Using Art and Science to Price Your Products and Services

I was at dinner with a friend the other night and we started talking about her new business. She was asking a lot of questions about marketing when the topic of pricing came up. She has a very premium product and is trying to find the best way to price it out.

I’ve always said that pricing is part are and part science, because you need to do research to see what people are willing to pay for your product/service and then place your stake in the ground and decide on what it is. Over time you’ll be able to adjust the price as you collect more data, but until that point, it’s based on your decision.

Pricing can be scary. If you price it too high, you’ll lose opportunities. If you price it too low, you could strain your operations by increasing work load without enough margin to cover the cost.

One way to price your product is with the tried and true “three option comparison”. You have three versions of your product (low feature set, medium feature set, high feature set) and each version has an increasing price point. If you’ve ever signed up for a web-based subscription you’ll know what I’m talking about. More often than not, people will select the middle option — looking for the best value.

But this may not always work for you. If not, there are other options to consider. Check out this great post by Kissmetrics called “5 Psychological Studies on Pricing you absolutely MUST read.” I love their examples, tips and tricks. It really makes me wonder about my own pricing strategies and if I need to reevaluate them.

Will AI Buy Me A Snack?

I got a chocolate milkshake tonight.
That may not sound interesting.

But I am interested to understand how my buying decision unfolded and if there is a better/easier way to make this happen.

Cause: I got up at 4:20 am and worked out.
Effect: My energy level was low tonight and I was looking for a fix.

Cause: I had a really good day at the office. I had some very effective meetings.
Effect: I wanted to reward myself.

Cause: I was home alone—the wife and kids were all doing something fun.
Effect: I didn’t need to buy a milkshake for my whole family.

Cause: It’s been a long time since I’ve had one.
Effect: I justified that I need one from time-to-time.

It wasn’t a single item that made me get in my car and drive to get a shake. It was a combination that, when bundled together, allowed me to make the purchase.

When we think about the vast amount of data that’s generated by each of us on a second-to-second basis, we must ask ourselves, “Why did I even need to make the decision to buy the milkshake at all?”

In emerging world of artificial intelligence (AI), I figure one day I’ll just get in my self-driving car and it will take me to my favorite milkshake establishment—without giving it any commands. When I get there, my order will be ready and waiting. Or better yet, my car will drive there by itself and pick my milkshake for me, or it will be delivered by drone.

The fact of the matter is that AI will be identifying our needs in advance of us even thinking about them.

Let’s break down my day again and look at the data (current and future):

Data: My watch will be able to identify my biometrics and determine my level of fatigue, my heart rate, my mood, and my blood-sugar level.
Data: My calendar is on-line and can determine if I’ll be home alone.
Data: My credit card statements are online and can tell the last time I has a milkshake.

AI will filter through the millions of data sets we produce each day to predict what we need next. It should understand our requirements, our wants, our needs, our desires. It should know if the batteries are low in my smoke detectors and order them automatically (the same goes for the toner in my printer!). It should know that my daughter loves dogs and hates cats so that when she sits at the computer, the desktop is a cute Labrador puppy.

It should know that I have a struggle with an employee at work and need to have a meaningful one-on-one offering tips on how to listen empathically.

It should know that I have a 15-minute window and would really like to read an article on how to launch a new product.

It should know that I’m trying to lose weight and so a milkshake is not what I should eat tonight and it should steer my car away… far, far away. {Stupid AI! I may hate it if I can’t ever have a milkshake again!}

You get the idea.

Traditions and consumers

My sons and I have a tradition that twice a year (the first Saturday of every April and October) we trek to a popular burger joint 10 miles from our house to have dinner, joke around and talk about life (and I usually hound them about their goals). The fact of the matter is that there are dozens of restaurants between our house and this one particular restaurant. We’ve had this tradition for years and we would never go anywhere else. It just wouldn’t be the same.

Tradition in marketing isn’t something you hear much about, but it’s an interesting thought? How can you get your clients to purchase your product as a tradition? What do you have that they must have at certain intervals in life? How can you get a tradition started?

Why are case studies important?

One of my favorite marketing books is Crossing the Chasm, by Geoffrey Moore. If you haven’t read it, buy a copy right now and read it. It will change your view on how to market your products and services to consumers. One of his key points is to generate client stories. Hearing a peer speak highly of your product is one of the best ways to convince a prospect to purchase.

There are many different ways to create case studies. Some people claim that they should be short (500 words) others claim they should be long. It really depends on how you plan on using them. If your goal is to drive greater traffic to your site, you will need something with adequate keywords in it, so longer may be what you need. If your sales force is just looking for something to share with prospects, you could go with a shorter, scannable version of a case study. I don’t think there is a “one-size-fits-all” formula for them. In my experience of writing dozens and dozens of case studies, there are a few things that should be included:

About the Client
The Challenge
The Solution
The Results
Call-to-Action

Everything else is just filler because most prospects are going to skim it looking for relevant information and results. Here are some case study examples and resources to help you out.

Case Study Template (HubSpot)

How to write a Case Study (Zapier)

Ultimate Marketing Case Study Template (Curata) [NOTE: Be sure to scroll down on this one to see the Bitly example. Or just click here.]

A Friendly Wager

Someone has been trying to get a sales call with me for a while and, due to time constraints, I haven’t had time to reply. (I also get a truckload of emails from people trying to make a living and so I’m very selective…like most people.)

But today was different. This person sent me a thoughtful email. It was obviously not spam because he’d read at least one post on this blog, and he did some basic research on where I went to school. His message was as follows:

Hi Matt – After reading the “Cool Marketing Idea (Weekly Winner)” story on your blog I felt inspired to get creative in my reach out. I’m sure you’ve seen your fair share of classic “cold” emails, but I was hoping to mix it up and have a little fun with it. I saw that you went to Utah for both undergrad and grad school and I wanted to make a friendly wager with you on the Utah vs. Stanford game this weekend.

If the Cardinals win, will you entertain an informal chat to learn a little about what we do, and how we help similar retailers increase repeat purchases and customer lifetime value? And if the Utes pull off a win, we well send you some Utah shirts for the whole family.

I hope this is something you’re willing to entertain. Please let me know if we have a wager.

Looking forward to the game!

Attention grabbing? [CHECK]

Thought provoking? [CHECK]

Personalized? [CHECK]

By putting in a little more effort into his email, he got me to respond. Nice job!

So, I took him up on the wager. After all, Stanford is 2-2, Utah is 4-0 and ranked in the top 20.

I’ll let you know who wins the bet. Go Utes!

_________

10/8 UPDATE: Last night the Utes lost 23-20. I guess I’ll be sitting through a sales call now.

Employees as marketing

I was at a sandwich shop the other day and the line was out the door. One man at the front of the line was ordering lunch for his whole office off of a piece of paper and everyone behind him was getting frustrated.

When it was my turn to order, I was hot under the collar.

The woman behind the counter was in her early 70s and she asked what I’d like on my sandwich.

“Tomatoes,” I replied.

“Yes!” she exclaimed.

“And Lettuce,” I said

“Yes!” she said again with gusto.

“And pickles.”

“Yes! This is going to taste great!” she concluded.

I looked at her and said, “You love your job, don’t you.”

“Oh yes! I love my job so, so much.”

I told her that she made my day. She replied by saying, “Sir, you made MY day! And you’re handsome.”

Will I go back there? You bet! On employee did more for the marketing of that store, than all of the advertising they could ever buy.

Finding Ball Chasers

I have a dog that only wants to chase balls. My wife and I could sit in our backyard 24×7 and not wear her out. As I write this, I’m sitting here with my ball chucker filling the need of my miniature Australian Labradoodle.

The marketing trifecta is when your product is so good, it matches your customers’ needs exactly and they want to consume it over and over again.

Product = tennis ball
Customer = dog
Frequency = hourly

Have you hit the marketing trifecta yet in your business? If not, keep looking and you’ll find them.

How to name and position a product (not!)

In less than 24 hours one of the largest hurricanes ever, “Hurricane Irma,” will make landfall in Florida. It’s scary. Just search for the terms, “Images of Hurricane Irma” and you’ll see what I mean.

Whoever’s in charge of the naming hurricanes should try something more dramatic, like how the military names their operations:

Spartan Scorpion
Bayonet Lightning
Warrior’s Rage
Gothic Serpent
Montana Mauler

If CNN said, “A mandatory evacuation has been called because Gothic Serpent is approaching and will destroy everything in it’s path,” people would begin to understand the dramatic nature of what is about to hit. Maybe the National Hurricane Center could use this.

Webcasting equipment setup for under $1,000

Webcasts have been part of my life for over a decade. I’ve written two books on the topic (The Learning eXplosion and The Webinar Manifesto) and created a webinar division of my company that went from $0 to eight-figures in annual revenue. I’ve worked on most of the major platforms (Adobe Connect, On24, WebEx, GoToMeeting, GoToWebinar) and lately I’ve fallen in love with Zoom.

But where to you start? I’ve seen setups that cost over $10,000 for the pros with unlimited funds and on the other end you can just use your computer and built-in web cam for free. But suppose you want to go a bit bigger? Here’s a simple, relatively inexpensive, webcast solution you can try for under $1,000.

CAMERAS:
I’m doing interview-style webcasts and to get a professional feel, I’m using two cameras, one for a wide-angle shot and another for a close up.

You can hook up an HD camcorder, but I’ve found this to add additional costs. For example, you’ll need a USB HDMI capture device like the Magewell XI100DUSB-HDMI USB Capture HDMI 3.0 HD Video Capture Dongle ($299). I opted not to go this route for simplicity’s sake. But I may try it in the future.

Instead, I purchased two Lo gitech HD Pro Webcam C920 ($59 each) hooked into two different computers so I can switch cameras back and forth. This avoids having to pay for a $1,000 camera switcher.

AUDIO:
I’m pretty picky about my audio because I’ve heard too many webcasts that sound like they’re delivered through an echoey tin box. I purchased two AKG Pro Audio Perception 45 Presenter Set BD A Wireless Microphones ($249 each).

If you have two microphones, you’ll need an audio interface to hook into your computer. I have the Scarlett 2i2 2nd generation USB Audio Interface plus two XLR cables ($13). I could’ve purchased a small mixing board, but this option is much simpler and if I want to record, it will automatically split out the two audio channels.

You’ll also want a set of headphones to plug into the monitor to check for levels.

TRIPOD:
I also purchased two inexpensive tripods, but not cheap. I don’t want it wiggling around after a month. I settled on the Manfrotto MKCOMPACTADV-BK Compact Advanced Tripod with 3-Way Head ($79). It’s a solid piece of machinery.

So, for under $1,000 ($854) I have a complete webcast set up that adds a professional touch.

EDIT: After testing the Scarlett audio interface, we realized it introduced some strange static and feedback into the webcast. So, I purchased a ZEDI8 from Allen & Heath and it is working really well.

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