What Pricing Cult Are You a Part Of?
How To Figure Out Your Price
When an entrepreneur goes through the process to figure out how to price their product, there's a lot of advice:
Research the competition and be competitive against the market.
Figure out your desired earnings and price accordingly.
Calculate a fair hourly rate, estimate the hours it costs you, then add 30%.
After hearing so many compelling pieces of advice from people with lots of credibility, I realized that there wasn't a universal best practice to pricing.
Pricing is a philosophy you get to choose. And any philosophy that you get to choose is basically a religion.
You have to choose your Pricing Cult.
The initiation ritual to my pricing cult was when I was shown the Value Pyramid. It's part of a longer article about the Elements of Value which essentially says to first figure out what value you bring to a customer.
Value to a customer is more than money! Value can look like:
More leisure time with family
A higher status among peers/competitors
Better alignment to a particular value or ideal
Internal confidence in decision making
Trust from employees
Building a stronger legacy
If you can really understand what value looks like through the eyes of your customer, then you not only can fearlessly price, but also close more sales, generate more meaningful marketing, and build a transcendent brand.
There's a nifty interactive that explains this concept in detail, but fair warning: you might consider joining the Value Pricing Cult.
