Price Check in Aisle 5

I love this advice on pricing from Jason Fried at 37Signals:

The good news about pricing is that you can guess, be wrong, but still be right enough to build a great sustainable business. Maybe you’re leaving some money on the table, but, like my dad always says, no one ever went broke making a profit.

However, you are not allowed to ask people:

  • “What would you pay for this?”
  • “Would you buy this for $20?”
  • “How much do you think this is worth?”
  • “What’s the most you’d pay?”

And these are the questions I hear people asking over and over. You can’t ask people who haven’t paid how much they’re willing to pay. Their answers don’t matter because there’s no cost to saying “yes” ”$20” “no” ”$100”. They all cost the same – nothing.

The only answers that matter are dollars spent. People answer when they pay for something. That’s the only answer that really matters.

So put a price on it and put it up for sale. If people buy that’s a yes. Change the price. If people buy, that’s a yes. If people stop buying, that’s a no. Crude? Maybe. But it’s real.

Too often we are afraid to change our prices (or experiment with flat fees) because we’re afraid we’ll get it wrong — and either scare clients away or leave money on the table.  Of course we will.  More than once, in all likelihood.

But that doesn’t mean we can’t keep trying.  Let’s start small, try lots of prices for similar things, and let the marketplace be our ultimate guide for whether we’ve got it right or not.  Ultimately, we’ll figure it out.

Or, we could just stick with the billable hour …

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