8 Pricing Strategies To Use On Your Product, Service or Workshop (FS124)

5/31/22, 9:28 AM 8 Pricing Strategies To Use On Your Product, Service Or Workshop (FS124)
8OnPricing
Your Strategies
Product, To Use
Service Or
Workshop (FS124)
🎙️ Listen to the episode:
1:16:06
Episode 124: 8 Pricing Strategies To Use On Your Product, Service Or Workshop (FS124)
iTunes | Overcast | Pocket Casts | Stitcher | Spotify | RSS
How you price your product, service or workshop can have a massive impact
on your sales. Unfortunately, it can also lead to a massive anxiety attack as
well.
In this episode we lay out 8 pricing strategies you should know about.
More importantly, however, we share off the cuff, brutally honest ideas about
how to price your offering.
Other topics include:
7 pricing strategies for you to choose from
3 methods to price your first product
https://fizzle.co/podcast/7-pricing-strategies/ 1/12
When to use your gut and when not to
What kinds of things should be on your sales page to help customers feel
comfortable with your price
“Pre-selling” to test the price of digital products
Why we threw out our pricing strategy several months after we launched
Fizzle
Whether it’s your first time putting something up for sale, or you’re an old pro,
the tactics in this conversation are going to help you get confident about your
pricing. Enjoy!
Let’s Talk About Pricing Strategy

Most entrepreneurs never think too much about their pricing strategy. They
might take a peek at a similar product from a competitor, adjust the price by a
couple dollars, and joila – the product is ready for sale.
But in the classic business world, pricing was an art form. Pricing gurus at
major companies obsessed over finding the perfect price to maximize profit
from a given product or service.
In other words, that Gillette razor is priced the way it is for a reason. Not
because it makes the most sense for the consumer, but because it maximizes
shareholder value.
So, keep in mind that a pricing conversation is really about how you will get the
most value from the product or service you decide to sell. Thankfully,
independent business owners don’t have shareholders, so we can also take
into account things like doing what’s right for the customer.
Price Elasticity of Demand
While we’re not crazy about business school terms, we wouldn’t be doing our
jobs if we skipped over price elasticity of demand in this conversation about
pricing.
All you really need to know about price elasticity is this: if all else remains
equal, demand for your product or service will decrease with an increase in
price.
As an example, imagine this: you can sell 100 units of a $100 dollar product to
your current audience. If you increase the price to $105, you are able to sell 95
units. Your costs are $20 per unit. Should you sell at $105 or $100?
The answer: $105. Why? Because you’ll earn $8,075 profit as compared to
$8,000 at $100 per unit.
Great. That’s all the theory you need to know. When price increases, demand
goes down. There is an optimal pricing level you can reach to make the most
money from your thing. Capiche?
8 Pricing Strategies to Help You Price Your

Digital or Physical Product, Service, or
Workshop
Elasticity is great in theory, but it doesn’t tell us anything about where to start
with your pricing strategy. Instead, let’s talk about some of the most common
methods for pricing:
1. Cost-plus Pricing – Cost-plus pricing is an effective way to build a profit

margin directly into the price of your product or service. It’s just what it
sounds like: you calculate the cost to deliver a product or service (cost) and
then add a 10% margin, for example (plus). Cost-plus is straightforward for
the entrepreneur, but doesn’t take into account the mindset of the
customer. You may also leave money on the table by focusing on cost.
2. Competitive Pricing – Competitive pricing focuses neither on costs or
customers. Instead, competitive pricing is all about the existing market for
your product or service. In competitive pricing, your job is to research the
pricing strategies of many competitors to establish a pricing range. The
range should have a high end and a low end, and the price of your product
or service should fall somewhere between those bookends so that it is
competitive.
3. Luxury Pricing – Luxury pricing is a classic strategy used by brands like
Louis Vuitton, Mercedes, and Rolex. The price has more to do with the
aspirations and image of the person making the purchase than anything
else. By buying a product or service at a luxury price, we are buying our
way into a club. That club is a representation of how we want others to see
us in the world.
4. Rate-based Pricing – Also known as hourly pricing. Freelancers,
consultants, and coaches most commonly use rate-based pricing for their
services. The downside is that you have to trade time for money. The
upside is that you’re guaranteed to get paid for every hour of work. Clients
are sometimes hesitant about hourly pricing because they fear the
incentive is to work more hours to make more money as opposed to being
efficient.
5. Project-based Pricing – Project-based pricing is a flat fee arrangement

agreed to at the outset of a project. The entrepreneur may make an
estimate of how many hours she thinks the project will take and then price
accordingly. Or, she may combine this strategy with some of the upcoming
pricing strategies to charge more. The incentive is to finish the work quickly
and with high quality. For this to work well, the scope of work should be
well defined up front.
6. Value-based Pricing – Value-based pricing takes into account two key
questions: 1) Can they pay?; 2) Will they pay? They are the customers,
which makes value-based pricing a customer-centered approach to pricing.
The determinant factor in this pricing strategy is how much your customers
are willing to pay, rather than how much a product or service costs to
produce or deliver. There is huge upside for the entrepreneur when value-
based pricing is used well.
7. Tiered Pricing – A tiered pricing strategy gives consumers the option of
choosing between different versions of the same product or service. For
example, imagine considering a single gear bike for $299, a three-gear bike
for $399, and a seven-gear bike for $499. A tiered pricing strategy turns a
yes or no decision into an either or decision for the potential customer. It
also provides a price anchor (as a consumer, I can convince myself I am
being frugal by spending $299 on the single gear bike as compared to
$499 on the seven-gear).
8. Pay What You Want Pricing – Also known as a donation-based pricing
strategy, pay what you want pricing allows the customer to make the
decision on how much the product or service is worth to her. Pay what you
want allows you to test market demand without knowing the price elasticity
for your thing. When combined with a “suggested price,” a pay what you
want pricing strategy can sometimes lead to more profit than a set price.
As you read through the eight pricing strategies, you might have noticed
y
5/31/22, 9:28 AM
g g p g g ,y g
8 Pricing Strategies To Use On Your Product, Service Or Workshop (FS124)
something… These pricing strategies are not mutually exclusive. And, in fact,
they are not.
Many of the pricing strategies can be used together to create the best
outcome for your business and your customers.
Pricing Strategies for Digital Products,

Physical Products, Services, and Live Events
Now that you have an arsenal of pricing options available to you, let’s get into
the specifics of how to apply them.
Digital Products
For digital products, pricing strategies range widely. From $.99 books on
Amazon to $2,000 courses, digital products truly run the gamut. Your price
should be a reflection of your industry, your customers, and the value provided
through your product or service.
Pricing strategies to consider: Competitive Pricing, Value-based Pricing,
Tiered Pricing, Pay-What-You-Want Pricing
Physical Products
Unlike digital products, there are hard costs (other than time and energy) to
producing a physicial good. While services like drop shipping, print-on-
demand, and 3D printing are helping drive costs down, the physical product
world is still very unique. It’s important to keep in mind unit economics when it
comes to pricing physical products: if you lose money selling one product, you’ll
lose more money with every successive sale.
Pricing strategies to consider: Cost-Plus Pricing, Competitive Pricing, Luxury

Pricing, Value-based Pricing, and Tiered Pricing
Services
Pricing services can be challenging, as so much of the value comes from your
personal ability to deliver. Customers like to see things like testimonials,
portfolios, and case studies of your work before they’re even willing to consider
hiring you. While price is important, make sure you don’t disqualify yourself by
keeping necessary information from your customers. Additionally,
“productizing” your services can be a great way to help customers understand
exactly what you can do for them.
Pricing strategies to consider: Rate-Based Pricing, Project-Based Pricing,
Value-Based Pricing, and Tiered Pricing
Live Events
Like services, workshops and live events are highly dependent on the speakers
or workshop leaders to deliver value. The experience of the attendee can vary
greatly from session to session. Setting clear expectations up front helps frame
the value of the event so that a potential attendee is ready to consider the
price you’ve set for the ticket.
Pricing strategies to consider: Competitive Pricing, Value-Based Pricing,
Tiered Pricing, and Pay-What-You-Want Pricing
Pricing Strategy Matters, But a Great Product

or Service Matters More
H f ll thi i
https://fizzle.co/podcast/7-pricing-strategies/ t i f th i i t t i il bl t 7/12
Hopefully this gives you a great overview of the pricing strategies available to
you, and the ways you can use them to help price different kinds of products
and services.
But if you take one thing away from this podcast episode and article, let it be
this: no matter how well you price your product or service, nothing can make
up for the importance of having a truly great product or service.
Your customers will tell you whether you have a great product. Make sure you
listen.
If you want to learn more about pricing strategies, be sure to check out the
show notes below!
Show Notes:
Are You Making the Most Common Pricing Mistake?
10 Pricing Strategies to Drastically Increase Sales
The Ultimate Guide to Finding Your Unique Selling Proposition
10 Examples of Killer Unique Selling Propositions on the Web
Are You Making the Most Common Pricing Mistake?
Pricing Hangups — First Product Series Part 2 (FS036)
Set Prices, Raise Rates & Get Paid What You’re Worth
Pies, Ideas & Insecurities
Social Riggers | Herek Dalpern’s Jam Study Explained
Search
Earn a living doing something you love.

Grow an audience and get paid for your work as an independent
creator. Fizzle is where creators come to learn, share and make
progress toward their online dreams.
Try Fizzle Free
Or, start learning now.
Featured Instructors
Pat Flynn View
Smart Passive Income
Dana and John Shultz View

Minimalist Baker
Leo Babauta View

Zen Habits
John Lee Dumas View

Entrepreneur on Fire
Steph Crowder View

Courage & Clarity
See all instructors »
I’ve taken a lot of courses and been involved in several paid

communities since I started my business, but I’ve never ever felt like
anyone CARED as much about seeing my reach my goals as the Fizzle
Team. They show up for me as much as I show up for myself. Thank
you SO much, you guys!
Claire Pelletreau
ClairePells.com
See all success stories »
📓 Articles & Announcements
8 Experiments to Spice Up Your Podcasting Routine

Is your podcast routine stuck in a rut? If so, we’ve got just what you need! Jane Portman from
Userlist joins us on the blog today to share her podcasting genius. Keep reading for 8 experiment…
Introducing Fizzle 2.0

Today is an exciting day for Fizzle. We’re announcing a complete refresh of Fizzle, including every
aspect of our user experience – courses, content, live events and more. Since we first opened…
The Secret to Creating Consistent Content (that nobody’s talking about)

Hands up if you easily create consistent content week after week without fail. My guess? Since
you’re reading this article, that’s probably not the case. Despite what you may be thinking – you’…
All articles and announcements »
🎙️Podcast Episodes
The EXITpreneur’s Playbook with Joe Valley

Joe Valley is an Author, Guest Speaker, EXITpreneur, Advisor, and Partner at Quiet Light. He has
also built, bought, or sold over half a dozen of his own companies. Over the last nine years, Joe h…
R&D Tax Credits with Tiffany Bisconer

Tiffany Bisconer is a CPA with over 20 years of accounting and tax experience. Tiffany worked with
one of the top certified public accounting firms before becoming director of Acena Consulting. Sh…
Behind the Scenes: Fizzle 2.0

This has been an exciting month for Fizzle! We recently announced a complete refresh of Fizzle,
including every aspect of our user experience – courses, content, live events and more. Since we…
See all episodes »
RESOURCES MEMBERSHIP FIZZLE CO.

Courses Pricing About
Podcast Success Stories Contact
Articles Terms
Instructors Privacy
SUBSCRIBE TO OUR NEWSLETTER
The latest news, articles, and resources, sent to your inbox weekly.
Enter your email
Subscribe
© 2022 Fizzle Co. All rights reserved.

8 Pricing Strategies To Use On Your Product, Service or Workshop (FS124)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

8 Pricing Strategies To Use On Your Product, Service or Workshop (FS124)

Uploaded by

Copyright:

Available Formats

5/31/22, 9:28 AM 8 Pricing Strategies To Use On Your Product, Service Or Workshop (FS124)

When to use your gut and when not to

Let’s Talk About Pricing Strategy

8 Pricing Strategies to Help You Price Your

methods for pricing:

1. Cost-plus Pricing – Cost-plus pricing is an effective way to build a profit

5. Project-based Pricing – Project-based pricing is a flat fee arrangement

Pricing Strategies for Digital Products,

Pricing strategies to consider: Cost-Plus Pricing, Competitive Pricing, Luxury

Pricing Strategy Matters, But a Great Product

Social Riggers | Herek Dalpern’s Jam Study Explained

Earn a living doing something you love.

Dana and John Shultz View

Leo Babauta View

John Lee Dumas View

Steph Crowder View

See all instructors »

I’ve taken a lot of courses and been involved in several paid

📓 Articles & Announcements

8 Experiments to Spice Up Your Podcasting Routine

Introducing Fizzle 2.0

The Secret to Creating Consistent Content (that nobody’s talking about)

The EXITpreneur’s Playbook with Joe Valley

R&D Tax Credits with Tiffany Bisconer

Behind the Scenes: Fizzle 2.0

RESOURCES MEMBERSHIP FIZZLE CO.

© 2022 Fizzle Co. All rights reserved.

You might also like