Inside Strategic Coach Podcast with Dan Sullivan: Pricing Strategies

Key Insights on Pricing

1. Common Entrepreneurial Approach

   • Many entrepreneurs set prices based on competition.
   • Competitors' prices may not be in favor of your business's success.
   • Important to create independent pricing strategies.

2. Subjectivity of Pricing

   • Prices change frequently (e.g., every 21 seconds in the stock market).
   • Emphasis on subjective nature over objective pricing.

3. Understanding Customer Experience

   • Focus on the customer's willingness to pay for an experience.
   • Align product/service pricing with the kind of experiences customers are accustomed to paying for (e.g., a $10,000 week at a luxury hotel).
   • High-level programs priced in accordance to significant investments (e.g., $50,000 for a year of college).

4. Confidence in Pricing

   • Fears around setting high prices are internal and not shared by potential customers.
   • Confidence and how you present the price is crucial.
   • Being okay with a 'no' can bolster confidence.

Additional Strategies

1. Psychological Approach

   • First-time high pricing can be intimidating but sticking to it builds capability and confidence.
   • The value is determined by what customers are willing to pay.

2. Real-world Examples

   • Reference to high-value contracts in sports (e.g., $450 million for baseball players), stressing subjective value.

Packaging and Presentation

1. Creating a Hospitable Environment

   • Drawing parallels to luxury hotels to create a welcoming and valuable environment.
   • Ensuring clients feel taken care of from start to finish.

2. Pricing with Packaging

   • The experience crafted around the service impacts perceived value.
   • Impressions before, during, and after the service are important.

Actionable Steps

1. Increasing Engagement

   • Raising prices can increase client interest and engagement.
   • Doubling prices in adverse economic conditions showed heightened interest.

2. Psychological Pricing Formula

   • Increase your current price to a point where it scares you and add 20%. This solidifies confidence and ensures not leaving money on the table.
   • Key is to be committed to value and developing the courage to set higher prices.

Conclusion

• Entrepreneurs should rethink their approach by focusing on the customer experience and subjective value rather than competition.
• The podcast emphasizes confidence, appropriate customer targeting, and creating a unique, valuable experience to justify higher pricing.

Helpful Resources

• Watch Dan Sullivan's on-demand web presentation for more strategies at DanWebinar.com.