Nov '24 • Acquiring Clients
Pricing Determines The Value
I used to think that if I lowered my prices people would perceive it as more valuable. They would appreciate and be grateful for the great deal and I'd get a higher volume of sales.
I actually found the opposite to be true.
I had a service I sold to gym owners for $1500/month but wanted to create something more affordable.
So I created a SaaS offer.
It was a software that could launch their ads for them and they could do it all themselves.
It was only $497/month.
After a year of running that there were many positives but the cons outweighed.
- Most the clients still expected the world.
- Sales were just as difficult and the objections were still the same. I was surprised at this. I thought because it was a third of the price there would be less sales objections. So now I was putting in the same sales effort and getting a fraction of the pay. (Close rates stayed the same at both price points.)
- Churn was just as high on the lower priced thing which was surprising.
- Providing support was actually more effort than my team just doing the work for them lol.
There's many other offer dynamics that created these outcomes, not just the pricing.
But pricing was a huge factor.
Trying to compete on the lowest price is a horrible way to grow an online business.
Especially as a coach.
For me personally, the greatest leaps I've taken in business were also tied to my greatest investments.
For multiple reasons.
When I first started my agency I invested 10k. The most money I've ever invested. This was 2019.
- It caused me to perceive the value of his program was going to be high. If it were $199/month my expectations wouldn't be to high as to what I would be getting.
- It caused me to commit on a whole new level. Nothing like putting your money where your mouth is. Commitment is an absolute non negotiable if you want breakthrough in your life. Because you aren't going to feel confident and you are going to want to quit. Commitment is what keeps you going during the tough times.
This is what Hormozi did with Gym Launch. He charged broke gym owners $1,000/week for 16 weeks. Plus they had to spend money on ads. The product was decent but one of the main secrets of why that model worked was because it caused these Gym Owners to dig deep and find a new level of commitment.
And of course Gym Launch had a process to help them make 10x the invested amount over 12 months.
But the pricing caused a deep level of commitment and actually created the value.
If they priced it at $199/month I guarantee the gym owners wouldn't have had the same results.
You owe it to your clients to charge a decent amount. To make it hurt a bit. To make it a significant investment. To help them believe in themselves. To help them make the damn commitment and hold them to it.
So my point is pricing is a huge determining factor when creating a premium value offer.
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Pricing Determines The Value
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