Career Intensity by David V. Lorenzo, Business Coach and Advisor

June 1, 2007

Charge What You Want

Posted by Dave Lorenzo - Business Coach

When you become a business owner you automatically earn the right to do things you own way.

I am one of the highest priced consultants you will ever meet. When it comes to corporate work, my team is among the best in the industry. We charge high fees. We do not negotiate. We produce results.

I take the same approach with my coaching of entrepreneurs and independent professionals. I can teach any kid with a lawn mower how to make a million bucks. I guarantee it. I literally put my money where my mouth is. I can only work with a handful of people at any given time. But what I teach works. I charge a lot.

I provide great value in everything I do. That gives me the right to charge whatever I want. People can choose to work with someone else if they don’t like my pricing.

In Ivy League schools all around the country there are courses on how to competitively price your product or service. You should only take those courses if you want to know what not to do. I took those courses. It screwed me up for quite a while. I wish I could unlearn that stuff. There was actually a class on “rational pricing”. Why the hell would you ever price your product or service rationally when people buy for emotional reasons?

There are only three factors that play into how you should price your product or service. They are:

How much value do you provide?
How good is your marketing?
How much money do you want to make?

That’s all there is to it.

If you provide value and you can communicate that value effectively to your clients, you can charge whatever you want to charge. Keep in mind that you don’t have to be the best at what you do in order to charge the most. You just have to be good at your craft and excellent at marketing. Marketing influences the customer’s perception of value.

The better you are at marketing the more money you can charge. Want proof?

Digital Research mp3 player $10 – Ipod $199 (The music sounds the same)
Leather Briefcase (Target) – $27 – Coach Briefcase $428 (The leather looks the same and smells the same)
Steak Dinner for Two at Tad Steaks (no booze) $49 – Steak Dinner for Two at Mortons $129 (Steak tasted exactly the same)

Why do people regularly pay more for the identical product or service? Because of the perception of value created by marketing.

I know, I know. You’re worried that people will suddenly stop using your services or stop coming into your store if you charge a lot. I understand. You don’t have faith in your ability to market your services properly.

Look at it this way:

What’s the worse case scenario? I’ve thought about that and I decided a long time ago that there were two ways to go broke.

You can go broke charging too little – working hard and not making any money;

You can go broke sitting on the couch at home because you charge too much and you’re marketing stinks.

I guess it makes sense to learn how to market your product or service so you can charge what you want.

Filed under: Marketing
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