Is there something holding you back from confidently raising your rates? If you’ve been waiting for that much-needed push to go for it, this episode will give you the tools and confidence you need.
In this episode of Influence By Design, Samantha and Tim have an interesting discussion about pricing and how business owners can charge more while actually doing less.
They explore the mindset issues entrepreneurs constantly deal with, including lack of clarity in their messaging, not knowing who their ideal client avatar is, not being able to articulate their program offer clearly, and a fear of delivery. Building confidence in these areas is key.
They also emphasise that pricing is not based solely on costs, but more importantly, on the transformation and value the business delivers. They share insightful tips on how to set more appropriate rates, such as simplifying your offers, exploring different target markets that could benefit even more from your skill set, and outsourcing.
IN THIS EPISODE YOU’LL DISCOVER:
- Falling into the trap of increasing prices and doing more (03:24)
- The four main reasons why people lack the confidence to charge their desired price point (04:30)
- The value of being specific about your “who” (09:08)
- Simplifying and maximising your offer to charge more (11:57)
- Changing your market to charge more (16:38)
- How to charge more doing less through outsourcing (22:38)
- Recap (27:33)
QUOTES
- “It really does come down to your confidence and clarity in what it is that you’re delivering. You don’t need to justify your pricing to other people.” – Samantha Riley
- “When you serve a really broad audience, you tend to pull back a little in your delivery and your marketing, the way you show up, because you’re leaving out parts that maybe don’t resonate with all your audience.” – Samantha Riley
- “It’s not the thing that we do that provides value to customers. It’s the transformation we create.” – Tim Hyde
- “Too often, when we look at how we price, we only focus on what it costs us to do, not on what the transformation that creates for our client.” – Tim Hyde
- “Your pricing isn’t aligned with how much work you do. It’s about the transformation that you can deliver in the fastest possible way to your client” – Samantha Riley
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TRANSCRIPTION
Samantha Riley 0:00
There’s a mindset issue that comes up for a lot of people when we talk about pricing. And that’s this real lack of confidence and lack of self worth in being able to charge a certain price point. And I think that there’s four different reasons that people don’t have this confidence.
Welcome to the Influence By Design Podcast. I’m Samantha Riley, authority positioning strategist for coaches and experts. If you’re ready to build a business that gives you more than just a caffeine addiction, and you dream of making more money, having more time, and having the freedom to be living your best life, then you’re in the right place. It’s time to level up.
Welcome to today’s episode of Influence By Design. I’m your co host for today, Samantha Riley and joined by my partner in crime, Tim Hyde. How are you today, Tim?
Tim Hyde 0:51
Wonderful. Thank you, Sam. I’ve had a whole week without any injuries, which is brilliant.
Samantha Riley 0:58
This is very good. I actually had people reach out to me last week going, Wow, is Tim okay? Well, no, actually, no, Tim is not okay.
Tim Hyde 1:09
Did I tell you the story of one of my first cars? No, I’ll tell you, I’ll tell you a story alright? One of the first cars I bought was a 1973 Mazda 808 that used to be owned by this Polish woman that my grandfather would drive to the shops once a fortnight, okay. And this was a five kilometre drive. So she might, maybe drove 50 kilometres a month, all up. Never drove this car any other time. I bought it for $300. Okay, which is excessive, and I had a hole in the passenger seat that you can actually see the road going past.
Samantha Riley 1:42
Oh my goodness.
Tim Hyde 1:46
And it worked. It was super reliable. It works. You know, whenever I needed it to, wasn’t, you know, it was cheap, kind of cheap car. And one day, my, I think we’ve just been married at this stage, my wife said to me, you’re like, you really need to wash the car. Okay, it’s dusty, touch it and then kind of end up with pipe flakes on your hand.
Samantha Riley 2:10
You can write messages in it for people to read driving past.
Tim Hyde 2:14
Anyway, so we washed it. I washed this car. Gave it a little sponge bath. And the only time that it ever broke down was the day that I washed it. And I think you know, since I turned 50, I decided last year that I would go and get all the medical checkups. I know that was just washing the dust off my body that was …
Samantha Riley 2:38
I was wondering where the story was going. I was like, Are you going to tell me you had a shower for the first time in a year?
Tim Hyde 2:43
You know, it’s now better. It’s now better. No, it’s not the only time I’ve ever showered. But I mean, the interesting metaphor in this is sometimes where you have to take a long hard look at our business and go, you know, am I held together with dust? And do I just need to wash that off and break a couple of things in order to kind of be able to accelerate further?
Samantha Riley 3:11
100%. A lot of people are fearful of doing this.
Tim Hyde 3:15
Yeah. What is this? It’s scary, right? I think it works the way it is right now. But sometimes it’s not necessarily going to work to serve you where you want to go. Which brings us a little bit to the topic of today’s conversation, which is, how can we charge more by doing less? And you and I have had this conversation a number of times both on this podcast in its various guises, but also offline as well, that we kind of fall into this trap of thinking if I want to be able to charge more and increase my pricing, which is something that someone, everyone should have looked at at the start of 2024 already. If you haven’t, go and do it. We fall into this trap of thinking or maybe if I do more, I can charge more. Well, yeah, we want to, we want to actually increase your margins, we want you to make more money from the stuff you do, not make less money.
Samantha Riley 4:05
And not be working 22 hours a day.
Tim Hyde
So we thought we’d dedicate today’s podcast to that.
Samantha Riley
Absolutely. We’re talking about charging more. So essentially talking about the topic of pricing. And I think that there’s a mindset issue that comes up for a lot of people when we talk about pricing, and that’s this real lack of confidence and lack of self worth in being able to charge a certain price point. And I think that there’s four different reasons that people don’t have this confidence. The first one is really not having a clarity of their message. Messaging is, unless it’s clear, it’s very difficult to people to feel confident delivering it. Because when we deliver it we either have people not listening or people sort of giving us a quizzical look back and it makes us feel not, you know, it really takes our self worth and confidence. So I think that’s one of the reasons that there’s a lack of confidence, lack of clarity of message. The second is not having a clarity on your “who,” or your person, your ideal client, however you want to say it. If you don’t know who you’re speaking with, this can really attack your confidence. Number three is not being clear on your offer. So not being clear on what it is and also how to speak about it. And number four is not having confidence that you’re able to deliver on that promise. And I think that those four main areas are what eats confidence away and makes it difficult for people to say I’m okay to put my price up.
Tim Hyde 5:41
Yeah, I would agree. I think, you know, and ultimately, is this Sam, it does come back to your confidence about what it is you can do. Right. And absolutely everyone in this podcast, right now, could put their pricing up by 10% and probably not lose any, if many customers at all. I was talking to a client recently about putting their pricing up by 400%.
Samantha Riley 6:04
Wow, that’s a big difference. Yeah, exactly.
Unknown Speaker 6:08
It’s a big difference. Right?
Samantha Riley 6:09
That’s a visceral response.
Tim Hyde 6:12
As part of like, yeah, what if, what if, right, yeah, normal, you know, you don’t need the, you don’t even need to sell for, you know, you could touch a large number of sales you made by three quarters and still make more money, then you would, because you don’t have the same, you know, cost of delivery on top of that. You know, increase the volume, right, so you’re gonna make more profitability. And that’s ultimately what we’re talking about here. Why can’t they do it? No reason other than, well, we used to sell it at that price.
Samantha Riley 6:46
It feels scary. Yeah. I think that one of the most important things to mention here is that pricing is made up. There’s no algebraic equation to work out exactly what your cost is. And we’re talking service based business here. Mind you, even still product based businesses. We’ve all heard about the 24 karat gold paperclip that Tiffany sells for some phenomenal amount of money. It’s nothing special. It’s just a paper clip, exactly the same as all the other paper clips.
Tim Hyde
It does the same job, right?
Samantha Riley
It does, although if I had a Tiffany gold paperclip, I don’t know I’d be using on my paperwork. Like, I didn’t even know what you would do with a 24 karat gold paperclip. But anyway, digressing there. Pricing is actually made up
Tim Hyde 7:37
Tell everyone you’ve got one.
Samantha Riley 7:39
Yeah. But it’s a made up thing. And so it really does come down to your confidence and clarity in what it is that you’re delivering, to be able to justify to yourself, because you don’t really need to justify to other people, what the price is of your program or your offer.
Tim Hyde 8:02
I’ve just looked it up. Incidentally, Sam, the Tiffany 18 karat gold paperclip, it’s $1,500.
Samantha Riley 8:12
You can get a packet of silver ones down at Woolies for like $1.
Tim Hyde 8:18
That’s right. Yeah, they can put a lot of paper clips. But we’re talking about, you know, the perception of value here in many ways as well. And if we look at a year, some of the reasons that people don’t feel confident, I want to pull one of those out. And I think this is, comes back to one or two of these I think, work in concert together. One is not being really clear about who it is that you serve. And if you serve an audience that’s too broad, the confidence that you have to make the transformation from what it is you do to that broad audience becomes diminished. The more specific you are about your audience, the more likely it is that you can be confident that thing you do makes that transformation to them.
Samantha Riley 9:08
I want to touch on something else in there. When you serve a really broad audience, you tend to pull back a little in your delivery and your marketing, the way you show up, because you’re leaving out parts that maybe don’t resonate with all your audience. So you’re not fully giving who you are, because you’re trying to attract or speak to multiple people.
Tim Hyde 9:36
Yeah, you’re just not, you know, whatever you say is just not resonating with them. Yeah, totally. Because you’re being too generic, too generic. I don’t think it is there. There is nothing there about, you know, knowing with some certainty and you get this with experience, obviously. But knowing with some certainty that the thing you do does this outcome repeatedly every single time. Now if you’ve been around for a while, yes, you can say it does things to that coach and this coach and that coach and whatever, as opposed to just this particular profile, gives you confidence to say, well, I know with absolute certainty that when I do my thing, my sprinkle, my fairy dust onto your life, business, whatever, this is the transformation we can create. Now, I think secondly there, you know, as we look at that message, when we talk about the transformation we create, I think this is a really important one to focus on, because it’s not the thing that we do that provides value to customers. It’s the transformation we create, right? So if you’re using your Tiffany paper clip. Alright. And the transformation we create for someone by using the Tiffany paperclip is, you know, some mystical unicorn state, right, where we go, Oh, my God, you’ve got a Tiffany paperclip, it might be worth 1500 bucks, right? To the customer, which has absolutely nothing to do with the costs. And too often when we look at how we price, we only focus on what it costs us to do, not on what the transformation that creates for our client.
Samantha Riley 11:22
Yes, 100%. Let’s talk about different ways that we can charge more, because it’s super easy just to say put your price up. But I think that there’s a deeper conversation to be had rather than just say, Well, today, it’s $1,000 and tomorrow, it’s going to be $1,500. Because I think that when you charge, and especially if you start to think about charging 10x or you know, 400%, like you were just talking, there needs to be some things that we consider. And one of these pieces I feel is inclusions in your program or your offer. And that what a lot of people automatically think is, if I’m going to charge more, I need to put more in the program or more in the offer. And the way that this was described to me by a mentor years and years ago, was imagine that you were walking up Mount Everest, it’s a big walk. You can either, do you want to have more in your backpack? Or do you want to walk up with less and have a group of Sherpas actually carrying things up the mountain for you? And if we think about your stuff in your program, being in that backpack, the more that’s in there is going to slow your ideal clients down and may even stop them. It’s actually the opposite is what is the least amount that we can put in that backpack to make sure that your client gets that transformation, so that your client reaches, you know, base camp or the peak. That’s what we want to be thinking. And in actual fact, we want to, usually, want to be taking more out of the program so that they can make the transformation as quickly as possible. And that’s a real mindset.
Tim Hyde 13:16
So that’s why we’re actually saying that in order to charge more, proverbially by doing less, it’s actually just not delivering everything I need to do. Simplify it down, simplify it down. I heard this the other day, actually, you know, and it’s probably a really good lesson to do once a month or so, if not more, as what is the minimum I can do to still achieve the same outcome? Right. That’s the thing. All right, and probably, a probably good lesson to apply in all, every part of your life. Right, you know, it might have been on a Tim Ferriss podcast because it sounds like something he was totally, you know, what is? What is the minimum I can do to achieve the same outcome? Alright, and then do that. Right. So, you know, when we talk about taking out of your program, what’s not needed, again, you’re absolutely right, Sam, we do tend to sort of over complicate and over and over and have to explain everything that’s in it. Right. As soon as we get to the explaining, right, we’re not selling. Right, it’s, you know, we tend to lose people in the detail. Certainly one thing I know from selling CRM systems for, you know, 10 years now, is that the more that I explained the detail of how we build automations and what goes into the underpinning stuff in a CRM, the less I sell.
Samantha Riley 14:46
100%. Because people don’t care.
Tim Hyde 14:48
Okay.
Unknown Speaker 14:50
Yeah, just take away my problems.
Tim Hyde 14:53
Definitely take out what’s needed so that clients can get a result faster.
Samantha Riley 14:59
I remember years and years ago, I was chatting with someone and she said, Oh, you know, I think I’m going to, I’m in this other program. And I think I’m gonna stick with them. And I went, tell me about, you know, what this is? And she said, Well, there’s like 2000 videos in their members portal, and I’ve got access to them anytime I want. And okay, cool. So how often do you log in and watch these trainings? And this is where it got really weird. Because she said, I’ve never looked at any of the videos. And I went, so do you actually want access to 2000 videos or do you just want someone to tell you what the next step is? And she said, Yeah, I want that. I just want to know what the next step is. Well, let’s think about this. Because a membership portal with access to 2000 videos, is that going to help you understand with clarity what the next step is, and help you to take action tomorrow? No. So that was quite an easy conversation. But it really, you know, at the time, she was like, oh, you know, I didn’t even know that’s not what I wanted. Yeah. Yeah. So, you know, that’s the first idea is how can you simplify? How can you take out what’s needed, so that your clients can get a result faster, but also so that you’re not completely going into burnout? Like, let’s, that’s really important as well. But I want to touch on something else. That maybe you need to have a different market, or a different person, a different ideal client to charge more more.
Tim Hyde 16:46
I love this one.
Samantha Riley
This is one of my favourites.
Tim Hyde
I was actually on a call, just this week, it was just a group call in a BNI group that I mean, it was a cross chapter thing for our region. And the leadership coach in that group mentioned that he was having a slow period. That this time of the year was always seasonally slow for leadership coaching. I’m going, that’s really interesting. And of course, everyone sort of piled in with their two cents about what he should be doing to pick up his business right now. And chasing referral partners, everything else. Okay.
Samantha Riley 17:22
Let me guess, doing a special discount?
Tim Hyde 17:28
Special discount to get people on, to get people on right now. And, you know, not a huge fan of discounting because it massively cuts into the profitability of what you do. Okay, that’s the one thing you’re spending, you’re spending your profit. Whenever you discount, you spend your profit, nothing else becomes cheaper. You know, and if you don’t know what your profits are, you’re potentially spending your money to be busy, which is a really bad place to be.
Samantha Riley 17:58
Yeah, not so much.
Tim Hyde 17:59
I said, who’s your client? And he said, you know, typically, sort of, businesses with five or 10 staff. I think that’s where the problem is right here. You’re just not talking to people big enough, who, whilst they need leadership training, because they’re leading teams, the lever that you’re pulling for them is not big enough for them to prioritise, and over all the other shit they should be working. And you gotta appreciate that. Imagine for yourself, put yourself in those shoes, would you go engage a leadership coach if you had four staff? Or would you go and engage a leadership coach if you had 5000 staff? Where would that sit in your list of priorities? One of these two people will value this thing that you do more than the other. It’s a difficult thing to ask yourself sometimes and go on, who is going to value what I do the most? And making sure we’re putting ourselves in front of those people.
Samantha Riley 19:03
Absolutely. And I think that that’s also a really interesting conversation to have . What can I do with the exact skill set and experience right now? Who can I go to that could also utilise that skill set and get an even greater transformation than the people I’m currently working with? It can be a really interesting exercise too, and you can even ask Chet GPT. I know a few people that have done that, and come up with new markets to promote different programs in that they hadn’t previously thought of. So get clear on what your offer is. The transformation that you help people and ask Chat GPT, who else, what other industries can utilise this skill set to get a result? And you might be pleasantly surprised that you might easily be able to charge 10x of what you’re charging right now, just by going to a different segment of the market.
Tim Hyde 20:05
I must admit, you know, I did the same thing two years ago, right. And we have spoken about this on this podcast as well, where I made a transformation. And not only has it allowed me to charge a lot more, but it’s also, as a result of that, allowed me to give my clients better results at the same time. Right. Because I’m not always feeling squeezed and having to deliver more, you know, with the limited resources I’ve got available. Now I can actually deliver a really quality result.
Samantha Riley 20:39
You’re not jumping through hoops and doing, you know, a whole heap of different dances, it’s just like, I’m just doing this one thing.
Tim Hyde 20:47
Yeah. But it’s also I think, when you, you know, when we are, let’s use the sort of the word here cheap, alright, when you are affordable, inexpensive, cheap, whatever term you want to use, you do tend to find that you might compromise, in order to remain profitable. And you know, we do make a value judgement ourselves, in order to remain profitable, often we sort of cut corners a little bit on what it is we deliver. Which means that thing that we deliver isn’t necessarily as good at providing that transformation to a client as we want it to be. Might be like putting, you know, a one gallon tank of fuel into a rocket and expecting it to launch in a space when it needs 1000 tons of fuel. You’ve got to put enough fuel into your machine to actually create the transformation that you want. And if you don’t do that, you actually, you find yourself naturally compromising on what it is that you can do. And noting the backpack scenario familiar about doing more, you’ve got to still make sure that the thing you are doing is of a standard that it will create the transformation for your client.
Samantha Riley 21:58
Yes, yes, exactly.
Tim Hyde 22:03
Okay, and that way, you know, we can actually, as a result of that, be more confident about the transformation we’re delivering. And as a result of that, we can then charge a client appropriately.
Samantha Riley 22:14
Love it. Let’s talk about outsourcing.
Tim Hyde 22:17
This is a bit of a left field, isn’t it?
Samantha Riley 22:22
Right? It is, and when we were talking about it, it made sense to both of us. But then we had to unpack it just a little bit to make sure that it was going in the right way. But tell us more about this. How can we charge more with less, doing less by outsourcing?
Tim Hyde 22:38
Yeah, well, I wrote this really cool thing the other day. And again, it comes back to the efficiency of delivery. Okay, so if you are delivering the work in total yourself, right, you’re probably getting caught up in, I need to win the work and do the work. And then win the work and do the work. And when I’m doing the work, I can’t win the work until such time as I’m finished. And you kind of get into this roller coaster state that you and I see a lot with business owners. By outsourcing to supply partners, and this is something that I read late last year, I think I mentioned it last week, that entrepreneurship is not fulfilment. Right? Entrepreneurship is creating a thing that gives you the money you need to live the lifestyle that you want. Okay, I’m gonna reinforce that a lot.
Samantha Riley 23:28
I was gonna say, it’s not about working harder, not about working for more hours.
Tim Hyde 23:36
Yeah. And so if you can outsource to supply partners, right, who can deliver the outcome better than you can, at a price that’s cheaper than you can do it, because you’re then not having to kind of wear the overhead of delivering in terms of your business, you can also charge more to your client because you get a better outcome for them at a cheaper price. This is not a new thing.
Samantha Riley 24:04
No, and it makes it easier for your client. It’s all about ease.
Tim Hyde 24:10
Yeah, that’s a really, really important thing to come back to, Sam, when we look at how we price and position that product for that customer. It’s one thing to be aware of what it is that you do, right, we do need to have a really clear eye of what it costs us to produce a product, what does it cost to get a client and we talk about, you know, data analytics for that. What does it cost us to deliver that work to a client and you can probably look at your p&l over the last couple of months to kind of work it out. Don’t just group all your sort of cost of goods and everything attached to that, you know, what does it cost us to run our business? Those things all have to come into your pricing and then whatever profit margin you want in. But most people stop there they go well, it costs me $500 to you know, win, deliver, and run my business for this for this client and I want to make $200 every time I do it, therefore, I’m going to price myself at $700 for my program or maybe 799, or something like that. Not looking at what is the thing, what is the impact of that thing that you sold to a client on their life? Or on their business? One and the same thing. And I like this, you know, I’ve got this saying in the back of my head that I keep telling myself, right, and it says, “To a man dying of thirst, a glass of water is priceless.” To everybody else, it’s just a glass of water. Okay, absolutely. Put it in a bottle, and you can charge four bucks for it. That same bottle of water to abandon the desert might be worth 40,000. Yeah. Is the product any different? No. Has it cost us anything more to produce the product? No. We’re just putting it in different context, that changes the apparent valuation of that product. And so we need to look at, you know, when we’re pricing stuff, not necessarily we talked about doing less by outsourcing or taking stuff out of your program. But you know, the lever on the other side is if we put our product in the right context, it is worth a lot more than it is to somebody else.
Samantha Riley 26:28
Totally. Totally. So take it, take a long hard look at it, brainstorm, come up with different ideas, run it past someone else. Use someone else as a sounding board and see what you can, see what comes back at you so that you can really start to understand where the gaps are or what you might be missing.
Tim Hyde 26:49
Yep, absolutely. Like even that last one, that I, just take that last one and go, you know, this is the thing I sell. Right? So for you, it’s coaching and for me it’s, you know, systemization of growth. Right? Who buys that? Right? For that, you know, who’s that man dying of thirst?
Samantha Riley 27:14
Yeah. Where do we find our person in the Sahara Desert?
Tim Hyde 27:25
Yeah. Might not likely be in the Sahara Desert.
Samantha Riley 27:29
Absolutely. So let’s just recap. Really think about your pricing so that you’re able to charge more but do less. Your pricing isn’t aligned with how much work you do. It’s got, it’s actually nothing to do with that. It’s about what is the transformation that you can deliver in the fastest possible way to your client. So get clear on your message, who you’re speaking to, your offer, and on delivering your promise, because that confidence will help you take more action. Think about how can you simplify your offer. What can you take away or strip back to again, be able to get your clients a result faster? Think about what market you could take your current offer to so that you could charge more. And who can you outsource to, to really simplify your delivery in a way that someone else is looking after the overheads. I like the way that you said that, that was good. And definitely think outcome based versus hourly rate. Because it really is about delivering a result in the fastest possible way. Good conversation, Tim?
Tim Hyde 28:47
Absolutely. I think it’s one, it’s an important one to revisit. And we’ve done this topic a couple of times, but I reckon you know, every year you should probably come back and go, What am I doing here?
Samantha Riley 29:00
Absolutely. Absolutely. If you’ve enjoyed this episode, take a screenshot on your phone, pop it up on your stories, tag both Tim and myself. And let us know your biggest takeaway or something that really stood out to you in this episode, and share it with the rest of our community so that they can learn together. I think that’s what it’s about as well. Thanks for listening today. Thanks for joining me, Tim. And we will catch you on the next episode of Influence By Design.
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