Inside Strategic Coach Podcast: Pricing with Dan Sullivan

Key Points

• Dan Sullivan shares his unique perspective on pricing services and products.
• Importance of not relying on competitor pricing.
• Pricing should be viewed subjectively from the customer's perspective.
• Focus on the value and experience provided to the customer.

Important Concepts

Subjectivity of Pricing

• Pricing is subjective, not objective.
• Example: Stock prices change every 21 seconds on the NYSE, influenced by various factors.
• Entrepreneurs often rely on competitor pricing, which isn't beneficial.

Customer-Centered Pricing

• Focus on what customers are willing to pay based on the experience they receive.
• Example: Customers spending $10,000 for a week in New York expect a premium experience.
• High-end programs ($50,000) compared to paying for a great college year.

Importance of Confidence in Pricing

• Fear of quoting a high price is natural but must be overcome with confidence.
• Confidence in pricing shows in the sale and helps negate the fear of rejection.
• Quoting a price higher than before requires courage, but it builds capability and confidence.
• Shared example of increasing prices during a downturn, leading to more sign-ups.

Pricing Formula and Strategy

• Raise price to a point where it feels scary, then add 20%.
• Advice based on experience: Confidence in pricing attracts the right clients.
• Psychological aspect: Higher pricing can filter out less committed clients.

Experience Over Product/Service

• Customers pay for the experience, not just the product/service.
• Example: Harley-Davidson — customers pay for the experience and brand value, not just the motorcycle.

Packaging and Hospitality Model

• Creating a five-star experience for clients at Strategic Coach is crucial.
• Strive to make clients feel at home and taken care of, akin to a five-star hotel experience.
• Attention to detail and customer care is key to perceived value.

Actionable Steps

• Evaluate if current pricing is exciting or boring; if bored, increase prices.
• Implement the “scare yourself plus 20%” formula when setting prices.
• Understand the psychological impact of pricing and aim to create a premium experience.
• Focus on delivering exceptional value and an unforgettable experience to justify higher prices.