Ask Patrick McFadden, Small Business Marketing Consultant on Pricing

Do you have any suggestions with determining the right price for a service that will not scare away people, especially for a new business?

Price is funny because it is just a function of value.

People will pay a million dollars for something that they believe is worth a million dollars. And that’s the hard part for a lot of people.

There are million-dollar problems that people want solved. Everything from, “I want my neighbors to think I’m a really impressive person” to “I have a legitimate medical problem” or “something I want to solve”.

The real reason people end up discounting things or feeling like, “Oh, I can’t charge that much because nobody else is,” is because they haven’t really unlocked somebody’s problem that they’re trying to get solved and they haven’t unlocked a way to communicate why this is the path to solve that.

What I like to do early on, if I’m creating a product or a service is have a group of people that I think I’m going to target, participate and not just give me feedback, but literally build it with them.

I will say this whole customer discovery process is how you nail the differentiation, it’s how you nail the messaging. And that’s how you then are able to not only lock down on pricing but charge more.