Pricing Fuck Ups. Heard (L)earned lessons from the wrong side of pricing for indie brands. Ep14. Tying Time To Money.
If my course gets you to a result in less time, I should charge you less.
A language course that takes you less time to speak and understand a new language dropped its price 20% because the lessons changed from 5 days/week to 4 days/week.
It would make sense, right?
Unless you get to speak and understand the language in less time.
Tying money to time.
Approach
The price was tied to the time, not to the result. You get to the same results doing a 4-times a week course as when you did 5-times a week. So now you get punished for better results.
Less hours. Less staff. Less capacity used. Leaving money on the table.
It works for me, but wouldn’t have minded if it was the original price. I was in for the result, not the time. Hell, if they had a magic wand and got me to speak fluently in a week, I’d pay more, not less.
But they charge for the money and used capacity.
What did happen
They’re tighter on money. While they’d get a bit more of clients, it’s a 20% less in revenue.
What didn’t happen
Got overflowed with new requests and new clients.
Feels it’s more of the same work, almost the sam effort, using less time and making less money.
What would happen if
Now, if they raised the prices back to the original, they’d go into a price argument with their customers.
Simple: they tied time to money, and taught their customers that. Trying to get out of that hole would mean they’d have to disjoint time and money from that relationship. It won’t work.
From the client side: too much brain power to use and would feel like being ripped off.
From the business side: too much effort to convert these clients into higher ticket ones.
Lose-lose situation.
Would have done different
Leave the price as is. Focus on the benefit:
“Now you’ll have more time for yourself AND get to learn a new language faster.” What’s not to love about that?
Would leave room to create new offerings: get extra materials, conversational products, private assessments, special prep for job interviews…
Would detach time from anything related as a cost.
Lesson
Focus on what’s important for your client. They don’t care about your time, the care about their time and what they can achieve.
Stop assuming. Ask the right questions and you might find out that what you think is important, is not. Don’t think with your wallet. Let them decide. Value lies in the eye of the beholder.
Read this post and more on my Typeshare Social Blog
