The Neuro Science Of Product Pricing
What is it about pricing that gets business folk so hung up?
I mean a product costs you so much to make and you need to sell it for more right? Simple!
Well apparently not so.
Pricing is what I class as a high level question when we consider our business – what price should I charge my customer? What is the right price? How much should I charge? You get the picture!
Like most high level questions, the answers are not accurately forthcoming and require a whole bunch of next level questions to help us get closer to our pricing strategy.
Watch the mentoring moment video here.
So why is pricing so difficult?
There are many reasons, some being fairly simple and others being more complex.
Today I am going to talk about more of the neuroscience behind pricing, rather than its practicalities, and there are two distinct areas I want to address:
- The number you attach to your product that determines value
- The value you attach to you and your business that determines value.
We will address point two today.
The Value You Attach
If you were 100% guaranteed that no matter what price you charged for your product you would build a great business how much would you charge?
You see pricing – especially in the start up and early growth days – is so much more attached to our own sense of value than it is what a customer might pay. Even if we charged what we should, but did not value our offering ourselves, our customer would also struggle to see the value in you and your business.
Why We Devalue?
Well it is all in the title – “DE” value – we begin by devaluing ourselves, second guessing, running in fear and not putting our best foot forward. We do this in a lot of areas of life, often driven by deep seated fears (subconscious) and just like a sabotage effort we cut our prices, anguish over charging too much and end up not being able to build a profitable business.
How Do We Fix The Value We Attached?
- Know what you are really worth. If self worth is playing into this talk to someone about how you can change your thinking – honest pricing starts in your head
- Recognize sabotage. Sabotage is a strong word but it often looks like those honest moments of “once again it hasn’t worked out” – where are these patterns repeating themselves?
- Shift your beliefs if you need to – recognize the ones that are not serving you well, perhaps connect with a trusted partner or coach to talk through how to shift them.
- Now reset what you are really worth. Try it out – be prepared for success and failure. Remember that learning from failure is very powerful.
If you do this you will notice that it is much easier to set an honest price for you and your business and to back yourself when you get pushback.
NEXT – Part Two – The number you attach to your product / service determines its value