Pricing Isn’t Just About Price

“Do you want to go to the zoo?”

This seemed like a trick question, coming out of the blue, as it did.

But, since it was my wife, Linda, doing the asking, I figured I had better play along.

“Sure, I’ll go to the zoo.”

As it turned out, the reason for Linda’s offer was that our local zoo was having a Father’s Day special: dads admitted free! So, the next day, off we went.

It was a lot of fun. Giraffes, kangaroos, tortoises, a ton of little kids, and a beautiful day to boot.

But that’s not what got us there.

After all, it’s only 25 minutes away and I’ve known about the zoo since my own kids were little. And yet, I had not set foot in there in ten years, maybe more.

What moved us to action was the special offer.

I wasn’t focused on the $25 we had to pay for Linda’s ticket … I was thinking about the $25 we didn’t have to pay for mine. Toss in the Father’s Day connection and I was sold.

Your Pricing Structure Matters

How much you charge, whether that’s on an hourly basis (not recommended) or some other way, is only part of the story.

The way in which you describe, package, and structure your fees has as great an impact on a prospect’s eagerness to hire you as does the absolute dollar amount.

With that in mind, here are three fee-related things I recommend…

#1. Keep it simple.

When it comes to fees, my philosophy is that if you can’t explain your pricing structure over the phone (i.e., no grids, no diagrams, no PowerPoint slides), it’s too complicated.

Yes, people like choice. But as Gerd Gigerenzer explains in his book, Gut Feelings: The Intelligence of the Unconscioustoo many options causes people to shut down and, often, do nothing.

Like a chef who says, “Tell me what you want and I’ll make it,” offering endless variations, add-ons, and options can be overwhelming to the point of inaction.

#2. Remove the friction.

Hiring you is a decision. Your goal is to remove as many obstacles to that decision as possible – i.e., make it “frictionless.”

For me, with a specialty in email newsletters, that means a couple of things:

Flat fee pricing. There’s no clock running; you can call me as often and whenever you like; I’ll make an unlimited number of changes to the words until you love it.

No loose ends. My fee includes everything. Strategy, writing, design, backend set up, posting on your web site and social media, monthly reporting … anything and everything related to your newsletter.

By removing all of the, “What happens if…?” questions in a prospect’s mind, the only decision he or she has to make is whether or not my one, flat fee seems like a smart investment (hint: it is).

#3. Offer some choice.

Despite what I said in #1 above, “take it or leave it” isn’t great either.

Again, in the case of newsletters, I (essentially) offer three options:

#1. I do most of the work
#2. You do most of the work
#3. I do none of the work (I coach you, but I never touch a keyboard)

Note that all three approaches result in “a newsletter.” The difference is in how much I’m involved month to month.

Also, because I’ve priced these in a way that balances my time/effort with the size of the fee, I’m indifferent as to which option a prospect chooses. That allows me to have an honest discussion about what’s best for them, something they can sense pretty quickly.

Bottom Line

Pricing is a tricky thing. It’s far from objective – did $25 per person for the zoo seem like a lot, a little, or just right to you? – and it has as much to do with how people feel as anything else.

Striving to offer a “fair price” is fine. Just remember that if you are dealing with humans, there’s a lot more going on.


Discussion Questions:

  1. What’s your favorite zoo animal?
  2. Don’t you wish your name was as cool as Gerd Gigerenzer’s?
  3. Do you have a pricing rule of thumb that you rely on?

Share your answers below…


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8 thoughts on “Pricing Isn’t Just About Price

  1. Brianne Vander Neut

    Marmosets – they look like gremlins!
    I’m happy with my name – google it, I’m literally the only one. Maybe that doesn’t say much for the name though…
    Ugh – hate pricing. So-and-so is cheaper for the same thing…well it’s because they suck, but I can’t say that, now can I?

    Reply
    1. Michael Katz Post author

      I will check out the marmosets!

      And congrats on your unique name. You might want to buy the URL, just for fun. Back in the late 90s I urged friends to do the same but nobody listened!

      Reply
  2. Debbie Boggs

    The big cats…definitely! And I’ve never heard that song before, lol. I enjoyed it, thanks for sharing!
    It’s interesting you mention names, as I wonder how many people look up the meaning of names and what theirs’ in particular means. It’s also revealing how names fit a person’s personality, except you don’t know that when you’re naming a baby. It’s weird how that works out!
    Your pricing structure makes sense. I don’t currently have a newsletter but it’s at the top of my to-do list…and I know who the expert is 🙂

    Reply
    1. Michael Katz Post author

      I agree that to some extent names are destiny. I don’t suspect we will see a supreme court justice named Biff anytime soon (but who knows)!

      Reply
  3. Lindsay Gower

    Lions, tigers, and bears. Truth!

    I have a cool name — although I was Lindsay *before* Lindsay was cool. Still, I’m decades older than the youngsters that have it now.

    My proposals to customers are Small, Medium, and Large — and I’m always amazed that many people go for Large! But I also offer an hourly rate, so I need to stretch myself and propose a project price. Oy, that terrifies me. I’ll get back to you on that!

    Reply
    1. Michael Katz Post author

      Project fees are better for you and your clients , I find. It does require creating boundaries (the way all you can eat restaurants have rules about sharing, etc.), but once you do that, it makes things run more smoothly and you will make more money with happier clients!

      Reply
  4. Brad

    Favorite zoo animal: Giraffe. They’re very unique, have zero competition for food since they reach where no other mammal can (they are the largest mammal on Earth). And, they don’t seem to get grumpy even though they only sleep about 30-minutes per day.

    Oh wait… was I supposed to say penguin? So sorry Michael.

    I don’t know, having a name representative of a digestive disorder? I was looking for maybe something in the cardio line. Maybe myocardial infarction. That’d be a pretty unique name.

    I like the idea of a simple pricing menu. Simple is good.

    Reply
    1. Michael Katz Post author

      Yes, penguins was the correct answer. But… I agree, giraffes are just so cool to watch!

      Reply

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