I’m Nicolas Gramnea ―co-founder of itconvert.com
My mission is to help 1.000.000 entrepreneurs succeed on their journey.
Because entrepreneurs make this planet a better place to live on!
With that said…
You are in the right place, today, if you want to take your business to the next level!
This is the second component of your offer that will help you convert more people and make more money.
Your offer might not be converting because first― you might be in the wrong market…
…but it also might not be converting even if you’re in the right market because you’re charging the wrong price.
This is a really important component if you want to build a thriving business… if you charge nothing for something, you probably won’t make money from it.
Here’s how to pick the right price.
• Price to value discrepancy
• Virtuous cycle of pricing
• High prices = High perceived value
So, I’ve this little graph here…
…the reason this is so important to understand is that whenever you have services or products or anything whatsoever, people inherently buy because they BELIEVE what they are getting in value is superior to price.
This is how people make purchasing decisions, alright. And they will continue to buy from you as long as this discrepancy between price and value exists!
As long as value stays above the price, they are happy.
Here’s the thing… and this is where you stop getting customers or people bought from you once, and they don’t want to buy from you again.
It’s the moment that value dips below or matched your price… then this is the point of the cancelation or point of no returns.
• if you’re selling recurring software, they will cancel.
• if you’re selling services, they will not refer new people…
Customers are not going to want to do business with you again.
The thing is that most businesses, believe it or not, are actually below this line.
Which is sad.
So, they are only able to make only one sale per customer, and they can never make another sale again, which massively impacts the business!!
That’s why most businesses not make money. They always have to find new customers, because their existing product isn’t that good.
And I’ll be really honest with you for one second… so many times I talk to entrepreneurs… and they are like “we’re so good at what we do, we just can’t find customers”…
…the reality is probably you’re not that good― you’re probably mediocre, you’re probably average; and the thing is that average puts you at the point of no returns or below.
And in order to get repeat business you can’t just be above average, you need to be exceptional. You need to be remarkable. You need to be so good that people will talk about you, and that is a difficult thing to do.
And that’s why most people make no make money― that’s ok. This is why you’re here, you’re learning, and you’re getting better.
So, understanding this concept in terms of how much value you need to provide it’s going to be key to making sure that our pricing works.
There are two ways to improve this discrepancy:
1.) You can lower your price.
Which is one ticket to failure.
2.) Increase your value.
Which is always the best way. We’ve to figure out ways to increase the value, and the more importantly the perceived value of the product or the service to the customers― so they’re more willing to pay a higher rate.
So… part of that will be niching down, positioning the offer and reversing risk; all that kind of stuff― that you’ll be learning in this training.
Remember: you can only go down to zero,
but can go infinitely high the other way.
Which is one of the key points.
Let’s illustrate that.
Mr. Beast― you might already know him.
In one of his videos, he bought a 70.000€ pizza. Which it might sound insane when we think about. But that kid was doing +100.000.000€ per a year… at that moment.
Why this is so interesting, is that it shows you can go infinitely high in the other direction, but you can only go down to zero.
For me, at that time, buying a 15€ pizza… it was me giving away 2 hours of my life in order to get that amount of money.
For Mr. Beast, buying a 70.000€ pizza… he was making over 47.000€ /hour, it would take him less than 2 hours of his work life in order to buy that pizza.
So it took me 2 hours to buy a 15€ pizza, and it took that kid 2 hours to buy a 70.000€ pizza. That purchase is equivalent to both of us.
That was a huge belief breaking moment for me to understanding the price / value discrepancy.
So… going back to our lesson.
The goal = the client buys a tremendous amount of value at a discount.
That is always the goal.
You’re selling euros at a discount. That is the idea. They have to feel like their best “investment of spending” their hard-earned money… is going to be with you― because they get so much more per euro.
Not how many euros they spend, but per euro, they are going to get more value (or perceived value) than anywhere else.
So, this is what most people do when they are trying to decide on pricing.
Vicious cycle of pricing
1.) They look at the marketplace
2.) See what everyone else is offering
3.) Take the average
4.) Go slightly below to remain “competitive”
5.) Provide what their competitors offers with a “little more”
6.) End up at a value proposition of “more for less”
This is what you don’t want to do.
This is what everyone does, this is why everyone is broke, so stop looking at them. Every one of these competitors, you’re looking at, is poor.
So that’s the big secret.
I can tell you I have been speaking with so many entrepreneurs, who look a certain way, who present in a certain way, most people are broke.
So… don’t model them. Don’t copy them. Do something different.
Do your own thing― use your own brain.
So, this is the vicious cycle of price.
As you do this, all you have to do overtime is just repeat step 5 and 6. You’re trying to provide a little bit more, for a little bit less. A little bit more, for a little bit less.
Until eventually you’re giving everything for nothing. And you can’t make money, and you wonder WHY you aren’t successful.
The point here is that when you price this way, you’re pricing for marketing efficiency.
This is what they talk on the perfect marketplaces and economics… is the pricing for the people who are not sophisticated competitors, they will continue to do the same process as we just said… do a little bit more, for a little bit less.
Over and over again.
Until eventually is almost no profit left in the business. So that green is your profit, the red is the overhead… because you’ve been forced in this category of everyone, which it forces you to compete on price, which drives you down.
Which means pretty much everyone just goes out of business or just stays barely above water every month… and wondering when that corner that’s going to come; it’s going to― and it never does.
Because can’t do it better, they have to do it differently.
Virtuous cycle of pricing
*I heard it so many times. But didn’t believe it, until I burned myself. So, I’ll tell you, the people that pay you the least are the ones that are the biggest pain in the butt.
**Because they pay more, you can literally spend more money to give them an exceptional experience and make sure they get the results they want ―which increase the perceived value.
So, virtuous cycle is a flywheel.
Vicious is a flywheel in the wrong direction, that’s working against you.
*You’re like man, “I’m just a low-cost person… I’m not good. I don’t believe in myself. That’s why I have to lower my price.”
**You start to question your own validity and your conviction starts to drop; you don’t feel as confident in your ability to provide services and value, because you continue to decrease your prices… So people don’t want to buy from you anymore, because you’re not convicted that you can provide the results, because you KNOW that you don’t have enough margin left over.
***It becomes more and more difficult to attract great talent and to keep them working for your business.
And if you can increase your price…
• you’ll increase your profitability
• you’ll increase your perceived value of self
• your perception of impact will increase, you’ll feel like your clients get better results from working with you
• your services level increase because you have excess money left over to reinvest in talent in providing an exceptional experience
• and your sales team, or you, are massively convicted because you know you’re changing people’s lives and making the impact you always wanted to…
…which is why you started the business to begin with.
And, you may have made some of these mistakes up to this point, but that’s ok because you can always change― that’s the beauty of being our own boss… we can always make the decisions.
Ok, so that’s the virtuous cycle of price, and hopefully I’m selling you right now on increasing pricing.
Let’s see one more reason why you should charge more.
Price in and of itself is a communication of value.
To better understand this, I’ll share with you a real-world blind taste study done on 3 different wines. They presented the tasters with:
• low-priced wine
• medium priced wine
• expensive wine
All the bottles had the same branding on the outside.
So, the people could see the price on the bottles right in front of them, they could taste them, and they had to rate good, better, best.
They said that the low-priced wine, unsurprisingly― was not as good.
They said the medium priced wine― was medium.
And they said the expensive wine― was great.
Alright. Fairly standard… a lot of us kinda come to that association.
You know, good wines are more expensive. And that’s why they are good. That’s why they are more expensive.
But… here what’s interesting!!
All of those wines were actually the exact same wine, just put in different bottles with different price tags on them.
And so here’s why this is so important.
People literally perceived more value from the same product because the price was higher.
So that means that you don’t just charge higher prices because your product it’s better, charging higher prices also makes your product better.
Think about that for a second.
Now if you’re the wine business owner of this particular bottle, and you had a way of doing one thing that made you more money and increase the perception of your clients… believing what you have was better… would you do it?
Why wouldn’t you get a better result for your client. Why would you want to sell the bad wine, when you can sell the great wine. And it is the exact same wine.
Why would you not do that?
You probably were not doing it because you were afraid of what would happen.
Goal: be so much more expensive that the client must pause and think “this can not be the same category of solution as everyone else” thereby making you a category of one.
So, this is how you need to think about it…
If you can make your price so much disconnected from the marketplace, not just a little bit more expensive, but significantly more expensive than the rest of the marketplace…
…then they have to pause and think, “My god, this has to be something different. It must be something different. It has to be because it’s priced so differently.”
So the price communicates so much about your business, and the value you’re going to provide that is inextricably linked to the value that you’re providing.
Which is why, one of the ways of fixing the value is actually looking at the price and making sure that we’re charging what it’s worth…
Because obviously all that extra money you’re gonna make, compared to your competitors… will be put to good use― improving your customer experience.
So, if your competitors charge 2000€― they have to make a margin from that.
You charge 10000€― and you can reinvest 2000€ right off the top into offering them an unbelievable experience. You’d can invest your competitor’s entire cost of their service into making someone experience better…
…and as a result your clients would get better results, their perceived value is higher, you’d have more referrals, etc.
That it is the virtuous cycle in action.
Note: if you have something where the client must perform some actions in order to be successful, then the more invested they are (cash)… the more invested they would be (emotionally). Which, in turn, will create better students and better outcomes.
SO, ethically, if you want to say that you’re helping someone the most― then you have to ethically get them emotionally invested in the outcome, especially if you’re offering any type of service or product… where the client have to do something.
Increasing the quality of your prospects,
increases the quality of your product.
Think about that for a second.
You can do that by increasing your price, which creates a barrier of entry for people to come in. You want that.
So that way you get only the best people as a client…
• you have more money to invest in them
• they have a higher perceived value
• they don’t price compare to anyone else, because your offer is unique
• and you can do things that no one else can do― you have more margins than everyone else
And that’s how you create a great business.
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