Patrick Schwerdtfeger is a motivational speaker who can cover the topic of value and pricing strategy at your next business event. Contact us to check availability. The full transcript of the above video is included below.
Full Video Transcript:
Hi and welcome to another edition of Strategic Business Insights. Today we’re going to talk about profit opportunities. This is just one of those basic tenets of business. You have a profit opportunity every time the value of what you’re selling is higher than the price that you’re selling it for. That’s the whole message of this video, but I want to talk about it a little bit because people, they make things too complicated.
People make things more complicated than they need to be. At the end of the day, if you want to have a successful business, if you want to have a profit opportunity, you have to provide more value than what you’re charging. If you’re charging a lower price, then what you’re offering in terms of value, nobody’s going to question the price. And this is the primary thing here, is if people are questioning the price you’re charging for your product or for your service, you’re not providing enough value or you’re charging too much. That’s all there is to it. That’s the end of the story, is that you have to find a way to either lower your price or increase the value of what it is you’re providing.
When you’re providing a ton of value, nobody questions the price anymore. Everyone’s like, “Yeah, that’s fine. I’ll take it. I’ll buy it.” And I’m sure we’ve all had that happen in our lives. It’s happened to me many times where I’ve seen something and I see right away, I’m like, “Wow, I’ll buy that. Done. I see the value. I don’t have to think about it. I’m going to buy that because it’s worth it to me.” Well, you want your customers to feel that way about your products and services. You want them to look at it and see the value and be like, “I’m buying that. I need that and I’m buying it.”
Now, there’s the whole idea of trying to increase the value or the perception of value to help increase the conversion rate. That’s what sales is all about, is to convince someone essentially that the value is actually higher than they may have perceived right at first blush. So someone comes in and might focus on the problem and really identify the problem and a lot of clarity, and by doing that it clarifies the need and it increases the perceived value of your solution to that problem. That’s a sales process and there is definitely a lot to be said for helping people realize the value of what it is you’re selling.
Like for example, in some cases people might not even realize what the true implications of what you’re selling are. Like in consulting for example, when I do consulting jobs, sometimes I have to say, “Listen, if we do this and if we do it right, it’s going to impact your entire sales force. We’re going to increase your sales conversion rate, which is going to increase your profits on the same staff levels that you have today.” And people are like, “Oh wow, okay.” So this is actually going to have a pretty broad impact, and because of that increased value my price is perceived as being more reasonable. That’s all a sales process.
But the core tenet of business and the core tenet of pricing strategy is to charge an amount for your product or service which is less than the value that they’re going to get from getting your product or service. So when you look at your business, look at it from the perspective of a customer. What’s the true value? What are actual benefits that they’re going to receive from whatever it is you’re selling? And once you know what that value is, charge an amount that is somehow less than that.
They have to have an actual benefit. They have to have an ROI. They have to have a profit on their side too. So they have to buy it at one level and receive value which is higher. So you can’t try and do it so they’re exactly the same because then it’s a wash, that they’ve spent their money, they get the value and everything’s exactly the same. They have to be better off. So the price has to be lower than the value that they’re getting for either the product or the service that you’re selling. Basic tenet of business but I hope it helps you clarify the pricing structure you have now and in the future.
Thanks so much for watching this video. My name is Patrick, reminding you as always to think bigger about your business, think bigger about your life.
Patrick Schwerdtfeger is a keynote speaker who has spoken at business conferences in North America, South America, Europe, Africa, the Middle East and Asia.