What Premium Pricing Is Really About - Charging And Getting Paid Top Dollar For Your Branding Projects
‘You should raise your prices because charging premium prices is the best way to run a business.’
You’ve heard it, I’ve heard it.
But what are you supposed to do with it? How are you supposed to charge premium prices and actually get top dollar?
Are you supposed to take the $1,000 projects that you usually do and start charging $10,000 for them instead?
And how do you muster up the confidence to 5x or 10x your prices when you've never been paid that before?
In this article, I’ll break down my experience both raising my own prices and coaching other people to raise their prices. Because I think the worst advice you can get is ‘just raise your prices, because you're worth more than you're charging.’
The problem with charging too much for your services
When people tell you that you should raise your prices and you should charge premium prices, they're not wrong - it’s a good goal to have for any branding agency owner.
Premium prices build more profitability, create more income and create more freedom in your life.
After all, if you are getting paid the equivalent of a low hourly rate, then you have a very low income ceiling on how much you can make. And it requires you to be working all the time just to make ends meet.
The value of charging a premium price is that obviously you make a lot more money.
And with more money comes more freedom and more flexibility.
You get to choose the kind of clients you want to work with, go on the kind of vacations you want to go on etc.
But I think it's really irresponsible when people recommend that you just raise your prices or even to look at what you're doing and say you should charge more because it's worth more, without talking about what actually happens to us when we increase our prices.
Here's a scenario that I've seen many, many times.
Somebody hears that they're not charging enough and that they should charge more for the same service that they're offering.
Maybe they're charging $3,000 for this service, and somebody, maybe even a past client, says ‘I would have paid you a lot more for that - you should charge twice as much.’
So this person says, ‘Yeah, I should be charging more. I'm a little scared, but I'm going to charge $6,000 for this project.’
So the next client that comes to them and they charge $6,000.
And then what happens?
Well, sometimes that next person says, ‘No, I don't have the budget for that. That's too much.’ And they go away.
What happens internally to the person that just raised their price? Well, if I were them, I would immediately start thinking, ‘Maybe that was too much. Maybe it's not worth that, or maybe I shouldn't have raised it, I could have gotten that client if I had been charging the $3,000 that I was charging before…’
This person instantly starts to shrivel and their confidence goes away.
Now they aren't sure whether it was the person or whether it was their price that made that client disappear.
Often, the agency owner would have been happy to just have that client at $3,000.
So then what do they do?
Maybe they go back to that person and say, ‘Okay, I'll do it for $3,000.’
I don't know what reason they give them, but they might actually end up doing the project for $3,000 anyway.
The problem with that is that if you go back on your pricing, you're completely invalidating the value that you put on it and you're telling your clients, ‘my pricing is arbitrary.’
This is why I don't tell people to just raise their price. That's not how you're going to be able to raise your price sustainably for the long run.
Raising prices starts with you.
It starts with your comfort and your confidence in your prices, so here's what I like to do.
Understand what premium pricing really means
Instead of just going ahead and raising prices, I break it down into 2 parts, and the first is to understand what premium pricing really means.
When most hear the term ‘premium price’, they think ‘Price as much as I can charge.’
But it’s not that. It's the price that you charge as it relates to the time that you spend, also known as profitability.
There was a time when, in my agency, we were charging $30,000 for projects that were taking six-eight months to deliver on and supported a team of four people.
Now that might sound like a premium price, but based on the amount of time and inputs that it took to deliver on that project, it probably came out to minimum wage or less.
After I switched to the No BS Agency model that I have today, the first project that I did was $3,000 for one day.
And while $3,000 doesn't seem as premium as $30,000, it was way more profitable than the $30,000 project, because it only took one day.
So that $3,000 for one day was more of a premium price than the $30,000 project.
So premium pricing is about how profitable it is, not just the top line number.
Imagine, there’s a client you want to close right now who won't pay you $5,000 for a project, and they say they don't have the money for that.
Imagine if you said to them ‘For $5,000, I'll work for you full-time for a year.’
I bet you they'd find $5,000 to pay you.
That’s an extreme example, but I'm trying to make a point.
It's not about the number. It's about profitability.
So how can you make what you already offer more premium and more profitable, without raising our prices?
Some people can triple or quadruple their income, just by decreasing the amount of time that they spend delivering on the projects.
And you can decrease the time you spend on a project by creating systems so that your projects are repeatable in a lot of ways.
If you get more efficient, get more organised, work with the right clients who are not going to drag projects out because of the way that they approach you, get hired more as an expert and less as a service provider who is just executing on someone else's vision - these are all things that you can do to become more profitable.
As a result, you can take a project that you normally spend, say, 100 hours over and shrink it down to 50, 40, or even 20 hours.
And you don't even have to change the price to do it.
Sell and raise
The second part of going premium is something I like to call ‘sell and raise.’
Typically, charging premium prices can mean taking a $3,000 package or project and suddenly increasing the price to $10,000, when you’ve never sold anything for $10,000.
If you pitched somebody a $10,000 project where the highest project you've ever sold is $3,000, and they came back to you saying it’s too much money, you would then start to question whether or not that price point is viable.
That would not be a weird conclusion to make - I would make that conclusion too.
Instead, I recommend you start with a price that you feel confident in because you've sold it before, and then build confidence in the real world through actual data and actual experience.
Because here's how I see it. If you are selling something for $500, and you've sold it for $500, you know that people will buy it for $500.
If you then raise it to $600, and the next person you offer it to says that's too much money, you are going to be much more likely to assume that it's them who has the issue with the amount of money and not you and your price, right?
Because if somebody bought it for $500, they'll buy it for $600. I mean, there's not a huge difference between $500 and $600.
The same goes if you're selling something for $10,000.
There's not much of a difference between $10,000, $11,000 or even $12,000.
Somebody who's willing to pay you $10,000 for a full project probably would pay you $12,000 as well.
I don't think $2,000 at that level is a deal breaker.
If we go forward with this line of thinking, every time you sell something, raise it a little bit.
Raise it as much as you feel comfortable with and then ask yourself this question:
If the next person that I offer this to says no because it's too expensive - am I going to draw the conclusion that it's the price or that it's them?
And if you can confidently say to yourself, ‘it's them, because I've sold this for something pretty close to it’ then you can raise your price to that level.
That's the trick I want you to use from now on.
Sell, and then raise.
I did exactly this in my branding agency.
I started selling my intensive one-day BrandUp for $3,000.
I got that price up to $10,000 just a year later, because over the course of five or six months, I was raising the price $1,000 dollars every single month.
I tell people to sell their offer three to five times and then raise the price.
This is really about comfort level.
So I would sell that package a few times, and then I would raise it $1000.
My goal was to get it to $10,000 because that worked really well in the business model that I wanted to have.
Which, by the way, is the reason I created the Freedom Calculator to help you understand how much money you need to generate in revenue to support the business and life that you want to have.
Knowing that is so valuable, because then you know exactly what price point you need to hit in order to achieve that goal.
And then you can raise your prices with that specific goal in mind, instead of just raising your prices, trying to get them as high as they can be.
The danger with just trying to raise your prices as high as possible, is that you end up adding so much value in order to justify the increase in price such that they end up actually being less profitable.
I cannot tell you how many times I have worked with somebody where they have evaluated the profitability of their offers, and the highest priced package actually ends up being their least profitable package.
Why?
Because as we increase prices, we feel like we need to add so much stuff to justify it so it ends up being much less profitable.
So sell and raise, sell and raise.
And that entire time you're selling and raising it, I want you to keep your eye on how much time you're spending to deliver it.
Because that's going to keep your eye on profitability.
And if you sell and raise, what you're doing is building your confidence, true confidence.
Building true confidence in what you charge
If you haven't seen my TED talk, go watch it.
It's all about banking true confidence.
And what I say in the TED talk is that in order to actually have real confidence, you need to actually do these things in the real world, right?
Your work is worth as much as you've been paid for it.
Until the world has told you it's worth more, because somebody has actually paid you for it, you can't honestly say it's worth more.
So go out into the world, offer it to somebody and get them to pay you for it.
And now you know it's worth that.
You can do that over and over again.
By just raising your prices every single time you sell your services, you’re increasing your own internal confidence in yourself and the value of your offers.
And you’ll probably raise your prices in a very short amount of time to a very high and sustainable profitability level.
If you take this approach, you're going to feel confident every time you say your prices.
And your confidence in your own prices is a really important factor when it comes to closing clients.
If you are in any way uncomfortable with the price that you're charging, the clients can tell.
If you’re not super confident that this is worth $20,000 because you’ve never charged it, you’ll be scared to say it.
Instead, go with the prices that feel confident and just keep raising it.
And by the way, if you are selling something for $5,000, and you feel in your heart of hearts that it’s worth $10,000, then by all means raise it to $10,000.
This is about understanding and listening to your own internal comfort zone about pricing, and using that as a way to get that comfort and increase those prices, instead of trying to fake it and trick yourself, because I just don't find that to work.
Ultimately the goal is premium prices. But there are a lot of ways to get there. And that is my recommendation on how you should get there faster.
Here’s what you need to get…
Charging premium prices just because you think you ‘should’ or ‘because you’re worth it’ is an easy way to kill your confidence and actually lose out on business for your branding agency.
Focus on what’s profitable, and raise prices incrementally, once you have real world data that enough people will pay what you charge. That is, by far, the quickest way to charge, and get, top dollar for your branding projects.
P.S. You can always jump on a call with my team if you want to fast-track your pricing strategies, and learn all my other tools and strategies to scale up your agency - just go here to get started!