How to Defend Your Price

Explaining the Whys of Your Price

If you want people to pay, you gotta know your numbers. I’m surprised how often biz folks don’t know their own numbers. I’m not immune, either. It’s only in the last few years that I’ve been more interested in the nitty gritty of the numbers.

Two Kinds of Numbers- Financial

First, you need to know your financial numbers. What’s your break-even point? Do you know what your margin is? Do you know the difference between net profit and margin. Whether your business is a product or service, you have to have basic financial literacy and understand cash flow, profit, margin and other lovely terms.

Check out the book Found Money by Steve Wilkinghoff if you want to read up on where to find the hidden profits in your business. It’s not light reading, but understanding why one service or product is profitable over another is curiously fascinating. And, totally useful to boost your own income.

Demographics

Second, are the demographics or psycho-graphics numbers. The lifestyle stuff about your clients like their attitudes, values, location, age, gender, income. Marketers suggest you build a buyer persona to help with creating marketing messages that are authentic and rich.I say, use the same persona to help set the right price so you don’t have to defend it!

I Won’t Pay That

Each one of us has a money set-point around purchases. Kinda like a range: one end is too cheap, the other end is too expensive. (What’s the most you ever spent on shoes? That’s your high point) Digging to get this kind of psychic data on your market helps you pick an irresistible price range for your clients.

Here are a couple of good questions to get you started.

Where do they shop? What zip code, and what’s the average household income for that zip. What magazines do they read.

Make sure to go beyond the original question, though. Knowing their favorite magazines means you also know:

The style of writing your market responds to The kinds of advertisers they are exposed to The price points of they are offered

The tile that appears in Better Homes and Garden is definitely differently priced than that in Elle Decor! Find your local business library. Have a chat with your business librarian who will yield tons of usable data.

Defend your price is about knowing what you want/need to make to be profitable and explaining that price in a way your customers can feel comfortable with. Doing the research into your own numbers and those of your clients empowers you to ask for that ‘right price’ -and get it. The more confident you are that your price is right, the easier it gets to attract clients who want to pay you that.

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