March 2, 2025
Ep 126: The Pricing Puzzle: Finding Your Sweet Spot | Guest Expert Peter Giordano III
We dive into the complex world of pricing, addressing how service providers can find effective pricing strategies that reflect their value and meet client expectations. Peter Giordano III shares his insights on the psychology of pricing as well as practical steps to boost profitability.
• Common pricing challenges service providers face
• Understanding value versus cost in pricing decisions
• The concept and benefits of gateway offers
• Psychological tactics for effective pricing
• Various pricing models: hourly, fixed, and performance
• Strategies for overcoming pricing objections
If you've found value in this episode, drop a comment and let me know what your biggest pricing takeaway was from this episode!
Join my events community for FREE monthly events.
I offer free events each month to help you master your business's growth through marketing, sales, systems, and offer strategy.
Join the community here!
Are you tired of prospects ghosting you? With a Gateway Offer, that won't happen.
Over the next Ten Days, we will launch and sell our Gateway Offers with the goal of reaching booked-out status!
Join the challenge here.
Come tour my digital home :) >>>Website
Wanna be friends? >>> LinkedIn
Let's chat every Tuesday! >>> Newsletter
Catch the video podcast on YouTube >>> YouTube
00:00 - Welcome to Tiny Marketing
02:17 - Understanding the Value of Your Services
06:27 - The Importance of Pricing Strategies
12:57 - Introducing Gateway Offers and Biteable Strategies
22:12 - Pricing Psychology: Making Your Pricing Work for You
35:02 - Final Insights and Key Takeaways
WEBVTT
00:00:00.059 --> 00:00:01.084
Welcome to Tiny Marketing.
00:00:01.084 --> 00:00:07.245
This is Sarah Norblok, and this is a podcast that helps B2B service businesses do more with less.
00:00:07.245 --> 00:00:12.621
Learn lean, actionable, organic marketing strategies you can implement today.
00:00:12.621 --> 00:00:16.030
No fluff, just powerful growth tactics that work.
00:00:16.030 --> 00:00:21.650
Ready to scale smarter, hit that subscribe button and start growing your business with Tiny Marketing.
00:00:23.821 --> 00:00:27.123
Pricing your services can feel like throwing darts in the dark.
00:00:27.123 --> 00:00:29.748
Too high and you scare people off.
00:00:29.748 --> 00:00:32.261
Too low and you're leaving money on the table.
00:00:32.261 --> 00:00:35.067
So how do you find the sweet spot?
00:00:35.067 --> 00:00:48.335
Today we're breaking it down with Peter, a pricing strategist who helps consultants and service providers price with confidence and how to maximize their profitability.
00:00:48.335 --> 00:01:00.531
So we're going to cover how to turn intangible strategy into a tangible value, when to reveal your pricing and how to use psychology to make your pricing more persuasive.
00:01:00.531 --> 00:01:08.462
Plus, peter shares game-changing insights on gateway offers and biteable strategy approach.
00:01:08.462 --> 00:01:19.912
So if you want to charge what you're worth and have your clients see the real value and feel like they're getting a steal, then this episode is for you.
00:01:19.912 --> 00:01:22.906
You are listening to episode 126.
00:01:22.906 --> 00:01:25.733
I am Sarah Noelle Block and this is Tiny Marketing.
00:01:26.581 --> 00:01:27.725
I'm Peter Giordano III.
00:01:27.725 --> 00:01:34.707
I am a pricing strategist and I really help consultants and other service providers who sell strategy to really nail their pricing.
00:01:34.707 --> 00:01:37.462
It's really hard to equate some quantifiable value.
00:01:37.462 --> 00:01:53.847
So one of the first things I will say and one of the things that I solve is really trying to as closely distill to a quantifiable value as possible, making it tangible even if it is intangible, and being able to have a conversation with the individual on the other side to talk about value.
00:01:53.847 --> 00:02:02.492
And it's not perfectly purely value-based pricing, but it is being able to try to get to something that is tangible, making it more real.
00:02:02.492 --> 00:02:05.239
And you talked about the gateway offer in episode 108.
00:02:05.239 --> 00:02:26.569
We talked about my gateway offer 10K in one day which was literally designed to do that, which was to break off a piece of strategy to make it tangible short-term right, like in lower price and lower risk, so that people can actually more easily buy it, so it's easier for you to upsell or to convert over to your signature offer.
00:02:27.659 --> 00:02:32.009
Yeah, that is exactly how a gateway offer works is.
00:02:32.009 --> 00:02:41.741
The idea is to pull them in with that strategy, because you're teaching them how you can get from A to B and then moving them toward the next project.
00:02:41.741 --> 00:02:56.264
I think strategy works really well in bouncing off of what you said, when you're making it tangible, value-based, and I want to say biteable, instead of looking at a massive strategy.
00:02:56.264 --> 00:03:05.688
Creating biteable strategies that accomplishes one goal and then moving on to the next goal could be an easier way to sell it.
00:03:06.270 --> 00:03:07.152
Biteable strategies.
00:03:07.379 --> 00:03:09.649
I literally just came up with that right now.
00:03:10.466 --> 00:03:11.139
That's what happens.
00:03:11.139 --> 00:03:15.919
That's what happens when we're talking Just random things, excellent things, yeah, no.
00:03:15.919 --> 00:03:18.626
But biteable strategies, is you want?
00:03:18.626 --> 00:03:21.673
Even let's relate this to pricing, right, let's relate this pricing.
00:03:21.673 --> 00:03:29.140
And the reason why I think we're talking about this actually I know why we're talking about this is that strategy, all these things being intangible.
00:03:29.200 --> 00:03:32.027
Price is tangible, like we are humans.
00:03:32.027 --> 00:03:34.293
Literally everything has a price tag on it.
00:03:34.293 --> 00:03:36.504
Even if it's free, everything has a price tag on it.
00:03:36.504 --> 00:03:49.406
We know what price means, like money, we we can viscerally like, we feel it, like we know it, it it's tangible to us, and so the moment that price comes up, it grounds us.
00:03:49.406 --> 00:03:51.611
Every time it just grounds us.
00:03:51.931 --> 00:03:59.118
You solve my pain, you can solve my problem, you can really just totally speak to me, but the moment that price comes up, we want to compare.
00:03:59.118 --> 00:03:59.801
That's just what we do.
00:03:59.801 --> 00:04:09.850
We compare something versus something else, and so it's like being there's a difference between messaging the pain and messaging the problem, and messaging for attention versus the messaging around price.
00:04:09.850 --> 00:04:41.598
And so it's when we talk about strategy is hard to sell, and really getting to those biteable strategies and even getting more tangible and more real is it makes it easier to compare against price If we're able to have a conversation in a fit call or a discovery call that basically can get somebody to estimate their value of a project, for example, like if they can get to say I really want a scoped project to make me a hundred thousand dollars and I know this is really vague, but that is a tangible reason of value, right?
00:04:41.598 --> 00:04:44.800
A hundred thousand dollars, and now you can price accordingly to that number.
00:04:44.800 --> 00:04:49.002
Now you've been able to actually set aside a comparison apples to apples.
00:04:49.142 --> 00:04:51.223
That is really smart.
00:04:51.223 --> 00:05:03.410
So when someone books my gateway offer, which is a strategic spark in that form that they fill out at the beginning of it, it asks them like what's their revenue now?
00:05:03.410 --> 00:05:05.151
What is their lead gen goal?
00:05:05.151 --> 00:05:06.730
Where do they want to be next year?
00:05:06.730 --> 00:05:08.771
Are they getting enough leads now?
00:05:08.771 --> 00:05:11.934
What is the true value of the strategy I'm giving them?
00:05:11.934 --> 00:05:14.475
How much money do they plan on making from it?
00:05:15.014 --> 00:05:17.475
Yeah, you're either pricing the scope or you're scoping the price.
00:05:17.475 --> 00:05:26.242
In all honesty, I went on in the first conversation in episode 108, which is like the most simple sustainable business strategy is what?
00:05:26.242 --> 00:05:31.574
Right, your price is above your cost, but your value is above your price.
00:05:31.574 --> 00:05:32.985
So value is always greater than price.
00:05:32.985 --> 00:05:34.754
Price is always greater than cost.
00:05:34.754 --> 00:05:37.105
That's a sustainable formula, right?
00:05:37.105 --> 00:05:43.225
Being able to iterate on that that is really it, and being able to quantify your valuable value makes pricing much easier.
00:05:43.225 --> 00:05:51.709
Our ultimate goal is for the client themselves to be wow, that was a bargain in you, to feel unbelievably well compensated.
00:05:51.709 --> 00:05:53.273
Right, like that's what we want.
00:05:53.980 --> 00:06:10.165
So what I'm hearing so far is that when you're deciding on price, you need the price to hit the sweet spot where they feel like this is a steal and you feel like you're well compensated, and they should.
00:06:10.165 --> 00:06:31.653
The client should be able to equate it to a certain value, so it's easy for them to understand why it costs what it costs and why it it should cost that much a pricing strategy is much more than just how much to charge, and we've been focusing in on the value should help inform us to know what to charge.
00:06:32.281 --> 00:06:34.846
But there's much more to that right there in.
00:06:34.846 --> 00:06:39.884
From a pricing strategy perspective, there is like when do you reveal the price right?
00:06:39.884 --> 00:06:44.014
How do you use behavior, economics and psychology to anchor the price in a different way?
00:06:44.014 --> 00:06:45.480
How do you make sales, economics and psychology to anchor the price in a different way?
00:06:45.480 --> 00:06:48.870
How do you make sales objections more palatable?
00:06:48.870 --> 00:06:54.833
How do you actually position your service as it relates to price?
00:06:54.833 --> 00:06:58.350
How do you make every single sale from a financial lens profitable?
00:06:58.571 --> 00:07:03.211
All right, let's pause there, because I want to deep dive on a few of those things that you talked about.
00:07:03.211 --> 00:07:06.488
So one when should you reveal it?
00:07:06.488 --> 00:07:10.649
Should you have your pricing on your website, or do you wait until after the discovery call?
00:07:11.141 --> 00:07:12.466
I knew that question was going to come up.
00:07:12.466 --> 00:07:14.923
There are multiple answers to this and I don't want to be just that.
00:07:14.923 --> 00:07:16.829
It depends type of person I currently have.
00:07:17.000 --> 00:07:18.086
It depends is coming.
00:07:18.379 --> 00:07:19.766
That's because it's a strategy, right?
00:07:19.766 --> 00:07:23.829
So here's what I would say is, if pricing is also a filter, right.
00:07:23.829 --> 00:07:32.937
If you show somebody your price, it's on your website and they choose to book a call, they've already subconsciously equated some version of value.
00:07:32.937 --> 00:07:35.569
They know that there's possibly an affordability, right.
00:07:35.569 --> 00:07:41.779
So now the conversation changes where you're focusing in specifically on scoping what and so forth.
00:07:41.779 --> 00:07:49.879
So I would say, in a sense, that if you do have your prices on your website, you know what, when a good moment to do that is if you are jam-packed with clients right.
00:07:49.879 --> 00:07:51.725
You want to use pricing as a filter.
00:07:51.725 --> 00:07:59.973
Or if your strategy is to use pricing as a filter, right, Because your time is now of the essence, like you are now competing against your calendar.
00:08:00.379 --> 00:08:03.723
But there are other times where I would suggest no, you don't actually reveal it.
00:08:03.723 --> 00:08:23.995
Because if you do want to have the value conversation and you're having a conversation with a $10 million organization and what they specifically want is for you to save them a million dollars, you can actually equate your price to that value and by showing it cost $2,000 to do your process, that's actually not hurt you from an anchor perspective.
00:08:23.995 --> 00:08:35.384
So I would say, is if you're focusing much more on the value-based process and you can more effectively wait and hold off to have the nice fit calls, the discovery calls.
00:08:35.384 --> 00:08:50.595
But if you are super productized, you have a growing sales pipeline and you're competing against time and you want to use that as a filter or you want to really structure it in a way in which is clear before they talk to you.
00:08:50.595 --> 00:08:52.163
Then you can put it on the website.
00:08:52.163 --> 00:08:53.004
It's perfectly fine.
00:08:53.004 --> 00:08:53.726
So there are.
00:08:53.726 --> 00:08:55.692
It depends in this answer.
00:08:56.780 --> 00:09:10.365
Okay, so just to reiterate if you have a solid sales pipeline and productized offers, it makes sense to put it on your website so you can filter out anybody who wouldn't be a good fit anyway.
00:09:10.365 --> 00:09:22.496
And if you are doing value-based pricing and there's more nuance to your offers, especially like custom offers which a lot of service providers have, then it doesn't make sense to have it on your website.
00:09:22.677 --> 00:09:23.116
That's correct.
00:09:23.860 --> 00:09:25.948
Okay, now let's talk about anchor pricing.
00:09:25.948 --> 00:09:27.065
Can you describe what that is?
00:09:28.381 --> 00:09:38.892
So anchor pricing is really the psychology of when you see some higher number, the less number seems just much more affordable or just seems so much more in reach.
00:09:38.892 --> 00:09:44.111
You can use anchor pricing in terms of making a high number look small.
00:09:44.111 --> 00:09:47.700
But there's also like another new aspect, that which is like the decoy effect.
00:09:47.700 --> 00:09:50.960
If you've ever heard of the decoy effect, the famous example is the popcorn.
00:09:50.960 --> 00:09:54.530
Like this is the jumbo size popcorn for 50 cents more, Right?
00:09:54.530 --> 00:09:59.191
And so what you're doing is just anchoring a high number against the low number.
00:09:59.191 --> 00:10:01.427
It is anchoring value against each other.
00:10:01.500 --> 00:10:08.910
So it's like the small popcorn cost five bucks, the middle option costs 750 and the jumbo costs $8.
00:10:08.910 --> 00:10:11.095
And you look at that and say, wait, what?
00:10:11.095 --> 00:10:13.561
For only 50 cents more I get all that extra.
00:10:13.561 --> 00:10:14.923
And that's the decoy, right.
00:10:14.923 --> 00:10:22.749
And so you can move your pricing strategies to drive behavior, to let the individual pick what you want them to pick.
00:10:22.749 --> 00:10:26.563
Now here's the thing is, some people will say it's an ethical strategy.
00:10:26.563 --> 00:10:32.527
Some people will say it's not and in the grand scheme of things, like you are still driving behavior in everything that you do.
00:10:32.527 --> 00:10:45.462
As long as you can stand by every single value that you can create in all three of your services, that it's not just a true decoy, then it is an ethical strategy and I still would advise doing it in certain instances.
00:10:46.567 --> 00:10:49.496
Yeah, okay, I hadn't heard it called that before.
00:10:49.496 --> 00:10:51.863
I have a training inside the tiny marketing club.
00:10:51.863 --> 00:10:53.407
I call it popcorn pricing.
00:10:53.534 --> 00:10:53.956
There you go.
00:10:54.017 --> 00:10:59.505
Where you're pricing strategically to get people into the offer that you actually want to sell.
00:10:59.566 --> 00:11:13.941
Yes, yes, and the one that you actually want to sell is not just the one that you can probably deliver the most value, but it's also one they'll see the most value relatively speaking, because for you you might be amazing at your lowest offer and you can use a decoy effect to drive people to your lowest offer.
00:11:13.941 --> 00:11:19.328
You can use a decoy effect to drive somebody to your highest offer, and I know the term decoy is really hard to swallow.
00:11:19.328 --> 00:11:22.950
At times we can call it the popcorn, but in reality that's what it's doing.
00:11:22.950 --> 00:11:26.706
It's really just driving behavior towards the offer that you want, and that is a pricing strategy.
00:11:27.629 --> 00:11:36.403
Yeah, and it becomes easier to forecast too when you use that, because you have a baseline that you can use for forecasting.
00:11:36.403 --> 00:11:39.868
If I get this money leads, this is how much money I'll make.
00:11:40.048 --> 00:11:42.551
Totally true, no, absolutely true, and right and not.
00:11:42.551 --> 00:11:57.621
But the thing with that is, let's talk about this, which is decoy pricing is most effective, or this anchoring effect is much more effective when it's like you can see it optically, visually, right If you can see it on a website, or so forth.
00:11:57.794 --> 00:11:59.903
And we see this all the time with like StatsBase.
00:12:01.596 --> 00:12:02.801
Now, can it be in a call?
00:12:02.801 --> 00:12:07.302
Or I did this like a call even though we're having a live call, like this is can you do it?
00:12:07.302 --> 00:12:07.945
Yeah, of course you can.
00:12:07.945 --> 00:12:08.947
You can still anchor people.
00:12:08.947 --> 00:12:12.057
You first drive, you say 10,000 first and then you say 1, thousand land.
00:12:12.057 --> 00:12:15.221
That's a version of anchoring, but it's really effective when it's optic.
00:12:17.344 --> 00:12:18.846
Okay, that makes a ton of sense.
00:12:18.846 --> 00:12:30.947
So we have decoy pricing, we have anchoring, we have equating your pricing to the value or, probably more likely, the goal that they have.
00:12:32.049 --> 00:12:33.399
All right, here's another one too.
00:12:33.399 --> 00:12:38.585
The endowment effective means hey, we've put our blood, sweat and tears into these services, we know their value.
00:12:38.585 --> 00:12:42.100
Even though it's not tangible, we can feel it, we know it.
00:12:42.100 --> 00:12:58.919
It's hard to explain it, and so I think sometimes that endowment effect is a psychological bias or cognitive bias that actually harms the value conversation or harms the pricing objection conversation or harms, like, our own ability to value and price our service as well.
00:12:58.919 --> 00:13:02.168
So that's just another layer of pricing psychology.
00:13:02.634 --> 00:13:03.798
How do you overcome that?
00:13:04.820 --> 00:13:05.581
That is so hard.
00:13:06.062 --> 00:13:06.764
No, that one's hard.
00:13:06.924 --> 00:13:39.743
No, that honestly, in all honesty, that, like we have cognitive biases for a reason, right, these are the internal battles that we have and it does take sometimes coaching and conversations for us to actually see as my favorite line is, it's hard to read the label from inside the jar and sometimes even in pricing or strategy or value conversations, in order for us to actually get out of these cognitive biases or these pricing strategies, have somebody on the outside helping you read the label, right, because it's really hard to read the label from inside the jar.
00:13:40.644 --> 00:14:00.249
Yeah, whenever I'm thinking through a new offer, I always schedule a bunch of connection calls with people who would be a good fit for it and I don't try and sell them on it, I just talk through the offer and ask them if they think the pricing should be on it so I can workshop what people are valuing that kind of offer at.
00:14:00.249 --> 00:14:02.655
And that has helped a lot.
00:14:02.655 --> 00:14:10.048
And it also leads to pre-selling an offer, because if they hear and they're like, yeah, I would pay this for it, okay, do you want to?
00:14:11.556 --> 00:14:12.418
In the service game.
00:14:12.418 --> 00:14:16.089
Sometimes it's not even competition In the service game.
00:14:16.089 --> 00:14:31.158
Sometimes it's not even competition, it's really just being able to define your value against your price, and just being present and being known and being the person to talk to is part of just the game, and so pricing isn't only a numbers game, it is also a feeling game, and that's what we're trying to make clear.
00:14:32.222 --> 00:14:53.711
Yeah, so that means that leaning into building your visibility and your authority around your specific offer and your messaging and proposition is extremely important, because once people start thinking about you as that person, then they're automatically going to see more value in what you do, that's absolutely correct.
00:14:54.111 --> 00:15:05.043
There's ad hoc pricing, which is if you're like in boutique consulting, the scope always changes and so you need to have a framework to deal with kind of ad hoc and defend against scope creep.
00:15:05.043 --> 00:15:16.162
There is price optimization, which is you already have an existing offer and you want to make sure the pricing strategy is optimized to fit both your goals as well as the client's value.
00:15:16.695 --> 00:15:26.840
And then there's what you just mentioned, which is price discovery, and that's like setting a brand new price for a new offer, even like a new business model and so forth.
00:15:26.840 --> 00:15:42.485
And while pricing from the start I've always said is exceptionally impactful because it has downstream implications, I think the first go about it is you can actually start with one type of pricing and then change.
00:15:42.485 --> 00:15:44.639
I think that there are five and I'm going to go down this path.
00:15:44.639 --> 00:15:59.701
It's like there's hourly pricing and we talk a lot of people talk about hourly pricing, especially if this is a service, particularly in the service business is if you are selling something that is repeatable or if it's a scoped offer, is that you're not just selling hourly but it's fine to start there.
00:16:00.195 --> 00:16:02.320
Sometimes you don't have your your stuff dialed in.
00:16:02.320 --> 00:16:05.719
If it's only a new offer, then yeah, you can go actually right to value.
00:16:05.719 --> 00:16:06.100
I like that.
00:16:06.100 --> 00:16:14.605
That's number two right Is what's the value?
00:16:14.605 --> 00:16:16.788
Right that you can equ, start right out fixed.
00:16:16.788 --> 00:16:18.690
You can say, hey, the project costs this.
00:16:18.690 --> 00:16:25.962
But the problem with that is, I think fixed pricing really requires you to be really dialed in to your service delivery and fulfillment.
00:16:25.962 --> 00:16:38.788
And if you're doing a new offer, it's hard because you're still exploring, unless you're just it's just an add-on function, or it is something that you have done, but done differently, or it was a part of another offer.
00:16:38.788 --> 00:16:40.379
What are your thoughts of that?
00:16:42.037 --> 00:16:47.769
Yeah, I'm thinking about me five years ago, how I priced my offers at the beginning.
00:16:47.769 --> 00:16:58.043
I started just timing how long it took me to do everything involved in that offer and then I equated an hourly rate.
00:16:58.043 --> 00:17:10.048
It was like at the very beginning I just divided my salary and then added something like 50% to cover the additional costs and overhead and things like that.
00:17:10.048 --> 00:17:28.898
So that's how I came up with my hourly price and I priced it a fixed amount, a project amount based off of that, Because I also really don't like the idea of telling someone how many hours it's going to take and this is what I'm charging per hour, Because then they start to think, why does it take you so long?
00:17:28.898 --> 00:17:32.106
Or they want to know what you're doing hour by hour.
00:17:32.106 --> 00:17:42.000
And it really causes a power imbalance when you charge hourly and you're displaying your pricing that way too.
00:17:42.461 --> 00:17:44.714
The more clients that you have, the more solidifying you are.
00:17:44.714 --> 00:17:51.178
You're creating for that value-based pricing or that fixed based pricing, or even if it turns into a retainer.
00:17:51.178 --> 00:17:54.666
The other option is like performance-based that one's really hard.
00:17:54.666 --> 00:17:55.914
That's a really big risk.
00:17:55.914 --> 00:18:00.077
It could be super upside, but performance-based that one's really hard, that's a really big risk.
00:18:00.077 --> 00:18:02.919
It could be super upside, but performance-based ends up being like requires a lot of tracking and so forth.
00:18:02.919 --> 00:18:10.603
So I guess, ultimately, how I'm answering this question is the first time you price a new offer is not going to be the last way that you price that offer.
00:18:11.702 --> 00:18:15.365
Yeah, I can testify to that, yeah exactly.
00:18:15.365 --> 00:18:19.007
That changed how I price a million times.
00:18:20.247 --> 00:18:22.107
And that's fine as long as the like now.
00:18:22.107 --> 00:18:23.328
So, as you go into this.
00:18:23.328 --> 00:18:31.913
So now we're talking about a new offer, right Now we have a new offer, and where it sits matter, right, is it a gateway offer, is it a signature offer?
00:18:31.913 --> 00:18:32.894
Is it an upsell?
00:18:32.894 --> 00:18:43.855
And the reason I say that is if it's a gateway offer, you may strategically sell, undersell its value 10x, I want 10x the value, I want 20x the value.
00:18:43.855 --> 00:18:48.151
I'm intentionally making sure that is my pricing strategy.
00:18:48.151 --> 00:18:51.944
Your signature offer, you may say I still want them to feel that value-based.
00:18:51.944 --> 00:18:54.451
I want it to be 3x or 4x and so forth.
00:18:54.451 --> 00:18:59.308
So I guess also the question that we have to ask here is what type of offer is it?
00:18:59.308 --> 00:19:00.712
What type of service is it?
00:19:00.712 --> 00:19:01.936
Where does it fit in your profile?
00:19:02.546 --> 00:19:25.212
That is to talk about, because, yes, gateway offers need to be high value, low cost to get people excited and hooked in on you, like you created something that is going to change my business and it only costs this much is it's a hook, so we can bring them into a larger offer.
00:19:25.212 --> 00:19:38.074
The signature offer and your signature offer needs to be priced at a point that will help you hit those annual revenue goals, because if you're not able to hit those, pay your bills, live the life that you want.
00:19:38.074 --> 00:19:39.276
What's the point?
00:19:39.276 --> 00:19:40.719
Why did you start a business?
00:19:41.118 --> 00:19:46.784
Yeah, one of the things that we've talked about, you and I in the past on numerous occasions is I call it max revenue or business model.
00:19:46.784 --> 00:20:05.089
Yeah, one of the things that we've talked about you and I in the past on numerous occasions is I call it max revenue or business model max, and I think you've called it something similar, which is like really understanding what is the capacity that your business actually enables you, and this, if I have to say, it's the relationship between price, the time it takes for you to fulfill your offers let's call them your active offers.
00:20:06.452 --> 00:20:07.934
Every business needs business development time.
00:20:07.934 --> 00:20:11.119
It's really like the direct revenue generation time.
00:20:11.119 --> 00:20:25.898
So if we could find the relationship between price, the time you invest in revenue generating activities and how long it actually takes for you to fulfill your services, you are going to find the max revenue or the max business model, based on what you actually offer.
00:20:27.244 --> 00:20:32.256
Yes, that is exactly how my old coach taught me to do it.
00:20:32.256 --> 00:20:34.365
This is the revenue I want to make for the year.
00:20:34.365 --> 00:20:38.638
Now, how much time does it take me to execute that offer?
00:20:38.638 --> 00:20:45.199
How many can I realistically sell and then I'll know what the pricing is?
00:20:45.199 --> 00:20:45.861
But you also.
00:20:45.861 --> 00:20:52.714
It could be unrealistic, so you also have to compare that to what does the market say that they'll pay?
00:20:52.714 --> 00:21:00.201
Right, you might want to charge 10 000 for something that other people are charging 4 000 for yeah, you got to.
00:21:00.643 --> 00:21:01.945
It's pricing is relative.
00:21:01.945 --> 00:21:07.255
It's a comparison game, so it's also relative, not just the value that you provide, but it's who you're providing it for, is it?
00:21:07.255 --> 00:21:08.336
A $10 million company.
00:21:08.336 --> 00:21:10.579
Is it a $100,000 company, friends?
00:21:24.357 --> 00:21:26.279
Huge difference, just them.
00:21:26.279 --> 00:21:33.035
They have clients that are midsize and they're family-owned manufacturing companies.
00:21:33.035 --> 00:21:34.218
That's who they sell to.
00:21:34.218 --> 00:21:39.974
Their clients make somewhere between $15 million and $30 million a year.
00:21:39.974 --> 00:21:54.138
They're US located and the value proposition that they have what they do is they help their clients find the bottlenecks in their operations and streamline them through tech, sops and structure.
00:21:54.138 --> 00:21:59.914
The consultant, who is so low, has a goal of making $300,000 this year.
00:21:59.914 --> 00:22:03.388
So how would you guide them through deciding their pricing?
00:22:04.412 --> 00:22:06.517
Is there a pricing model that is being typically used?
00:22:06.517 --> 00:22:10.855
So, for example, performance-based, value-based?
00:22:10.855 --> 00:22:12.157
Are they pricing hourly?
00:22:12.157 --> 00:22:14.313
What currently might be their structure?
00:22:15.424 --> 00:22:17.632
Based on the consultants I've worked with.
00:22:17.632 --> 00:22:19.016
They started at hourly.
00:22:19.565 --> 00:22:23.512
So we have an hourly rate, and so let me, I'm going to do public math real quick right here.
00:22:23.512 --> 00:22:24.576
This is scary.
00:22:25.086 --> 00:22:26.586
Grab a calculator I feel.
00:22:26.645 --> 00:22:28.951
So the thing is what we talked about.
00:22:28.951 --> 00:22:37.808
So let's just go back somewhere which is, even if you work like 40 hour weeks, and all that we can use 40 hour weeks is you still need time for biz dev and you still need time for admin.
00:22:37.808 --> 00:22:44.050
So we're talking about, if it were five and five, so 30 hours, that's I'll have to do the public math.
00:22:44.050 --> 00:22:47.659
Is that that $250 an hour at 50 weeks, $200 an hour?
00:22:47.659 --> 00:22:49.890
I wish I did public math better in that sense.
00:22:49.890 --> 00:23:00.733
So we're talking about $200 an hour at 30 hour weeks for, like, basically, 50 hour weeks or 50, 50 week years, all right, so this person would have to be doing $200 an hour.
00:23:00.733 --> 00:23:15.259
And so, if it's an operating consultant, so even if it was doing hourly, is one of the things that you had said in the manufacturing companies is that what they were doing was SOPs, they were doing automations and they were doing other operational aspects.
00:23:15.259 --> 00:23:18.749
So honestly, as I'm hearing this, let's go to value.
00:23:18.788 --> 00:23:25.773
So now, so my first conversations would be around time, because my so if I hear operation consultant, I hear manufacturing.
00:23:25.773 --> 00:23:30.800
A manufacturing company at that scale is going to have multiple employees.
00:23:30.800 --> 00:23:46.417
So now what they're either going to do is they're going to create efficiencies, which is going to either A save them time, or, b it's going to create efficiencies to save them time and then to repurpose time, or it's going to allow them to save costs, probably on new hiring, employees and so forth, like that.
00:00:00.059 --> 00:00:01.084
00:00:01.084 --> 00:00:07.245
00:00:07.245 --> 00:00:12.621
00:00:12.621 --> 00:00:16.030
00:00:16.030 --> 00:00:21.650
00:00:23.821 --> 00:00:27.123
00:00:27.123 --> 00:00:29.748
00:00:29.748 --> 00:00:32.261
00:00:32.261 --> 00:00:35.067
00:00:35.067 --> 00:00:48.335
00:00:48.335 --> 00:01:00.531
00:01:00.531 --> 00:01:08.462
00:01:08.462 --> 00:01:19.912
00:01:19.912 --> 00:01:22.906
00:01:22.906 --> 00:01:25.733
00:01:26.581 --> 00:01:27.725
00:01:27.725 --> 00:01:34.707
00:01:34.707 --> 00:01:37.462
00:01:37.462 --> 00:01:53.847
00:01:53.847 --> 00:02:02.492
00:02:02.492 --> 00:02:05.239
00:02:05.239 --> 00:02:26.569
00:02:27.659 --> 00:02:32.009
00:02:32.009 --> 00:02:41.741
00:02:41.741 --> 00:02:56.264
00:02:56.264 --> 00:03:05.688
00:03:06.270 --> 00:03:07.152
00:03:07.379 --> 00:03:09.649
00:03:10.466 --> 00:03:11.139
00:03:11.139 --> 00:03:15.919
00:03:15.919 --> 00:03:18.626
00:03:18.626 --> 00:03:21.673
00:03:21.673 --> 00:03:29.140
00:03:29.200 --> 00:03:32.027
00:03:32.027 --> 00:03:34.293
00:03:34.293 --> 00:03:36.504
00:03:36.504 --> 00:03:49.406
00:03:49.406 --> 00:03:51.611
00:03:51.931 --> 00:03:59.118
00:03:59.118 --> 00:03:59.801
00:03:59.801 --> 00:04:09.850
00:04:09.850 --> 00:04:41.598
00:04:41.598 --> 00:04:44.800
00:04:44.800 --> 00:04:49.002
00:04:49.142 --> 00:04:51.223
00:04:51.223 --> 00:05:03.410
00:05:03.410 --> 00:05:05.151
00:05:05.151 --> 00:05:06.730
00:05:06.730 --> 00:05:08.771
00:05:08.771 --> 00:05:11.934
00:05:11.934 --> 00:05:14.475
00:05:15.014 --> 00:05:17.475
00:05:17.475 --> 00:05:26.242
00:05:26.242 --> 00:05:31.574
00:05:31.574 --> 00:05:32.985
00:05:32.985 --> 00:05:34.754
00:05:34.754 --> 00:05:37.105
00:05:37.105 --> 00:05:43.225
00:05:43.225 --> 00:05:51.709
00:05:51.709 --> 00:05:53.273
00:05:53.980 --> 00:06:10.165
00:06:10.165 --> 00:06:31.653
00:06:32.281 --> 00:06:34.846
00:06:34.846 --> 00:06:39.884
00:06:39.884 --> 00:06:44.014
00:06:44.014 --> 00:06:45.480
00:06:45.480 --> 00:06:48.870
00:06:48.870 --> 00:06:54.833
00:06:54.833 --> 00:06:58.350
00:06:58.571 --> 00:07:03.211
00:07:03.211 --> 00:07:06.488
00:07:06.488 --> 00:07:10.649
00:07:11.141 --> 00:07:12.466
00:07:12.466 --> 00:07:14.923
00:07:14.923 --> 00:07:16.829
00:07:17.000 --> 00:07:18.086
00:07:18.379 --> 00:07:19.766
00:07:19.766 --> 00:07:23.829
00:07:23.829 --> 00:07:32.937
00:07:32.937 --> 00:07:35.569
00:07:35.569 --> 00:07:41.779
00:07:41.779 --> 00:07:49.879
00:07:49.879 --> 00:07:51.725
00:07:51.725 --> 00:07:59.973
00:08:00.379 --> 00:08:03.723
00:08:03.723 --> 00:08:23.995
00:08:23.995 --> 00:08:35.384
00:08:35.384 --> 00:08:50.595
00:08:50.595 --> 00:08:52.163
00:08:52.163 --> 00:08:53.004
00:08:53.004 --> 00:08:53.726
00:08:53.726 --> 00:08:55.692
00:08:56.780 --> 00:09:10.365
00:09:10.365 --> 00:09:22.496
00:09:22.677 --> 00:09:23.116
00:09:23.860 --> 00:09:25.948
00:09:25.948 --> 00:09:27.065
00:09:28.381 --> 00:09:38.892
00:09:38.892 --> 00:09:44.111
00:09:44.111 --> 00:09:47.700
00:09:47.700 --> 00:09:50.960
00:09:50.960 --> 00:09:54.530
00:09:54.530 --> 00:09:59.191
00:09:59.191 --> 00:10:01.427
00:10:01.500 --> 00:10:08.910
00:10:08.910 --> 00:10:11.095
00:10:11.095 --> 00:10:13.561
00:10:13.561 --> 00:10:14.923
00:10:14.923 --> 00:10:22.749
00:10:22.749 --> 00:10:26.563
00:10:26.563 --> 00:10:32.527
00:10:32.527 --> 00:10:45.462
00:10:46.567 --> 00:10:49.496
00:10:49.496 --> 00:10:51.863
00:10:51.863 --> 00:10:53.407
00:10:53.534 --> 00:10:53.956
00:10:54.017 --> 00:10:59.505
00:10:59.566 --> 00:11:13.941
00:11:13.941 --> 00:11:19.328
00:11:19.328 --> 00:11:22.950
00:11:22.950 --> 00:11:26.706
00:11:27.629 --> 00:11:36.403
00:11:36.403 --> 00:11:39.868
00:11:40.048 --> 00:11:42.551
00:11:42.551 --> 00:11:57.621
00:11:57.794 --> 00:11:59.903
00:12:01.596 --> 00:12:02.801
00:12:02.801 --> 00:12:07.302
00:12:07.302 --> 00:12:07.945
00:12:07.945 --> 00:12:08.947
00:12:08.947 --> 00:12:12.057
00:12:12.057 --> 00:12:15.221
00:12:17.344 --> 00:12:18.846
00:12:18.846 --> 00:12:30.947
00:12:32.049 --> 00:12:33.399
00:12:33.399 --> 00:12:38.585
00:12:38.585 --> 00:12:42.100
00:12:42.100 --> 00:12:58.919
00:12:58.919 --> 00:13:02.168
00:13:02.634 --> 00:13:03.798
00:13:04.820 --> 00:13:05.581
00:13:06.062 --> 00:13:06.764
00:13:06.924 --> 00:13:39.743
00:13:40.644 --> 00:14:00.249
00:14:00.249 --> 00:14:02.655
00:14:02.655 --> 00:14:10.048
00:14:11.556 --> 00:14:12.418
00:14:12.418 --> 00:14:16.089
00:14:16.089 --> 00:14:31.158
00:14:32.222 --> 00:14:53.711
00:14:54.111 --> 00:15:05.043
00:15:05.043 --> 00:15:16.162
00:15:16.695 --> 00:15:26.840
00:15:26.840 --> 00:15:42.485
00:15:42.485 --> 00:15:44.639
00:15:44.639 --> 00:15:59.701
00:16:00.195 --> 00:16:02.320
00:16:02.320 --> 00:16:05.719
00:16:05.719 --> 00:16:06.100
00:16:06.100 --> 00:16:14.605
00:16:14.605 --> 00:16:16.788
00:16:16.788 --> 00:16:18.690
00:16:18.690 --> 00:16:25.962
00:16:25.962 --> 00:16:38.788
00:16:38.788 --> 00:16:40.379
00:16:42.037 --> 00:16:47.769
00:16:47.769 --> 00:16:58.043
00:16:58.043 --> 00:17:10.048
00:17:10.048 --> 00:17:28.898
00:17:28.898 --> 00:17:32.106
00:17:32.106 --> 00:17:42.000
00:17:42.461 --> 00:17:44.714
00:17:44.714 --> 00:17:51.178
00:17:51.178 --> 00:17:54.666
00:17:54.666 --> 00:17:55.914
00:17:55.914 --> 00:18:00.077
00:18:00.077 --> 00:18:02.919
00:18:02.919 --> 00:18:10.603
00:18:11.702 --> 00:18:15.365
00:18:15.365 --> 00:18:19.007
00:18:20.247 --> 00:18:22.107
00:18:22.107 --> 00:18:23.328
00:18:23.328 --> 00:18:31.913
00:18:31.913 --> 00:18:32.894
00:18:32.894 --> 00:18:43.855
00:18:43.855 --> 00:18:48.151
00:18:48.151 --> 00:18:51.944
00:18:51.944 --> 00:18:54.451
00:18:54.451 --> 00:18:59.308
00:18:59.308 --> 00:19:00.712
00:19:00.712 --> 00:19:01.936
00:19:02.546 --> 00:19:25.212
00:19:25.212 --> 00:19:38.074
00:19:38.074 --> 00:19:39.276
00:19:39.276 --> 00:19:40.719
00:19:41.118 --> 00:19:46.784
00:19:46.784 --> 00:20:05.089
00:20:06.452 --> 00:20:07.934
00:20:07.934 --> 00:20:11.119
00:20:11.119 --> 00:20:25.898
00:20:27.244 --> 00:20:32.256
00:20:32.256 --> 00:20:34.365
00:20:34.365 --> 00:20:38.638
00:20:38.638 --> 00:20:45.199
00:20:45.199 --> 00:20:45.861
00:20:45.861 --> 00:20:52.714
00:20:52.714 --> 00:21:00.201
00:21:00.643 --> 00:21:01.945
00:21:01.945 --> 00:21:07.255
00:21:07.255 --> 00:21:08.336
00:21:08.336 --> 00:21:10.579
00:21:24.357 --> 00:21:26.279
00:21:26.279 --> 00:21:33.035
00:21:33.035 --> 00:21:34.218
00:21:34.218 --> 00:21:39.974
00:21:39.974 --> 00:21:54.138
00:21:54.138 --> 00:21:59.914
00:21:59.914 --> 00:22:03.388
00:22:04.412 --> 00:22:06.517
00:22:06.517 --> 00:22:10.855
00:22:10.855 --> 00:22:12.157
00:22:12.157 --> 00:22:14.313
00:22:15.424 --> 00:22:17.632
00:22:17.632 --> 00:22:19.016
00:22:19.565 --> 00:22:23.512
00:22:23.512 --> 00:22:24.576
00:22:25.086 --> 00:22:26.586
00:22:26.645 --> 00:22:28.951
00:22:28.951 --> 00:22:37.808
00:22:37.808 --> 00:22:44.050
00:22:44.050 --> 00:22:47.659
00:22:47.659 --> 00:22:49.890
00:22:49.890 --> 00:23:00.733
00:23:00.733 --> 00:23:15.259
00:23:15.259 --> 00:23:18.749
00:23:18.788 --> 00:23:25.773
00:23:25.773 --> 00:23:30.800
00:23:30.800 --> 00:23:46.417