Profitability is one of the main goals of your business, but if what you know about pricing is all wrong you will struggle at best.
What we learn as consumers is by in large the knowledge that most people posses about pricing. The retail world is different than most businesses. You need to step outside what you see and experience every day and look at whether those are the right strategies and tactics for your business.
In this episode
In this episode I take a look at 3 reasons why what you know about pricing is all wrong. Then I share with you what you can do to start turning that around. No matter if you’re just starting out, struggling to get ahead or seeking to optimize you want to make sure you know enough to ensure you pricing is helping your business not hurting it.
Click the image above for the video or below to enjoy it in podcast form.
Highlights of this episode:
- 00:00 Intro
- 01:12 Nobody taught you how
- 02:19 What you know isn’t suitable
- 03:46 Lots of bad information
- 05:09 Determine what fits
- 06:40 Where am I?
Best quotes from the episode:
“Nobody taught you about this thing (pricing), then how could you possibly understand what it is and how best to utilize it in your business?” Janene
“You’re taking what one industry uses and trying to apply it in something else where it’s not a very good fit.” Janene
“I’m not saying that they don’t have good intentions. What I am saying is you have to figure out if that’s right for your business, for the people that you’re targeting, for the offer that you have.”
Connect with Janene
Get started improving your business. Sometimes it’s difficult to know where to begin. I suggest you Download the the self assessment Pricing Scorecard. Get a view of what’s working and what’s not working when it comes to pricing in your business. Figure out where to start making improvements.
Get in touch with Janene. If you’ve got a question that needs answering, a challenge you’re facing or you have suggestions for future topics or guests, let me know. Contact Janene.
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00:00:00] Janene: Chances are what you know about pricing is total rubbish. Hey everyone, it’s Janene here. Welcome back. You are Live with the Pricing Lady. This show is all about helping small business owners like you get better at pricing in your business, helping you feel confident about what you charge. So you can have a sustainably profitable business. [00:00:27] Welcome everyone. Today, we’re going to talk about the three reasons why, what you know about pricing is all wrong. Earlier this week I was a guest on a podcast and the host asked me, “Janene why do you think people get this so wrong?”
[00:00:44]When I reflected on that, I realized that there’s some very good reasons why. These reasons why are going to help you to understand why you find this so difficult and how, or what’s the reason that it’s not helping your business. Then we’ll take a [00:01:00] quick look at what are some of the things that you can do to start getting it right.
No one taught you how
[00:01:04]The first reason why, is that nobody ever taught you how.
Now, that sounds really simple. You probably never thought about it. It’s not something that everyone does that’s for sure. But it’s not like when you’re in school, somebody pulls you aside and says, “Hey Janene, when you have that business 35 years from now, this is how you set your prices.”[00:01:28]Even if you went to business school, they still don’t teach you how to set your prices. They talk to you about things like pricing strategies, how to have a premium strategy or what a economy or a skimming strategy is, but they don’t tell you how to go about setting prices in the right way.
[00:01:47] They also don’t tell you what pricing really is. Nobody taught you about this thing, then how could you possibly understand what it is and how best to utilize it in your business? The [00:02:00] answer to that question is, you can’t. You’re kind of off the hook and that sense, but not totally. We’ll come back to that in a moment.[00:02:08] Let’s talk about the second reason why, what you know about pricing is all wrong.
You pricing intuition is based on being a consumer
That’s because you’re pulling your intuition from what you know, and what you know is based on being a consumer yourself.
Most of us as consumers we’re faced with what’s going on in the retail world and let’s face it in the retail world, pricing is for many businesses, a completely different thing.[00:02:39]You wouldn’t take the strategies that a retail business is using and apply it in your business because it wouldn’t make sense to do that. Now, as consumers we’re faced with things like seasonal sales all the time or big discounting, it depends on what kind of shopping you’re doing, but this is what we’re bombarded with every [00:03:00] day. Everyday low prices or buy one, get one free or whatever it is.
[00:03:05] But if you take that and apply that into a business where you’re not looking to do the same things, you’re not reaching out to the same people and the value of what you offer is different, then it doesn’t make sense to apply those kinds of strategies or tactics in another business. You’re taking what one industry uses and trying to apply it in something else where it’s not a very good fit.
You’re listening to what everyone else says instead of knowing your business
[00:03:30] The third reason why is that there’s lots of opinions and quick win schemes that people are sharing out there, but you don’t actually know if they’re fit for your business.
People say, if you have a coaching offer, you have to press it at 1997, right. Or if you have a little offer upfront, it has to be 47.
[00:03:54] They tell you these things, but is there a good reason that that’s right for your [00:04:00] business. It may have worked for them. I’m not saying that they don’t have good intentions. What I am saying is you have to figure out if that’s right for your business. For the people that you’re targeting. For the offer that you have.
[00:04:17]You can’t just take what someone else does and say, that’s the right thing for your business. You have to understand why it’s the right thing for your business. Or if it’s not figure out what the right thing is for your business. All these three things combined mean that you’re trying to do what we call, put a square peg in a round hole. And it doesn’t work because it doesn’t fit right. [00:04:41]That’s why your pricing strategy or the way that you’re working with your prices or the prices themselves, aren’t actually helping you in your business. We have to go back one step. If those are the reason why, and let me recap them one, you were never taught how to [00:05:00] price.
[00:05:00] Two, you’re taking strategies from what, you know, as a consumer and applying them to a different kind of business. And three, you’ve got lots of people telling you what to do. But you don’t really know if those things are right for your business.
Understand what you need in your business & customers
If those are the reasons why you’re doing it wrong, then the reason to do it right or how to do it right, Is to start to understand what you need in your business.
[00:05:29] You have to understand what is going to be fit for purpose for your business, for who you’re targeting, for the objectives that you have. Because a pricing strategy or pricing itself is there to help you meet your business objectives.
[00:05:44]If you aren’t clear about what those objectives are, then you certainly aren’t going to be able to set prices that help you get there. Top that with not knowing how to set prices or how to use pricing in the right [00:06:00] way to get where you want to go on top of prices that are not correct and you’ve got a double whammy.
[00:06:06]It’s no wonder that you’re not feeling comfortable, that you’re hesitating when people ask and that you’re struggling in general with this topic.
Get the self-assessment Pricing Scorecard
Where can you get started in order to try fixing this? I’ve got a self assessment tool on my homepage. Go to the www.thepricinglady.com and you’ll be able to find that scorecard tool and download a copy.
[00:06:28] It helps you look through the Five Steps to Pricing Success. And assess for yourself where you are in your Pricing Journey. You’ll start to see patterns where you can focus more attention. Or get more help and start to understand better what you can be doing in your business to improve your pricing.
[00:06:47] That’s one aspect. You’re going to have to learn how to do some of this stuff. You can use that as a starting point then to figure out what you need to focus on first. Maybe it’s a selling, maybe it is the [00:07:00] price setting. Maybe it’s getting clarity on who you’re really targeting. You have to figure out where those weak spots are before you can figure out how to start fixing the overall problem.
Reflect on what you can do differently
[00:07:11]I want you to reflect this week on what are some of the tactics you’ve learned from being a consumer that you’re applying in your business that aren’t working.
Or think about when was the last time you spoke with your coach about how to go about setting prices?
[00:07:28] Think about what we’ve talked about today and how it can help you to do something different with your pricing. So you can improve it and start feeling more comfortable with those prices. Instead of relying on all these things that are sending you in the wrong direction.
[00:07:44] That’s what I wanted to share with you today. Thank you so much for joining me. If you want to head on over to www.thepricinglady.com, that’s where you can grab my Scorecard. Until next time everyone and enjoy pricing. [00:08:00]