1. How much money is your time worth:
Consider this scenario: a couple at a local show selling handmade 3D printed plant potholders for a mere $5. The question arises: how much is your time worth? Many businesses, especially in the craft or hobby space, forget to account for their time when pricing products. Unpacking the pricing model is essential; from materials to transport, every aspect should be considered. A practical example comes from a vegan lipstick entrepreneur who, while pricing her product well, faced challenges with beeswax wraps. Pricing her time revealed a need to charge $35 per set, but market competition was around $10 to $15. The solution? Strategic thinking, considering loss leaders for specific products, and finding a balance between passion and sustainable business practices.
2. Value stacking vs. discounting:
Discounting can sometimes cheapen a product in the eyes of the consumer. The example of the 3D printed potholders demonstrates the impact of perceived value. If the initial price had been set higher, say $25, there would have been room to offer discounts or show specials. Value stacking, bundling high-ticket items with slower-selling products, can be a more effective strategy. An excellent example is creating an advent calendar with a mix of products, showcasing value to the customer without compromising the perceived quality of individual items. The key is to focus on value addition rather than steep discounts, maintaining both product quality and profitability.
Understanding the value of your time allows for effective delegation. In service-oriented businesses like coaching or physiotherapy, charging higher fees can be justified by providing an exceptional experience. One physiotherapist, for instance, ensures the first session is comprehensive, lasting longer than standard appointments. The idea is to deliver an outstanding service that justifies the higher initial cost. Additionally, exploring innovative approaches, such as subscription-based models, can create recurring revenue streams while offering flexibility to clients. Thinking outside the traditional pricing box can lead to increased perceived value and customer loyalty.
Pricing is not just about covering costs but also about communicating the value of your time and expertise. By considering the true worth of your time, implementing value stacking strategies, and exploring innovative pricing models, you can increase customer perceived value and, ultimately, charge more for your products or services. Remember, it's not just about the product; it's about the experience and the value you bring to your customers.
Listen in to our Bite-Size podcast episode about "3 ways to increase customer perceived value and charge more"
Watch this episode of our Business Bite-Size on YouTube to learn more: