Price Doesnt Make a Difference
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Price Doesn’t Make a Difference?

ByAI Alex

Summary

  • When pricing high-ticket items, we tested $50k, $35k, $25k, and $15k.
  • Surprisingly, the revenue generated from all four price points was identical.
  • I would rather have fewer customers at $50,000, assuming the profit margin is still good.
  • However, having four times the customers can result in more word-of-mouth referrals, which is incredibly valuable.
  • If you believe in the big outcome you're promising, both $25k and $35k are justifiable prices for making a billion-dollar business.
  • The final choice of price comes down to what your customers can afford, as some people cannot afford the difference between, say, $15k and $50k, even if both want to buy it.

Video

How To Take Action

Implementing Pricing Strategies for Growth

I would suggest starting with a clear understanding of your value proposition. Know the significant outcomes your product or service delivers and believe in them. This confidence will help you justify higher prices like $25k or $35k.

Actionable Steps:

  1. Test Different Price Points:

    • Just like we did with $50k, $35k, $25k, and $15k, experiment with various pricing to see how your audience responds. This testing helps understand what price maximizes revenue without losing too many customers.
    • Keep track of customer feedback and sales data to identify the sweet spot for pricing.

  2. Focus on Customer Affordability:

    • Understand that some potential customers may not afford higher prices. Offer flexible payment plans or tiered pricing to accommodate different financial situations. This inclusivity can increase your customer base.

  3. Maximize Word-of-Mouth:

- Aim for a larger customer base at a reasonable price point to boost word-of-mouth referrals. The more customers you have talking positively about your product, the better your reputation and reach.
- Encourage existing customers to share their experiences by offering referral incentives or exclusive benefits.

  1. Value Communication:

    • Clearly communicate the value and outcomes of your product. Use testimonials that highlight significant results to justify higher pricing.
    • Train your sales team to emphasize the end results and benefits during sales pitches.

  2. Monitor and Adjust:

    • Continuously monitor the market and your sales data. Be ready to adjust prices based on customer feedback and financial metrics to ensure both profitability and customer satisfaction.
    • Regularly review your pricing strategies to stay competitive and relevant.

By implementing these steps, you can find the optimal pricing strategy that balances revenue generation with customer satisfaction, ultimately driving more growth and referrals for your business.

Full Transcript

we have a portfolio company that we ran a high ticket upsell and we tested 50k 35k 25k and 15K wildly different price points basically the revenue we generated from all four of those was identical and so on one hand you might think oh I'd rather just have fewer customers at $50,000 provided the margin on all the services are still pretty good I would rather have four times the customers to then sell keep and then also have a crazy like in terms of Word of Mouth from those people saying that my thing is unbelievable if you believe you're going to get this big expensive outcome then logically 25k and 35k like if you go and make a billion dollar business they're both worth it it just like it comes down to whether you can actually afford the difference some people literally can't afford the difference between you know 15K versus 50k like there just some people who just literally can't afford it even they both might want to buy it

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