One of my clients shared with me the other day that she was creating a new program. The program sounded great, and I asked her the price.
“$6000,” she said.
Nope. Bad idea. (And not because it should be “$5997”)
The reason this is not a good price is psychological.
The program is six months long, and she wanted to charge $6000. That’s ‘easy math’ – it’s $1000/month.
This means that people will compare it to their other monthly expenses, like their mortgage or rent, car payment, etc. If it seems high compared to their other monthly expenses, they may walk away, even if they desire the transformation.
Another problem with a ‘$6000 for six months’ price point is that with coaching or consulting services, if people see this as a ‘per month’ charge, they may think that they can stop working with you at any time, even if you expect them to stay in for the entire six month time frame.
(Incidentally, used car salesmen employ the opposite tactic. They say ‘only $350/month’ and don’t tell you for how long those payments will run, knowing that you’ll think about what you can afford a month, and not the total bill.)
Here are the two better ways to price this package:
Good option #1: Emphasize the transformation, and use more complex math.
Instead, if she charges $7500 for six months, that’s more complex math. Then, all of a sudden, it’s not a ‘per month’ charge, it’s the price for the transformation she provides. It’s a higher price, but it’s actually evaluated by her prospective client in a different way, and she has MORE of a chance of people saying ‘yes’ to her offer.
Good option #2: Higher down payment, plus lower monthly.
Another way that you can price is with a down payment, and then a lower monthly charge. So if she offered ‘a $1997 down payment, and 5 payments of $797’ it would be perceived in a different way, even though it’s basically $6000.
So make sure when you price your services, you’re pricing in a way that has people focus on the transformation, and keep them away from the ‘easy math’!
Share with me on Facebook – do you prefer pricing strategy 1, or 2, and why?