you are now
competing against your calendar.
(08:00):
But there are other times whereI would suggest no, you don't
actually reveal it.
Because if you do want to havethe value conversation and
you're having a conversationwith a $10 million organization
and what they specifically wantis for you to save them a
million dollars, you canactually equate your price to
that value and by showing itcost $2,000 to do your process,
(08:20):
that's actually not hurt youfrom an anchor perspective.
So I would say, is if you'refocusing much more on the
value-based process and you canmore effectively wait and hold
off to have the nice fit calls,the discovery calls.
But if you are superproductized, you have a growing
(08:40):
sales pipeline and you'recompeting against time and you
want to use that as a filter oryou want to really structure it
in a way in which is clearbefore they talk to you.
Then you can put it on thewebsite.
It's perfectly fine.
So there are.
It depends in this answer.
Speaker 2 (08:56):
Okay, so just to reiterate if you have a solid
sales pipeline and productizedoffers, it makes sense to put it
on your website so you canfilter out anybody who wouldn't
be a good fit anyway.
And if you are doingvalue-based pricing and there's
more nuance to your offers,especially like custom offers
(09:18):
which a lot of service providershave, then it doesn't make
sense to have it on your website.
Speaker 3 (09:22):
That's correct.
Speaker 2 (09:23):
Okay, now let's talk about anchor pricing.
Can you describe what that is?
Speaker 3 (09:28):
So anchor pricing is really the psychology of when
you see some higher number, theless number seems just much more
affordable or just seems somuch more in reach.
You can use anchor pricing interms of making a high number
look small.
But there's also like anothernew aspect, that which is like
the decoy effect.
If you've ever heard of thedecoy effect, the famous example
(09:50):
is the popcorn.
Like this is the jumbo sizepopcorn for 50 cents more, Right
?
And so what you're doing isjust anchoring a high number
against the low number.
It is anchoring value againsteach other.
So it's like the small popcorncost five bucks, the middle
option costs 750 and the jumbocosts $8.
And you look at that and say,wait, what?
(10:11):
For only 50 cents more I getall that extra.
And that's the decoy, right.
And so you can move yourpricing strategies to drive
behavior, to let the individualpick what you want them to pick.
Now here's the thing is, somepeople will say it's an ethical
strategy.
Some people will say it's notand in the grand scheme of
things, like you are stilldriving behavior in everything
(10:32):
that you do.
As long as you can stand byevery single value that you can
create in all three of yourservices, that it's not just a
true decoy, then it is anethical strategy and I still
would advise doing it in certaininstances.
Speaker 2 (10:46):
Yeah, okay, I hadn't heard it called that before.
I have a training inside thetiny marketing club.
I call it popcorn pricing.
Speaker 3 (10:53):
There you go.
Speaker 2 (10:54):
Where you're pricing strategically to get people into
the offer that you actuallywant to sell.
Speaker 3 (10:59):
Yes, yes, and the one that you actually want to sell
is not just the one that you canprobably deliver the most value
, but it's also one they'll seethe most value relatively
speaking, because for you youmight be amazing at your lowest
offer and you can use a decoyeffect to drive people to your
lowest offer.
You can use a decoy effect todrive somebody to your highest
offer, and I know the term decoyis really hard to swallow.
At times we can call it thepopcorn, but in reality that's
(11:22):
what it's doing.
It's really just drivingbehavior towards the offer that
you want, and that is a pricingstrategy.
Speaker 2 (11:27):
Yeah, and it becomes easier to forecast too when you
use that, because you have abaseline that you can use for
forecasting.
If I get this money leads, thisis how much money I'll make.
Speaker 3 (11:40):
Totally true, no, absolutely true, and right and
not.
But the thing with that is,let's talk about this, which is
decoy pricing is most effective,or this anchoring effect is
much more effective when it'slike you can see it optically,
visually, right If you can seeit on a website, or so forth.
Speaker 1 (11:57):
And we see this all the time with like StatsBase.
Speaker 3 (12:01):
Now, can it be in a call?
Or I did this like a call eventhough we're having a live call,
like this is can you do it?
Yeah, of course you can.
You can still anchor people.
You first drive, you say 10,000first and then you say 1,
thousand land.
That's a version of anchoring,but it's really effective when
it's optic.
Speaker 2 (12:17):
Okay, that makes a ton of sense.
So we have decoy pricing, wehave anchoring, we have equating
your pricing to the value or,probably more likely, the goal
that they have.
Speaker 3 (12:32):
All right, here's another one too.
The endowment effective meanshey, we've put our blood, sweat
and tears into these services,we know their value.
Even though it's not tangible,we can feel it, we know it.
It's hard to explain it, and soI think sometimes that
endowment effect is apsychological bias or cognitive
bias that actually harms thevalue conversation or harms the
(12:53):
pricing objection conversationor harms, like, our own ability
to value and price our serviceas well.
So that's just another layer ofpricing psychology.
Speaker 2 (13:02):
How do you overcome that?
Speaker 3 (13:04):
That is so hard.
Speaker 2 (13:06):
No, that one's hard.
Speaker 3 (13:06):
No, that honestly, in all honesty, that, like we have
cognitive biases for a reason,right, these are the internal
battles that we have and it doestake sometimes coaching and
conversations for us to actuallysee as my favorite line is,
it's hard to read the label frominside the jar and sometimes
even in pricing or strategy orvalue conversations, in order
(13:29):
for us to actually get out ofthese cognitive biases or these
pricing strategies, havesomebody on the outside helping
you read the label, right,because it's really hard to read
the label from inside the jar.
Speaker 2 (13:40):
Yeah, whenever I'm thinking through a new offer, I
always schedule a bunch ofconnection calls with people who
would be a good fit for it andI don't try and sell them on it,
I just talk through the offerand ask them if they think the
pricing should be on it so I canworkshop what people are
valuing that kind of offer at.
And that has helped a lot.
(14:02):
And it also leads topre-selling an offer, because if
they hear and they're like,yeah, I would pay this for it,
okay, do you want to?
Speaker 3 (14:11):
In the service game.
Sometimes it's not evencompetition In the service game.
Sometimes it's not evencompetition, it's really just
being able to define your valueagainst your price, and just
being present and being knownand being the person to talk to
is part of just the game, and sopricing isn't only a numbers
game, it is also a feeling game,and that's what we're trying to
make clear.
Speaker 2 (14:32):
Yeah, so that means that leaning into building your
visibility and your authorityaround your specific offer and
your messaging and propositionis extremely important, because
once people start thinking aboutyou as that person, then
they're automatically going tosee more value in what you do,
(14:52):
that's absolutely correct.
Speaker 3 (14:54):
There's ad hoc pricing, which is if you're like
in boutique consulting, thescope always changes and so you
need to have a framework to dealwith kind of ad hoc and defend
against scope creep.
There is price optimization,which is you already have an
existing offer and you want tomake sure the pricing strategy
is optimized to fit both yourgoals as well as the client's
(15:15):
value.
And then there's what you justmentioned, which is price
discovery, and that's likesetting a brand new price for a
new offer, even like a newbusiness model and so forth.
And while pricing from thestart I've always said is
exceptionally impactful becauseit has downstream implications,
I think the first go about it isyou can actually start with one
(15:40):
type of pricing and then change.
I think that there are five andI'm going to go down this path.
It's like there's hourlypricing and we talk a lot of
people talk about hourly pricing, especially if this is a
service, particularly in theservice business is if you are
selling something that isrepeatable or if it's a scoped
offer, is that you're not justselling hourly but it's fine to
start there.
Sometimes you don't have youryour stuff dialed in.
(16:02):
If it's only a new offer, thenyeah, you can go actually right
to value.
I like that.
That's number two right Iswhat's the value?
Right that you can equ, startright out fixed.
You can say, hey, the projectcosts this.
But the problem with that is, Ithink fixed pricing really
(16:22):
requires you to be really dialedin to your service delivery and
fulfillment.
And if you're doing a new offer, it's hard because you're still
exploring, unless you're justit's just an add-on function, or
it is something that you havedone, but done differently, or
it was a part of another offer.
What are your thoughts of that?
Speaker 2 (16:42):
Yeah, I'm thinking about me five years ago, how I
priced my offers at thebeginning.
I started just timing how longit took me to do everything
involved in that offer and thenI equated an hourly rate.
It was like at the verybeginning I just divided my
(17:02):
salary and then added somethinglike 50% to cover the additional
costs and overhead and thingslike that.
So that's how I came up with myhourly price and I priced it a
fixed amount, a project amountbased off of that, Because I
also really don't like the ideaof telling someone how many
(17:22):
hours it's going to take andthis is what I'm charging per
hour, Because then they start tothink, why does it take you so
long?
Or they want to know whatyou're doing hour by hour.
And it really causes a powerimbalance when you charge hourly
and you're displaying yourpricing that way too.
Speaker 3 (17:42):
The more clients that you have, the more solidifying
you are.
You're creating for thatvalue-based pricing or that
fixed based pricing, or even ifit turns into a retainer.
The other option is likeperformance-based that one's
really hard.
That's a really big risk.
It could be super upside, butperformance-based that one's
really hard, that's a really bigrisk.
It could be super upside, butperformance-based ends up being
like requires a lot of trackingand so forth.
(18:02):
So I guess, ultimately, how I'manswering this question is the
first time you price a new offeris not going to be the last way
that you price that offer.
Speaker 2 (18:11):
Yeah, I can testify to that, yeah exactly.
That changed how I price amillion times.
Speaker 3 (18:20):
And that's fine as long as the like now.
So, as you go into this.
So now we're talking about anew offer, right Now we have a
new offer, and where it sitsmatter, right, is it a gateway
offer, is it a signature offer?
Is it an upsell?
And the reason I say that is ifit's a gateway offer, you may
strategically sell, undersellits value 10x, I want 10x the
(18:42):
value, I want 20x the value.
I'm intentionally making surethat is my pricing strategy.
Your signature offer, you maysay I still want them to feel
that value-based.
I want it to be 3x or 4x and soforth.
So I guess also the questionthat we have to ask here is what
type of offer is it?
What type of service is it?
Where does it fit in yourprofile?
Speaker 2 (19:02):
That is to talk about , because, yes, gateway offers
need to be high value, low costto get people excited and hooked
in on you, like you createdsomething that is going to
change my business and it onlycosts this much is it's a hook,
so we can bring them into alarger offer.
(19:25):
The signature offer and yoursignature offer needs to be
priced at a point that will helpyou hit those annual revenue
goals, because if you're notable to hit those, pay your
bills, live the life that youwant.
What's the point?
Why did you start a business?
Speaker 3 (19:41):
Yeah, one of the things that we've talked about,
you and I in the past onnumerous occasions is I call it
max revenue or business model.
Yeah, one of the things thatwe've talked about you and I in
the past on numerous occasionsis I call it max revenue or
business model max, and I thinkyou've called it something
similar, which is like reallyunderstanding what is the
capacity that your businessactually enables you, and this,
if I have to say, it's therelationship between price, the
time it takes for you to fulfillyour offers let's call them
(20:04):
your active offers.
Every business needs businessdevelopment time.
It's really like the directrevenue generation time.
So if we could find therelationship between price, the
time you invest in revenuegenerating activities and how
long it actually takes for youto fulfill your services, you
are going to find the maxrevenue or the max business
model, based on what youactually offer.
Speaker 2 (20:27):
Yes, that is exactly how my old coach taught me to do
it.
This is the revenue I want tomake for the year.
Now, how much time does it takeme to execute that offer?
How many can I realisticallysell and then I'll know what the
pricing is?
But you also.
It could be unrealistic, so youalso have to compare that to
(20:50):
what does the market say thatthey'll pay?
Right, you might want to charge10 000 for something that other
people are charging 4 000 foryeah, you got to.
Speaker 3 (21:00):
It's pricing is relative.
It's a comparison game, so it'salso relative, not just the
value that you provide, but it'swho you're providing it for, is
it?
A $10 million company.
Is it a $100,000 company,friends?
Speaker 2 (21:24):
Huge difference, just them.
They have clients that aremidsize and they're family-owned
manufacturing companies.
That's who they sell to.
Their clients make somewherebetween $15 million and $30
million a year.
They're US located and thevalue proposition that they have
(21:46):
what they do is they help theirclients find the bottlenecks in
their operations and streamlinethem through tech, sops and
structure.
The consultant, who is so low,has a goal of making $300,000
this year.
So how would you guide themthrough deciding their pricing?
Speaker 3 (22:04):
Is there a pricing model that is being typically
used?
So, for example,performance-based, value-based?
Are they pricing hourly?
What currently might be theirstructure?
Speaker 2 (22:15):
Based on the consultants I've worked with.
They started at hourly.
Speaker 3 (22:19):
So we have an hourly rate, and so let me, I'm going
to do public math real quickright here.
This is scary.
Speaker 2 (22:25):
Grab a calculator I feel.
Speaker 3 (22:26):
So the thing is what we talked about.
So let's just go back somewherewhich is, even if you work like
40 hour weeks, and all that wecan use 40 hour weeks is you
still need time for biz dev andyou still need time for admin.
So we're talking about, if itwere five and five, so 30 hours,
that's I'll have to do thepublic math.
Is that that $250 an hour at 50weeks, $200 an hour?
(22:47):
I wish I did public math betterin that sense.
So we're talking about $200 anhour at 30 hour weeks for, like,
basically, 50 hour weeks or 50,50 week years, all right, so
this person would have to bedoing $200 an hour.
And so, if it's an operatingconsultant, so even if it was
doing hourly, is one of thethings that you had said in the
(23:07):
manufacturing companies is thatwhat they were doing was SOPs,
they were doing automations andthey were doing other
operational aspects.
So honestly, as I'm hearingthis, let's go to value.
So now, so my firstconversations would be around
time, because my so if I hearoperation consultant, I hear
manufacturing.
A manufacturing company at thatscale is going to have multiple
(23:30):
employees.
So now what they're eithergoing to do is they're going to
create efficiencies, which isgoing to either A save them time
, or, b it's going to createefficiencies to save them time
and then to repurpose time, orit's going to allow them to save
costs, probably on new hiring,employees and so forth, like
that.
So to me, in my brain right now, if we want to make this as
tangible as possible, we reallystart focusing in on this time
(23:53):
element.
That's probably the value lever, and so now it's really getting
clear on what the timeframework is to talk to
manufacturing companies about.
Now here's the thing If this opsconsultant works with the same
exact, identical manufacturingcompany every single time, this
(24:13):
makes it a lot easier, right?
If it's a $20 millionmanufacturing company that is
four years old, that does thisand this, now you can actually
start to use your framework andhave proof behind it that says,
hey, I say 5%, and 5% means this, right.
But if it's a manufacturingcompany between 15 and 30
million one's 50 years old,one's 10 years old, and now we
(24:34):
have to use a little bit more ofa higher level framework to
start to understand and quantifytime.
So one of the first things thatwe now know that we basically
need to price at $200 per houror some version of a fixed price
of that is to start to have thefit calls or the discovery
calls based on time.
What is it that you want?
We buy wants?
What your manufacturing companyactually want is that I want to
(24:58):
save 10 hours a month.
Right, I want to save 10 hoursa week and it's really starting
to hone in using the frameworkto get to that first value based
conversation.
Speaker 2 (25:08):
Yes, let's say that she has been doing it for a
while and she's seen on averagethat she saves them about 10
hours a week in time 10 hours aweek.
Speaker 3 (25:19):
We're talking about 500, right, 500 hours a year for
this manufacturing company.
500, right, 500 hours a yearfor this manufacturing company,
sound right?
So, look, I fixed my publicmath this time.
Here's the thing.
It's about 500 hours.
One of the things that we can dois, in our calls and our
conversation, ask questions thatare going to allow us to get to
some version of dollar per hour.
(25:40):
Maybe you could go at a superhigh level and just figure out
how many employees are.
And one of the things is youcan make assumptions.
Which is right 50 hours a week,40 hours a week, how many
employees?
You can just get a sense as towhat's the cost per hour.
Right, you can just get aframework for it.
So you can start to understandthat if it were basically like
(26:02):
the value of this company andthe hourly rate in some sense is
a hundred dollars an hour,right, now we're talking about
50,000 worth of value, right?
Isn't that what?
500 times a hundred is right,$50,000.
So $50,000, we now have just asimple framework that we can
begin to have the valueconversation if they want to
save that much.
And so now we're talking about$50,000 worth of value.
(26:25):
And again, not perfect, butwe've now changed just this
we're going to help you createinefficiencies and we're going
to make things more efficientinto something that is dollar
value.
It could be people value.
You could be growing withouthaving to add any additional
staff time and so forth.
Like that.
This is like the first step ofmy conversation with somebody
would be like help me understandwhat you really want and
(26:50):
getting it to a monetary term.
Speaker 2 (26:52):
Okay, so we have the value of the project at $50,000.
And it takes her I think I said15 hours to execute it.
She needs to average $200 anhour in order to hit her revenue
goals.
Speaker 3 (27:06):
All right.
So this is probably an instancelike the way in which I had
this conversation is it doesn'tyou can, you don't have to go to
the hourly route.
So we just said that if it'staking about 15, 15 hours for a
$50,000 worth of savings, that'sright.
Now you're starting to get intoreally high ROI territory.
Now you're starting to get intoreally high ROI territory.
But here's the thing is, whenwe talk about pricing to value,
(27:27):
is you want to deliver the value?
Right, you want to deliver thedifference between the 50,000
and the cost, or for them, thecost would be the price.
So what is it?
One of the things is like whatis it that you actually want to
deliver?
And while you're somebodysaying it's like well, you're a
pricing tribe, just don't youtell me exactly how much you
want to charge.
But if you go back, if you goback to a few things that we
(27:50):
said, which is we're in theservice game, a lot of this has
to do with emotion, it has to dowith psychology, it has to do
with the feeling which is I wantthe client to be like, wow,
this, they're a bargain.
And you would be like I feelvery well compensated.
And so if you past experiencesays that you find that 10 X is
that number, that you start torevolve around that to be 10 X?
(28:12):
Another question, and I'm justgoing to go down this path.
Another question is to actuallyask the budget question.
There's nothing wrong withasking the budget question.
Ask the budget question righthow much do you want to invest
in this?
This is another anchoringprocess.
If they're like $5,000, thereyou go.
$5,000 at that point is now a10x to gain, and $5,000 divided
(28:34):
by 15 is actually $333 per hour.
So you feel it's above yourrate, but it's also in line with
their budget.
While I think hourly is fine,there are other ways and there
are better ways to start toalign your pricing strategy.
What to charge with theirperception of value, with their
(28:56):
budget?
Right, it's starting to make ita little bit more tangible.
Now, this is all high level youand I just created this scenario
variables that we could havethat are probably included in
this right.
But we can get to it if westart to quantify it, if we
start to ask questions and wefeel confident in what we
deliver and we actually havesome strategy walking into this
conversation.
Speaker 2 (29:16):
Yeah, After we went through those questions, you
went in two different directionson possible ways to price.
So you had the option of justasking what their budget is and
seeing if it aligned with whatwould make sense for you.
And then the other one is howmuch do you want to X their
value?
And then you can price itaccording to that.
(29:37):
So you can you have somethingthat you can compare it to.
Speaker 1 (29:41):
Right.
Speaker 2 (29:43):
And now my brain has rewired on pricing.
Speaker 3 (29:45):
Everything's changing .
Yeah, look, we're havingpricing while we're talking
about this.
What to charge is a lot oftimes is part of the
conversation.
It does be behavioral economicsas well, but there's a whole
elements of pricing strategyaround that, Like in the
proposal, like this is a verysimple call, but there's a lot
price objections, right?
What do you get when you haveprice objections and so forth?
(30:06):
All right, To me, there's threeprice objections, because the
messaging around pricing is verydifferent from the messaging
that we said is to talk aboutpain or the problem.
I either don't have the moneyfor this, I don't see the value,
or I see the value.
I just don't trust you.
Those like, when it comes downto pricing objections when it
comes down to pricing.
Those are really the only three.
(30:27):
And guess what?
It's fine If the person doesn't.
If you only have 6,000 in yourbank account and you see
something that costs 10,000,sometimes you're just limited in
the amount of money that youhave.
Speaker 2 (30:37):
Yeah, he just can't fund it.
Speaker 3 (30:39):
Value.
I don't understand what you'retrying to get to me.
That's on you.
You really just have to getreally clear.
And this is that, van.
This is that value conversation.
And then the third one like Isee the value, like we just
talked about the value in ourreally simple example right here
, which is, if they want toprice at $5,000 for $50,000
worth of returns, like they cansee the value.
That's a 10 X.
The problem might be like Ijust don't trust you.
(31:00):
Like meaning, meaning it's acredibility gap.
I think, that's on us too, andwhat we have to do there is we
have to either do risk reduction, which is guarantees, but you
can add guarantees.
You can add.
You can risk reduction forpricing in terms and methodology
of payments.
You can show a ton of socialproof Like you can tell.
You can ask for case studies.
(31:21):
You can actually have them talkto past clients.
But objections open theconversation.
They don't necessarily close it.
Speaker 2 (31:28):
No, I agree with you.
Every single sales conversationit will have some kind of sales
objection to it and as far asthat trust, being patient, is
incredibly valuable to you.
It will make you so much moremoney Because when you're
creating your content the rightway and you're nurturing those
(31:50):
leads that may have been likeI'm going to think about it they
will trust you from that.
They will learn to trust youbecause you earned it through
that content.
I have found that the longerI've been a content creator and
showing value, the more oftensales conversations just become
(32:10):
logistics conversations.
Speaker 3 (32:12):
Yeah, I'll say this.
It just made me think ofsomething and I have to share it
, which is we talked about thedecoy effect but, like also in
some of these salesconversations and some of these
pricing conversations and someof these offer conversations,
please give some options.
Give options, because if youjust give one option, the answer
is either yes or no.
Yes, that's true, if you givemultiple options, the answer is
(32:34):
which one do I choose?
So this is the wholeoptionality.
This isn't the decoy effect.
This is give options and youcan give variations to them so
that they can see value.
Variations to them so that theycan see value.
And if, for some reason I'llsay this to any other price
objections is if somebody saysit's too expensive or they want
a price reduce or it's outsideof their budget, which is
perfectly fine you can alwaysask them what do you want me to
(32:55):
take out?
And you can also gracefullywalk away.
Speaker 2 (32:57):
Yes, I think that's something that our egos often
don't allow.
But de-scope you don't have todo absolutely everything or set
up your project in milestones,so you're hitting one goal and
that's a standalone project, andthen they'll make some money
and then you can hit the otherone in another milestone.
So there's lots of differentways you can move around pricing
(33:21):
objections.
Speaker 3 (33:22):
It's not just one instance.
You're not just buying onething.
You will market around pricingobjections.
It's not just one instance,right.
You're not just buying onething.
You will market as you fulfill.
Because while we might be onething to somebody who doesn't
know us, once they get to knowus we have more skills and
there's economies of skills,right, Once you start to work
with somebody, you have otherskills.
There's tangential skills, youhave other skills, there's
(33:46):
tangential skills.
And instead of bringing in anexpert for absolutely everything
, you might have one, two orthree really high valued skill
sets and you can actually startto say oh, guess what?
I could also help you with thattangentially.
And by you already knowingtheir business and by you
already having that skill set,you're actually saving them time
and efficiencies as well andyou can start to do those
bundles and discounts on theirtime and on their pricing.
Speaker 2 (34:06):
When you do a gateway offer, you're identifying the
entire scope of what they'llneed now, but also a year from
now.
But you can build out projectsbased off of that, knowing what
you can upsell six months fromnow, based off of what you'll be
able to accomplish today withthem.
And the other thing is creatingoffer ladders so you don't just
(34:31):
have the one offer, you getthem to one milestone and then
you move them up to the nextmilestone and the next milestone
.
It's all within your skill set.
You're not a generalist, butyou have a natural progression
and a place to move people asthey move on to that next phase.
Speaker 3 (34:50):
Yeah, the other thing , too, is what you've talked
about a lot in terms ofnetworking is like having also
people around you that you caninsert for some of their
problems, and just you being inthe business with the offer
ladders is also knowing somebodyand them already having worked
with you, is also super valuable.
Right, I know this is notnecessarily pricing, but this is
a value add that you can bringto any company is the network of
(35:12):
people that you've worked withand partnered as well.
Speaker 2 (35:14):
Yeah, it is still like increasing the value of
that particular customer, and ina more scalable way, because
someone else is doing thefulfillment.
Can you tell everybody how theycan find you and work with you?
Speaker 3 (35:27):
Yeah, definitely.
I am most active on LinkedIn,so you can come find me there.
The other place you can go isto my personal website,
peterjordan IIIcom, all spelledout and it will link to
everything you need to know.
Speaker 2 (35:40):
I hope you liked our conversation.
If you've ever struggled withpricing your services or felt
stuck between charging whatyou're worth and what your
clients are willing to pay,peter just dropped a masterclass
on how to create value-basedpricing.
My key takeaway is pricing ispart psychology and part
(36:01):
strategy, and when done right,it creates a win-win your
clients feel like they'regetting a bargain and you feel
well compensated for yourexpertise.
If you're ready to refine yourpricing strategy, make sure to
connect with Peter on LinkedInor visit his website he just
said it a second ago for moreinsights.
(36:21):
And if you found value in thisepisode, be sure to like,
subscribe, drop a comment andlet me know what your biggest
pricing takeaway was from thisepisode.
Speaker 1 (36:36):
Thank you, you love all things tiny marketing.
Head down to the show notespage and sign up for the wait
list to join the tiny marketingclub, where you get to work
one-on-one with me withtrainings, feedback and pop-up
coaching that will help youscale your marketing as a B2B
service business.
So I'll see you over in theclub.
Welcome to Tiny Marketing.
This is Sarah Norblok, and thisis a podcast that helps B2B
service businesses do more withless.
Learn lean, actionable, organicmarketing strategies you can
implement today.
No fluff, just powerful growthtactics that work.
Ready to scale smarter, hitthat subscribe button and start
growing your business with TinyMarketing.
Speaker 2 (00:23):
Pricing your services can feel like throwing darts in
the dark.
Too high and you scare peopleoff.
Too low and you're leavingmoney on the table.
So how do you find the sweetspot?
Today we're breaking it downwith Peter, a pricing strategist
who helps consultants andservice providers price with
confidence and how to maximizetheir profitability.
(00:48):
So we're going to cover how toturn intangible strategy into a
tangible value, when to revealyour pricing and how to use
psychology to make your pricingmore persuasive.
Plus, peter sharesgame-changing insights on
gateway offers and biteablestrategy approach.
(01:08):
So if you want to charge whatyou're worth and have your
clients see the real value andfeel like they're getting a
steal, then this episode is foryou.
You are listening to episode126.
I am Sarah Noelle Block andthis is Tiny Marketing.
Speaker 3 (01:26):
I'm Peter Giordano III.
I am a pricing strategist and Ireally help consultants and
other service providers who sellstrategy to really nail their
pricing.
It's really hard to equate somequantifiable value.
So one of the first things Iwill say and one of the things
that I solve is really trying toas closely distill to a
quantifiable value as possible,making it tangible even if it is
(01:48):
intangible, and being able tohave a conversation with the
individual on the other side totalk about value.
And it's not perfectly purelyvalue-based pricing, but it is
being able to try to get tosomething that is tangible,
making it more real.
And you talked about thegateway offer in episode 108.
We talked about my gatewayoffer 10K in one day which was
(02:08):
literally designed to do that,which was to break off a piece
of strategy to make it tangibleshort-term right, like in lower
price and lower risk, so thatpeople can actually more easily
buy it, so it's easier for youto upsell or to convert over to
your signature offer.
Speaker 2 (02:27):
Yeah, that is exactly how a gateway offer works is.
The idea is to pull them inwith that strategy, because
you're teaching them how you canget from A to B and then moving
them toward the next project.
I think strategy works reallywell in bouncing off of what you
said, when you're making ittangible, value-based, and I
(02:50):
want to say biteable, instead oflooking at a massive strategy.
Creating biteable strategiesthat accomplishes one goal and
then moving on to the next goalcould be an easier way to sell
it.
Speaker 3 (03:06):
Biteable strategies.
Speaker 2 (03:07):
I literally just came up with that right now.
Speaker 3 (03:10):
That's what happens.
That's what happens when we'retalking Just random things,
excellent things, yeah, no.
But biteable strategies, is youwant?
Even let's relate this topricing, right, let's relate
this pricing.
And the reason why I thinkwe're talking about this
actually I know why we'retalking about this is that
strategy, all these things beingintangible.
Price is tangible, like we arehumans.
(03:32):
Literally everything has aprice tag on it.
Even if it's free, everythinghas a price tag on it.
We know what price means, likemoney, we we can viscerally like
, we feel it, like we know it,it it's tangible to us, and so
the moment that price comes up,it grounds us.
Every time it just grounds us.
You solve my pain, you can solvemy problem, you can really just
(03:55):
totally speak to me, but themoment that price comes up, we
want to compare.
That's just what we do.
We compare something versussomething else, and so it's like
being there's a differencebetween messaging the pain and
messaging the problem, andmessaging for attention versus
the messaging around price.
And so it's when we talk aboutstrategy is hard to sell, and
really getting to those biteablestrategies and even getting
(04:16):
more tangible and more real isit makes it easier to compare
against price If we're able tohave a conversation in a fit
call or a discovery call thatbasically can get somebody to
estimate their value of aproject, for example, like if
they can get to say I reallywant a scoped project to make me
a hundred thousand dollars andI know this is really vague, but
(04:39):
that is a tangible reason ofvalue, right?
A hundred thousand dollars, andnow you can price accordingly
to that number.
Now you've been able toactually set aside a comparison
apples to apples.
Speaker 2 (04:49):
That is really smart.
So when someone books mygateway offer, which is a
strategic spark in that formthat they fill out at the
beginning of it, it asks themlike what's their revenue now?
What is their lead gen goal?
Where do they want to be nextyear?
Are they getting enough leadsnow?
What is the true value of thestrategy I'm giving them?
(05:11):
How much money do they plan onmaking from it?
Speaker 3 (05:15):
Yeah, you're either pricing the scope or you're
scoping the price.
In all honesty, I went on inthe first conversation in
episode 108, which is like themost simple sustainable business
strategy is what?
Right, your price is above yourcost, but your value is above
your price.
So value is always greater thanprice.
Price is always greater thancost.
That's a sustainable formula,right?
(05:37):
Being able to iterate on thatthat is really it, and being
able to quantify your valuablevalue makes pricing much easier.
Our ultimate goal is for theclient themselves to be wow,
that was a bargain in you, tofeel unbelievably well
compensated.
Right, like that's what we want.
Speaker 2 (05:53):
So what I'm hearing so far is that when you're
deciding on price, you need theprice to hit the sweet spot
where they feel like this is asteal and you feel like you're
well compensated, and theyshould.
The client should be able toequate it to a certain value, so
(06:15):
it's easy for them tounderstand why it costs what it
costs and why it it should costthat much a pricing strategy is
much more than just how much tocharge, and we've been focusing
in on the value should helpinform us to know what to charge
.
Speaker 3 (06:32):
But there's much more to that right there in.
From a pricing strategyperspective, there is like when
do you reveal the price right?
How do you use behavior,economics and psychology to
anchor the price in a differentway?
How do you make sales,economics and psychology to
anchor the price in a differentway?
How do you make salesobjections more palatable?
How do you actually positionyour service as it relates to
(06:54):
price?
How do you make every singlesale from a financial lens
profitable?
Speaker 2 (06:58):
All right, let's pause there, because I want to
deep dive on a few of thosethings that you talked about.
So one when should you revealit?
Should you have your pricing onyour website, or do you wait
until after the discovery call?
Speaker 3 (07:11):
I knew that question was going to come up.
There are multiple answers tothis and I don't want to be just
that.
It depends type of person Icurrently have.
Speaker 2 (07:17):
It depends is coming.
Speaker 3 (07:18):
That's because it's a strategy, right?
So here's what I would say is,if pricing is also a filter,
right.
If you show somebody your price, it's on your website and they
choose to book a call, they'vealready subconsciously equated
some version of value.
They know that there's possiblyan affordability, right.
So now the conversation changeswhere you're focusing in
(07:39):
specifically on scoping what andso forth.
So I would say, in a sense,that if you do have your prices
on your website, you know what,when a good moment to do that is
if you are jam-packed withclients right.
You want to use pricing as afilter.
Or if your strategy is to usepricing as a filter, right,
Because your time is now of theessence, like you are now
competing against your calendar.
(08:00):
But there are other times whereI would suggest no, you don't
actually reveal it.
Because if you do want to havethe value conversation and
you're having a conversationwith a $10 million organization
and what they specifically wantis for you to save them a
million dollars, you canactually equate your price to
that value and by showing itcost $2,000 to do your process,
(08:20):
that's actually not hurt youfrom an anchor perspective.
So I would say, is if you'refocusing much more on the
value-based process and you canmore effectively wait and hold
off to have the nice fit calls,the discovery calls.
But if you are superproductized, you have a growing
(08:40):
sales pipeline and you'recompeting against time and you
want to use that as a filter oryou want to really structure it
in a way in which is clearbefore they talk to you.
Then you can put it on thewebsite.
It's perfectly fine.
So there are.
It depends in this answer.
Speaker 2 (08:56):
Okay, so just to reiterate if you have a solid
sales pipeline and productizedoffers, it makes sense to put it
on your website so you canfilter out anybody who wouldn't
be a good fit anyway.
And if you are doingvalue-based pricing and there's
more nuance to your offers,especially like custom offers
(09:18):
which a lot of service providershave, then it doesn't make
sense to have it on your website.
Speaker 3 (09:22):
That's correct.
Speaker 2 (09:23):
Okay, now let's talk about anchor pricing.
Can you describe what that is?
Speaker 3 (09:28):
So anchor pricing is really the psychology of when
you see some higher number, theless number seems just much more
affordable or just seems somuch more in reach.
You can use anchor pricing interms of making a high number
look small.
But there's also like anothernew aspect, that which is like
the decoy effect.
If you've ever heard of thedecoy effect, the famous example
(09:50):
is the popcorn.
Like this is the jumbo sizepopcorn for 50 cents more, Right
?
And so what you're doing isjust anchoring a high number
against the low number.
It is anchoring value againsteach other.
So it's like the small popcorncost five bucks, the middle
option costs 750 and the jumbocosts $8.
And you look at that and say,wait, what?
(10:11):
For only 50 cents more I getall that extra.
And that's the decoy, right.
And so you can move yourpricing strategies to drive
behavior, to let the individualpick what you want them to pick.
Now here's the thing is, somepeople will say it's an ethical
strategy.
Some people will say it's notand in the grand scheme of
things, like you are stilldriving behavior in everything
(10:32):
that you do.
As long as you can stand byevery single value that you can
create in all three of yourservices, that it's not just a
true decoy, then it is anethical strategy and I still
would advise doing it in certaininstances.
Speaker 2 (10:46):
Yeah, okay, I hadn't heard it called that before.
I have a training inside thetiny marketing club.
I call it popcorn pricing.
Speaker 3 (10:53):
There you go.
Speaker 2 (10:54):
Where you're pricing strategically to get people into
the offer that you actuallywant to sell.
Speaker 3 (10:59):
Yes, yes, and the one that you actually want to sell
is not just the one that you canprobably deliver the most value
, but it's also one they'll seethe most value relatively
speaking, because for you youmight be amazing at your lowest
offer and you can use a decoyeffect to drive people to your
lowest offer.
You can use a decoy effect todrive somebody to your highest
offer, and I know the term decoyis really hard to swallow.
At times we can call it thepopcorn, but in reality that's
(11:22):
what it's doing.
It's really just drivingbehavior towards the offer that
you want, and that is a pricingstrategy.
Speaker 2 (11:27):
Yeah, and it becomes easier to forecast too when you
use that, because you have abaseline that you can use for
forecasting.
If I get this money leads, thisis how much money I'll make.
Speaker 3 (11:40):
Totally true, no, absolutely true, and right and
not.
But the thing with that is,let's talk about this, which is
decoy pricing is most effective,or this anchoring effect is
much more effective when it'slike you can see it optically,
visually, right If you can seeit on a website, or so forth.
Speaker 1 (11:57):
And we see this all the time with like StatsBase.
Speaker 3 (12:01):
Now, can it be in a call?
Or I did this like a call eventhough we're having a live call,
like this is can you do it?
Yeah, of course you can.
You can still anchor people.
You first drive, you say 10,000first and then you say 1,
thousand land.
That's a version of anchoring,but it's really effective when
it's optic.
Speaker 2 (12:17):
Okay, that makes a ton of sense.
So we have decoy pricing, wehave anchoring, we have equating
your pricing to the value or,probably more likely, the goal
that they have.
Speaker 3 (12:32):
All right, here's another one too.
The endowment effective meanshey, we've put our blood, sweat
and tears into these services,we know their value.
Even though it's not tangible,we can feel it, we know it.
It's hard to explain it, and soI think sometimes that
endowment effect is apsychological bias or cognitive
bias that actually harms thevalue conversation or harms the
(12:53):
pricing objection conversationor harms, like, our own ability
to value and price our serviceas well.
So that's just another layer ofpricing psychology.
Speaker 2 (13:02):
How do you overcome that?
Speaker 3 (13:04):
That is so hard.
Speaker 2 (13:06):
No, that one's hard.
Speaker 3 (13:06):
No, that honestly, in all honesty, that, like we have
cognitive biases for a reason,right, these are the internal
battles that we have and it doestake sometimes coaching and
conversations for us to actuallysee as my favorite line is,
it's hard to read the label frominside the jar and sometimes
even in pricing or strategy orvalue conversations, in order
(13:29):
for us to actually get out ofthese cognitive biases or these
pricing strategies, havesomebody on the outside helping
you read the label, right,because it's really hard to read
the label from inside the jar.
Speaker 2 (13:40):
Yeah, whenever I'm thinking through a new offer, I
always schedule a bunch ofconnection calls with people who
would be a good fit for it andI don't try and sell them on it,
I just talk through the offerand ask them if they think the
pricing should be on it so I canworkshop what people are
valuing that kind of offer at.
And that has helped a lot.
(14:02):
And it also leads topre-selling an offer, because if
they hear and they're like,yeah, I would pay this for it,
okay, do you want to?
Speaker 3 (14:11):
In the service game.
Sometimes it's not evencompetition In the service game.
Sometimes it's not evencompetition, it's really just
being able to define your valueagainst your price, and just
being present and being knownand being the person to talk to
is part of just the game, and sopricing isn't only a numbers
game, it is also a feeling game,and that's what we're trying to
make clear.
Speaker 2 (14:32):
Yeah, so that means that leaning into building your
visibility and your authorityaround your specific offer and
your messaging and propositionis extremely important, because
once people start thinking aboutyou as that person, then
they're automatically going tosee more value in what you do,
(14:52):
that's absolutely correct.
Speaker 3 (14:54):
There's ad hoc pricing, which is if you're like
in boutique consulting, thescope always changes and so you
need to have a framework to dealwith kind of ad hoc and defend
against scope creep.
There is price optimization,which is you already have an
existing offer and you want tomake sure the pricing strategy
is optimized to fit both yourgoals as well as the client's
(15:15):
value.
And then there's what you justmentioned, which is price
discovery, and that's likesetting a brand new price for a
new offer, even like a newbusiness model and so forth.
And while pricing from thestart I've always said is
exceptionally impactful becauseit has downstream implications,
I think the first go about it isyou can actually start with one
(15:40):
type of pricing and then change.
I think that there are five andI'm going to go down this path.
It's like there's hourlypricing and we talk a lot of
people talk about hourly pricing, especially if this is a
service, particularly in theservice business is if you are
selling something that isrepeatable or if it's a scoped
offer, is that you're not justselling hourly but it's fine to
start there.
Sometimes you don't have youryour stuff dialed in.
(16:02):
If it's only a new offer, thenyeah, you can go actually right
to value.
I like that.
That's number two right Iswhat's the value?
Right that you can equ, startright out fixed.
You can say, hey, the projectcosts this.
But the problem with that is, Ithink fixed pricing really
(16:22):
requires you to be really dialedin to your service delivery and
fulfillment.
And if you're doing a new offer, it's hard because you're still
exploring, unless you're justit's just an add-on function, or
it is something that you havedone, but done differently, or
it was a part of another offer.
What are your thoughts of that?
Speaker 2 (16:42):
Yeah, I'm thinking about me five years ago, how I
priced my offers at thebeginning.
I started just timing how longit took me to do everything
involved in that offer and thenI equated an hourly rate.
It was like at the verybeginning I just divided my
(17:02):
salary and then added somethinglike 50% to cover the additional
costs and overhead and thingslike that.
So that's how I came up with myhourly price and I priced it a
fixed amount, a project amountbased off of that, Because I
also really don't like the ideaof telling someone how many
(17:22):
hours it's going to take andthis is what I'm charging per
hour, Because then they start tothink, why does it take you so
long?
Or they want to know whatyou're doing hour by hour.
And it really causes a powerimbalance when you charge hourly
and you're displaying yourpricing that way too.
Speaker 3 (17:42):
The more clients that you have, the more solidifying
you are.
You're creating for thatvalue-based pricing or that
fixed based pricing, or even ifit turns into a retainer.
The other option is likeperformance-based that one's
really hard.
That's a really big risk.
It could be super upside, butperformance-based that one's
really hard, that's a really bigrisk.
It could be super upside, butperformance-based ends up being
like requires a lot of trackingand so forth.
(18:02):
So I guess, ultimately, how I'manswering this question is the
first time you price a new offeris not going to be the last way
that you price that offer.
Speaker 2 (18:11):
Yeah, I can testify to that, yeah exactly.
That changed how I price amillion times.
Speaker 3 (18:20):
And that's fine as long as the like now.
So, as you go into this.
So now we're talking about anew offer, right Now we have a
new offer, and where it sitsmatter, right, is it a gateway
offer, is it a signature offer?
Is it an upsell?
And the reason I say that is ifit's a gateway offer, you may
strategically sell, undersellits value 10x, I want 10x the
(18:42):
value, I want 20x the value.
I'm intentionally making surethat is my pricing strategy.
Your signature offer, you maysay I still want them to feel
that value-based.
I want it to be 3x or 4x and soforth.
So I guess also the questionthat we have to ask here is what
type of offer is it?
What type of service is it?
Where does it fit in yourprofile?
Speaker 2 (19:02):
That is to talk about , because, yes, gateway offers
need to be high value, low costto get people excited and hooked
in on you, like you createdsomething that is going to
change my business and it onlycosts this much is it's a hook,
so we can bring them into alarger offer.
(19:25):
The signature offer and yoursignature offer needs to be
priced at a point that will helpyou hit those annual revenue
goals, because if you're notable to hit those, pay your
bills, live the life that youwant.
What's the point?
Why did you start a business?
Speaker 3 (19:41):
Yeah, one of the things that we've talked about,
you and I in the past onnumerous occasions is I call it
max revenue or business model.
Yeah, one of the things thatwe've talked about you and I in
the past on numerous occasionsis I call it max revenue or
business model max, and I thinkyou've called it something
similar, which is like reallyunderstanding what is the
capacity that your businessactually enables you, and this,
if I have to say, it's therelationship between price, the
time it takes for you to fulfillyour offers let's call them
(20:04):
your active offers.
Every business needs businessdevelopment time.
It's really like the directrevenue generation time.
So if we could find therelationship between price, the
time you invest in revenuegenerating activities and how
long it actually takes for youto fulfill your services, you
are going to find the maxrevenue or the max business
model, based on what youactually offer.
Speaker 2 (20:27):
Yes, that is exactly how my old coach taught me to do
it.
This is the revenue I want tomake for the year.
Now, how much time does it takeme to execute that offer?
How many can I realisticallysell and then I'll know what the
pricing is?
But you also.
It could be unrealistic, so youalso have to compare that to
(20:50):
what does the market say thatthey'll pay?
Right, you might want to charge10 000 for something that other
people are charging 4 000 foryeah, you got to.
Speaker 3 (21:00):
It's pricing is relative.
It's a comparison game, so it'salso relative, not just the
value that you provide, but it'swho you're providing it for, is
it?
A $10 million company.
Is it a $100,000 company,friends?
Speaker 2 (21:24):
Huge difference, just them.
They have clients that aremidsize and they're family-owned
manufacturing companies.
That's who they sell to.
Their clients make somewherebetween $15 million and $30
million a year.
They're US located and thevalue proposition that they have
(21:46):
what they do is they help theirclients find the bottlenecks in
their operations and streamlinethem through tech, sops and
structure.
The consultant, who is so low,has a goal of making $300,000
this year.
So how would you guide themthrough deciding their pricing?
Speaker 3 (22:04):
Is there a pricing model that is being typically
used?
So, for example,performance-based, value-based?
Are they pricing hourly?
What currently might be theirstructure?
Speaker 2 (22:15):
Based on the consultants I've worked with.
They started at hourly.
Speaker 3 (22:19):
So we have an hourly rate, and so let me, I'm going
to do public math real quickright here.
This is scary.
Speaker 2 (22:25):
Grab a calculator I feel.
Speaker 3 (22:26):
So the thing is what we talked about.
So let's just go back somewherewhich is, even if you work like
40 hour weeks, and all that wecan use 40 hour weeks is you
still need time for biz dev andyou still need time for admin.
So we're talking about, if itwere five and five, so 30 hours,
that's I'll have to do thepublic math.
Is that that $250 an hour at 50weeks, $200 an hour?
(22:47):
I wish I did public math betterin that sense.
So we're talking about $200 anhour at 30 hour weeks for, like,
basically, 50 hour weeks or 50,50 week years, all right, so
this person would have to bedoing $200 an hour.
And so, if it's an operatingconsultant, so even if it was
doing hourly, is one of thethings that you had said in the
(23:07):
manufacturing companies is thatwhat they were doing was SOPs,
they were doing automations andthey were doing other
operational aspects.
So honestly, as I'm hearingthis, let's go to value.
So now, so my firstconversations would be around
time, because my so if I hearoperation consultant, I hear
manufacturing.
A manufacturing company at thatscale is going to have multiple
(23:30):
employees.
So now what they're eithergoing to do is they're going to
create efficiencies, which isgoing to either A save them time
, or, b it's going to createefficiencies to save them time
and then to repurpose time, orit's going to allow them to save
costs, probably on new hiring,employees and so forth, like
that.
So to me, in my brain right now, if we want to make this as
tangible as possible, we reallystart focusing in on this time
(23:53):
element.
That's probably the value lever, and so now it's really getting
clear on what the timeframework is to talk to
manufacturing companies about.
Now here's the thing If this opsconsultant works with the same
exact, identical manufacturingcompany every single time, this
(24:13):
makes it a lot easier, right?
If it's a $20 millionmanufacturing company that is
four years old, that does thisand this, now you can actually
start to use your framework andhave proof behind it that says,
hey, I say 5%, and 5% means this, right.
But if it's a manufacturingcompany between 15 and 30
million one's 50 years old,one's 10 years old, and now we
(24:34):
have to use a little bit more ofa higher level framework to
start to understand and quantifytime.
So one of the first things thatwe now know that we basically
need to price at $200 per houror some version of a fixed price
of that is to start to have thefit calls or the discovery
calls based on time.
What is it that you want?
We buy wants?
What your manufacturing companyactually want is that I want to
(24:58):
save 10 hours a month.
Right, I want to save 10 hoursa week and it's really starting
to hone in using the frameworkto get to that first value based
conversation.
Speaker 2 (25:08):
Yes, let's say that she has been doing it for a
while and she's seen on averagethat she saves them about 10
hours a week in time 10 hours aweek.
Speaker 3 (25:19):
We're talking about 500, right, 500 hours a year for
this manufacturing company.
500, right, 500 hours a yearfor this manufacturing company,
sound right?
So, look, I fixed my publicmath this time.
Here's the thing.
It's about 500 hours.
One of the things that we can dois, in our calls and our
conversation, ask questions thatare going to allow us to get to
some version of dollar per hour.
(25:40):
Maybe you could go at a superhigh level and just figure out
how many employees are.
And one of the things is youcan make assumptions.
Which is right 50 hours a week,40 hours a week, how many
employees?
You can just get a sense as towhat's the cost per hour.
Right, you can just get aframework for it.
So you can start to understandthat if it were basically like
(26:02):
the value of this company andthe hourly rate in some sense is
a hundred dollars an hour,right, now we're talking about
50,000 worth of value, right?
Isn't that what?
500 times a hundred is right,$50,000.
So $50,000, we now have just asimple framework that we can
begin to have the valueconversation if they want to
save that much.
And so now we're talking about$50,000 worth of value.
(26:25):
And again, not perfect, butwe've now changed just this
we're going to help you createinefficiencies and we're going
to make things more efficientinto something that is dollar
value.
It could be people value.
You could be growing withouthaving to add any additional
staff time and so forth.
Like that.
This is like the first step ofmy conversation with somebody
would be like help me understandwhat you really want and
(26:50):
getting it to a monetary term.
Speaker 2 (26:52):
Okay, so we have the value of the project at $50,000.
And it takes her I think I said15 hours to execute it.
She needs to average $200 anhour in order to hit her revenue
goals.
Speaker 3 (27:06):
All right.
So this is probably an instancelike the way in which I had
this conversation is it doesn'tyou can, you don't have to go to
the hourly route.
So we just said that if it'staking about 15, 15 hours for a
$50,000 worth of savings, that'sright.
Now you're starting to get intoreally high ROI territory.
Now you're starting to get intoreally high ROI territory.
But here's the thing is, whenwe talk about pricing to value,
(27:27):
is you want to deliver the value?
Right, you want to deliver thedifference between the 50,000
and the cost, or for them, thecost would be the price.
So what is it?
One of the things is like whatis it that you actually want to
deliver?
And while you're somebodysaying it's like well, you're a
pricing tribe, just don't youtell me exactly how much you
want to charge.
But if you go back, if you goback to a few things that we
(27:50):
said, which is we're in theservice game, a lot of this has
to do with emotion, it has to dowith psychology, it has to do
with the feeling which is I wantthe client to be like, wow,
this, they're a bargain.
And you would be like I feelvery well compensated.
And so if you past experiencesays that you find that 10 X is
that number, that you start torevolve around that to be 10 X?
(28:12):
Another question, and I'm justgoing to go down this path.
Another question is to actuallyask the budget question.
There's nothing wrong withasking the budget question.
Ask the budget question righthow much do you want to invest
in this?
This is another anchoringprocess.
If they're like $5,000, thereyou go.
$5,000 at that point is now a10x to gain, and $5,000 divided
(28:34):
by 15 is actually $333 per hour.
So you feel it's above yourrate, but it's also in line with
their budget.
While I think hourly is fine,there are other ways and there
are better ways to start toalign your pricing strategy.
What to charge with theirperception of value, with their
(28:56):
budget?
Right, it's starting to make ita little bit more tangible.
Now, this is all high level youand I just created this scenario
variables that we could havethat are probably included in
this right.
But we can get to it if westart to quantify it, if we
start to ask questions and wefeel confident in what we
deliver and we actually havesome strategy walking into this
conversation.
Speaker 2 (29:16):
Yeah, After we went through those questions, you
went in two different directionson possible ways to price.
So you had the option of justasking what their budget is and
seeing if it aligned with whatwould make sense for you.
And then the other one is howmuch do you want to X their
value?
And then you can price itaccording to that.
(29:37):
So you can you have somethingthat you can compare it to.
Speaker 1 (29:41):
Right.
Speaker 2 (29:43):
And now my brain has rewired on pricing.
Speaker 3 (29:45):
Everything's changing .
Yeah, look, we're havingpricing while we're talking
about this.
What to charge is a lot oftimes is part of the
conversation.
It does be behavioral economicsas well, but there's a whole
elements of pricing strategyaround that, Like in the
proposal, like this is a verysimple call, but there's a lot
price objections, right?
What do you get when you haveprice objections and so forth?
(30:06):
All right, To me, there's threeprice objections, because the
messaging around pricing is verydifferent from the messaging
that we said is to talk aboutpain or the problem.
I either don't have the moneyfor this, I don't see the value,
or I see the value.
I just don't trust you.
Those like, when it comes downto pricing objections when it
comes down to pricing.
Those are really the only three.
(30:27):
And guess what?
It's fine If the person doesn't.
If you only have 6,000 in yourbank account and you see
something that costs 10,000,sometimes you're just limited in
the amount of money that youhave.
Speaker 2 (30:37):
Yeah, he just can't fund it.
Speaker 3 (30:39):
Value.
I don't understand what you'retrying to get to me.
That's on you.
You really just have to getreally clear.
And this is that, van.
This is that value conversation.
And then the third one like Isee the value, like we just
talked about the value in ourreally simple example right here
, which is, if they want toprice at $5,000 for $50,000
worth of returns, like they cansee the value.
That's a 10 X.
The problem might be like Ijust don't trust you.
(31:00):
Like meaning, meaning it's acredibility gap.
I think, that's on us too, andwhat we have to do there is we
have to either do risk reduction, which is guarantees, but you
can add guarantees.
You can add.
You can risk reduction forpricing in terms and methodology
of payments.
You can show a ton of socialproof Like you can tell.
You can ask for case studies.
(31:21):
You can actually have them talkto past clients.
But objections open theconversation.
They don't necessarily close it.
Speaker 2 (31:28):
No, I agree with you.
Every single sales conversationit will have some kind of sales
objection to it and as far asthat trust, being patient, is
incredibly valuable to you.
It will make you so much moremoney Because when you're
creating your content the rightway and you're nurturing those
(31:50):
leads that may have been likeI'm going to think about it they
will trust you from that.
They will learn to trust youbecause you earned it through
that content.
I have found that the longerI've been a content creator and
showing value, the more oftensales conversations just become
(32:10):
logistics conversations.
Speaker 3 (32:12):
Yeah, I'll say this.
It just made me think ofsomething and I have to share it
, which is we talked about thedecoy effect but, like also in
some of these salesconversations and some of these
pricing conversations and someof these offer conversations,
please give some options.
Give options, because if youjust give one option, the answer
is either yes or no.
Yes, that's true, if you givemultiple options, the answer is
(32:34):
which one do I choose?
So this is the wholeoptionality.
This isn't the decoy effect.
This is give options and youcan give variations to them so
that they can see value.
Variations to them so that theycan see value.
And if, for some reason I'llsay this to any other price
objections is if somebody saysit's too expensive or they want
a price reduce or it's outsideof their budget, which is
perfectly fine you can alwaysask them what do you want me to
(32:55):
take out?
And you can also gracefullywalk away.
Speaker 2 (32:57):
Yes, I think that's something that our egos often
don't allow.
But de-scope you don't have todo absolutely everything or set
up your project in milestones,so you're hitting one goal and
that's a standalone project, andthen they'll make some money
and then you can hit the otherone in another milestone.
So there's lots of differentways you can move around pricing
(33:21):
objections.
Speaker 3 (33:22):
It's not just one instance.
You're not just buying onething.
You will market around pricingobjections.
It's not just one instance,right.
You're not just buying onething.
You will market as you fulfill.
Because while we might be onething to somebody who doesn't
know us, once they get to knowus we have more skills and
there's economies of skills,right, Once you start to work
with somebody, you have otherskills.
There's tangential skills, youhave other skills, there's
(33:46):
tangential skills.
And instead of bringing in anexpert for absolutely everything
, you might have one, two orthree really high valued skill
sets and you can actually startto say oh, guess what?
I could also help you with thattangentially.
And by you already knowingtheir business and by you
already having that skill set,you're actually saving them time
and efficiencies as well andyou can start to do those
bundles and discounts on theirtime and on their pricing.
Speaker 2 (34:06):
When you do a gateway offer, you're identifying the
entire scope of what they'llneed now, but also a year from
now.
But you can build out projectsbased off of that, knowing what
you can upsell six months fromnow, based off of what you'll be
able to accomplish today withthem.
And the other thing is creatingoffer ladders so you don't just
(34:31):
have the one offer, you getthem to one milestone and then
you move them up to the nextmilestone and the next milestone
.
It's all within your skill set.
You're not a generalist, butyou have a natural progression
and a place to move people asthey move on to that next phase.
Speaker 3 (34:50):
Yeah, the other thing , too, is what you've talked
about a lot in terms ofnetworking is like having also
people around you that you caninsert for some of their
problems, and just you being inthe business with the offer
ladders is also knowing somebodyand them already having worked
with you, is also super valuable.
Right, I know this is notnecessarily pricing, but this is
a value add that you can bringto any company is the network of
(35:12):
people that you've worked withand partnered as well.
Speaker 2 (35:14):
Yeah, it is still like increasing the value of
that particular customer, and ina more scalable way, because
someone else is doing thefulfillment.
Can you tell everybody how theycan find you and work with you?
Speaker 3 (35:27):
Yeah, definitely.
I am most active on LinkedIn,so you can come find me there.
The other place you can go isto my personal website,
peterjordan IIIcom, all spelledout and it will link to
everything you need to know.
Speaker 2 (35:40):
I hope you liked our conversation.
If you've ever struggled withpricing your services or felt
stuck between charging whatyou're worth and what your
clients are willing to pay,peter just dropped a masterclass
on how to create value-basedpricing.
My key takeaway is pricing ispart psychology and part
(36:01):
strategy, and when done right,it creates a win-win your
clients feel like they'regetting a bargain and you feel
well compensated for yourexpertise.
If you're ready to refine yourpricing strategy, make sure to
connect with Peter on LinkedInor visit his website he just
said it a second ago for moreinsights.
(36:21):
And if you found value in thisepisode, be sure to like,
subscribe, drop a comment andlet me know what your biggest
pricing takeaway was from thisepisode.
Speaker 1 (36:36):
Thank you, you love all things tiny marketing.
Head down to the show notespage and sign up for the wait
list to join the tiny marketingclub, where you get to work
one-on-one with me withtrainings, feedback and pop-up
coaching that will help youscale your marketing as a B2B
service business.
So I'll see you over in theclub.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.