There’s a single assumption that kills pricing faster than you can say “discount.” In fact, it’s so common, it’s endemic among small businesses. In today’s video, we’re going to dive into three ways you can improve pricing right away, but, more importantly, we’re going to talk about a better way to see pricing.
DEADLY ASSUMPTION: CLIENTS SEE PRICE RATIONALLY
Another way to put it is assuming that people buy or don’t buy based on price. The assumption is paramount to throwing money out the window, cutting growth at the knees, and boxing yourself in, while your competitors roam wide open.
Yet, you see it in play all the time. When people assume that the client’s fixed budget is fixed. When people adopt the prices of their competitors. When people concede to clients, because another photographer is offering the same for less. Yes, price has an effect. But price is never a reason for buying, and very often, neither is it the reason for not buying.
Watch the video, then read on to see what you can do:
There are countless ways to grow business, charge more, and increase your sales. This is definitive. Experts have studied it, companies have employed it, and it powers businesses every single day. The research is out there. But you will not get there if you assume pricing is the barrier between you and your clients. It narrows your field of view to a single, numerical problem that completely fails to capture the psychology of buying and subtlety of human connection.
Here’s a bonus tip: Use charm prices
Charm prices are prices ending in 9 (that includes things like .99, .95 ,90, etc…). In a study by the University of Chicago and MIT, they tested three different prices for the same item at $34, $39, and $44. Remarkably, $39 outsold $34 by 24%. Explanations vary, but two things are clear. First, 9 has an almost magical pull to it. And second, people are not rational.
If you want to learn to see what makes people tick, start off with Cialdini’s book, Influence: The Psychology of Persuasion, then move on to Kahneman and Tversky, who did a lot of the groundbreaking research influencing companies today. Make your way through some classics, like How to Win Friends and Influence People by Dale Carnegie and Zig Ziglar’s Secret’s of Closing the Sale. But, above all, don’t look to any of these for the answers. Look at them to find the right questions.
Over time, some tactics will change and some will stay. But people will be people. And businesses that genuinely understand their clients understand what people are like and how they feel. Because when it all feels right, that’s when people sign on.
Some pretty eye opening stats Spencer. Really dig your insights. Totally put out a price sheet starting with the lowest package first, ugh. Gonna remember to start big from now on đŸ™‚
Appreciate that, Troy. I did the same thing with my price sheets originally!
love this spencer!
Thanks Trent!
Awesome video! Totally agree with the bundled packages. Such valuable information, thank you! Hope you do more of these videos đŸ™‚
Thanks Kate! Got many more videos planned!
VERY informative, thank you! I really enjoy the “non-photo specific” research/studies you share, that totally do relate to photography as well as many other businesses.
While I’m at it, I think the length of the video is perfect, you’re a great speaker, and visually I love the clean, bright look of the studio : D
Looking forward to more videos!
Thanks Carmen! Appreciate the feedback!!!
Thanks Spencer! I would love to know how to apply these pricing strategies to more of an Al-la-carte style pricing system. I’ve found it’s hard to have packages with everyone wanting different things all the time, and some people being out of state and not being able to take advantage of things like engagement sessions being included in a package.
Great question! I have some strategies for that, too. I’ve worked with both, including hybrids, and the same principles definitely work. One way or another, I’ll either address this in the newsletter or on the blog soon. Thanks Josh!
This post had come a the right time for as I’m currently trying figure out my pricing strategy for 2013/14. Some good food for thought in your video.
Thanks for sharing Spencer
Fantastic! Let me know how things work out for you!
Hello Spencer,
Thanks so much! Can I ask what the difference is between line items and bundled packages? Do you still give a detailed description of all items in the bundles?
Great work!
Thanks! Good question! When you do a line item, you list the cost. So people can see exactly how much each element is. In a bundle, there’s no breakdown. Think of those car upgrade packages, where they include seat warmers, xenon head lights, cruise control, and better rims, for example. There’s no breakdown for what each costs on it’s own – just one price for the upgrade option. That makes it much easier to swallow – especially when you don’t want one or two items, but you really like the others, because you don’t know how much you’re paying for the things you don’t want. You can still give detailed descriptions of what the items in a bundle are, though – in fact, you want to. It sounds more enticing that way.
Thanks! What do you think about a la carte pricing?
I think a la carte pricing is great! I’ve done both, and either can work, as can a hybrid, which appear all the time (think of McDonald’s with both the menu items and value meals, or, if McDonald’s is uninspiring, think of the prix fixe and a la carte menus from restaurants). It depends on the items you have, what you sell, and how you interact. I’ll try to address it some point in the future. A few people have asked, now!
Hey Spencer, just wanted to say, awesome post. We actually took actionable advice away, and applied it to our business within an hour of watching, and are now renovating pretty much everything we do!
Love hearing that Matt! Exactly what the video is for!!
Hi Spencer, what a refreshingly succinct and informative post regarding such an emotionally difficult topic for photographers. What do you recommend regarding putting prices on a photographers website?
Thanks once again,
Jerome
You’re welcome – thanks! In general, I’m against it. There are exceptions, but I’ve run it both ways, and there’s definitely a difference. Pricing is one of the biggest reasons people get in touch. The biggest hurdle you face is shifting people’s focus from cost to value, and this gives you one extra chance to move that process along.
Hi Spencer,
I have only just completed updating my price list – but will have to create the ‘big’ package now to start with. Thanks so much or sharing this invaluable information and your experiences.
At the end of your video you ask what issues we are experiencing – for me it is getting people to set a date and get on with it. I do weddings and family portraiture (wish they set dates for this like they do weddings!) and I have many families say “yes we want a portrait” however, getting them to commit to a date will devastate my business if I can’t get a handle on this problem. Have you got any tips? I realise its a bit out of the scope of the wedding photography sphere. Thanks again. Cant wait for the next edition.
Louise Gronold
It’s been my experience that conversations for family portraiture need to be a little more direct than wedding conversations. Which is to say that you really need to get people to move on to the next step, as I know you know.
I don’t know if you do this, but what worked well for me, when I was doing family work was having a pre-planning meeting before the session. This gave me an intermediate step for a meeting without requiring a payment, and if you connect well with clients and start the planning process on the phone, it becomes a natural step.
Some of the common objections you probably get are “Let me talk with my husband,” or “Let me think about it.” In both cases, you can handle them by simply asking more questions. The basic process is to agree, then inquire further. “Of course! I’m glad you’re thinking about it! Are there certain things you have on your mind?” That type of thing. Of course, tailored to sound natural.
Great article, just subscribed to your newsletter.
I have 6 bundles packages that describes one from each other, starting from the small one; do you recommend to start with the big one as an anchor? Or should I “cut” the 6 bundles to 3 or 4?
Thanks a lot!
Miguel
Thanks Miguel. Yes, start with the big one as the anchor, instead. I would also suggest cutting it down. I think 6 tends to become a little overwhelming. I like 3 or 4, myself, though I’ve done 5 and had it work successfully.
Excellent work, Spencer.
It’s unfortunate that most entrepreneurs start with discounting (or devaluing) their products right away when it comes to attracting more clients.
Getting people to buy based on price alone will slowly, but surely, turn any product into a commodity and attract more and more bad clients.
Cheers,
David Lee Tong
Thanks David! So true.
Great video Spencer. Thank you for sharing. I am a portrait photographer and what I’m struggling the most with right now is clients only wanting digital files. I would say 90% of my inquiries from clients is “How much is it for a CD with all the pictures?” Therefore, the packages/collections I have are no good to me. I do offer digital files as a bonus to add more incentive value to that package but I feel like I am losing clients because my price for digital files is expensive. I would love any advice or resources you have on this. Thanks! – Katharine, Atlanta based photographer
Spencer,
You’re seriously the friendly kick in the butt so many of us need. I can’t tell you how much insight and clearity this post has given us. I’ve watched and read over it many times and always feel so freaking motivated. Thank you.
Thanks Brett! So good to see your name here, and I love hearing that!
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