Keith Perhac is a technical marketer, a combination of a software developer and a conversion optimization specialist. He works with SaaS companies and internet marketers to develop automated evergreen sales funnels. He helps convert the traffic that comes to your website into sales. Keith has built two companies around this specialty: SegMetrics.io, which is the reporting that should come with Infusionsoft, and SummitEvergreen.com, which helps marketers create online courses.
Start by Focusing on Value
- What is the most important thing you can share about pricing?
- Recognize the value of what you are selling through the eyes of the customer, not your own.
- As you become better at your skill set, the value of that skill seems to diminish.
- There is an intrinsic value over and above the hard work that goes into it.
- See the potential value that your customer sees in it.
- It is easier to do this in industries where you are providing direct value.
- You have to determine what the ROI is for your customer and how you can deliver it consistently.
- Determining financial value is very straightforward.
- There is also non-tangible value, such as creating an internal business process, that allows the customer not to waste time.
- Raising your price is all about how you position what you are selling.
- If you do not value what you do, then you cannot see the value through the customer's eyes.
- The more you charge, the more valuable your customers think you are.
- Why is it hard to focus on value instead of the craft?
- You are predisposed to value something for which you pay money.
- The trappings around IBM are what make it valuable, not the software itself.
- You have to determine whether or not what you are providing to the customer is the right solution.
- Everyone tends to value their craft over others.
- Talking with customers is the best way to avoid the knee-jerk reaction that your offering is the right solution.
[clickToTweet tweet=”If you do not value what you do, then you cannot see it through the customer's eyes.” quote=”If you do not value what you do, then you cannot see it through the customer's eyes.”]
Then Create Options and Bundles
- What is your experience with offering tiers (options) when pricing?
- The two main strategies when pricing a product are:
- Tiered pricing
- Price anchoring
- Tiered pricing is when you have the same product at a basic level, silver level, and gold level; each level adds more value at a higher price.
- It gives everyone who is willing to pay an option.
- Having a range, lets you offer a product for each person who is a potential customer. (Nathan Barry‘s books)
- Three is the magic number for options.
- When you have one product, the option is buying or not buying.
- When you have three products, there is a 75% chance of yes and only 25% chance of no.
- Adobe is a great example of people who would go to extremes to hack a product because it was so expensive.
- Adobe made people choose between “I am a professional and want to do things now” vs. “I have a hobby and do not have any money to spend”.
- Three targets to hit:
- Have more time than money
- Have more money than time
- Time/money are almost equal
- Price anchoring is the reason that the Apple Watch has a $10K version; it anchors the $500 watch.
- The price can anchor both ways.
- When something is too cheap, people do not trust it.
- The two main strategies when pricing a product are:
- What are the advantages of bundling products and services?
- Bundling takes other products and services and combines them into a new product that helps the customer succeed faster.
- It is a great way to increase the value of your product instantly.
- Bundle in supplementary information that helps the customer speed up; you can add tools (checklists, worksheets, templates, coaching).
- Add interviews of people who would be interesting to your customers.
- When you interview someone who has an audience, you get to borrow his audience.
- We know Richard Branson because he puts himself out there and has social proof.
- When people have heard your name a lot, they start to equate you with success and trust you.
- Position yourself in such a way that you are the expert, such as Peter Hoppenfeld.
- It gives you the swagger and ability to charge more because customers are more inclined to purchase from you.
- Positioning comes before options, tiers, and bundling.
- Target yourself down to a specific industry and you can sell more.
[clickToTweet tweet=”When you have 3 products, there is a 75% chance of yes and only 25% chance of no.” quote=”When you have 3 products, there is a 75% chance of yes and only 25% chance of no.”]
Real-World Tiered Pricing
- What is SegMetrics.io?
- It is the reporting that Infusionsoft should offer out of the box.
- If you are doing business online, you want to find out how much a lead is worth.
- A lead is someone who opts into your site or list from a specific source.
- The product can track when someone hits your site to opt-in to the first sale to repeat customer.
- Why do you offer four options for SegMetrics?
- Normally, they would just offer Startup, Professional, and Business.
- There was a group of people who were just getting started and could not afford to spend $100/month.
- The number of contacts in your Infusionsoft account is an easy-to-understand metric to segment people by.
- How often your data gets updated is another way to balance the offerings.
- They balance on time and success.
- If you have more than 300K subscribers, there is another option to contact SegMetrics directly to have a customized solution.
- Pricing is contextual.
- Your audience dictates success; you have to validate it.
- Marketing is applied psychology.
- What is one of your best stories about creating value for a customer?
- While working with a customer on a launch, the shopping cart broke for 2 hours during a critical sales process.
- Rather than give up on lost sales, they contacted the people who could not complete their purchase and gave them another opportunity to take advantage of the offer.
- From one email, they made an additional $50,000.
- It is important to note that every mistake can be turned into a success.
- Very few mistakes are completely unrecoverable.
About Keith Perhac
- Website: keithperhac.com
- Twitter: @harisenbon79
Buyan Thyagarajan says
This was a gem of a podcast i listened to. Being a software consultant, Kirk and Keith share so much insights on how to price options based on time and money. It blow my mind and worth listening to for consultants..
Kirk Bowman says
Thank you Buyan!
Ty Ragland says
Interesting example of how to incorrectly learn what the customer wants. Years ago (I am in the market research business, specializing in defining what customers and prospects mean by value) I made a presentation to an industrial manufacturer who, when I was finished, told us he had done his own research, asking customer which of fifteen features they most wanted and then producing a product containing the top five. No products were sold. He was naturally not happy. I knew the reason without seeing the results — by lumping the top five together he had created a camel in a segmented market that wanted various types of horses.
Kirk Bowman says
Thank you for listening Ty!