How to Price Your Offer to Increase Sales

27:35Most likely, statistically, you will, but you feel a lot better about it on Black Friday. Y 'all, the psychology of buying. So let's get into a little bit of an example. An owner of a small bakery makes these delicious red velvet cheesecake cupcakes, and she only makes them on the first Saturday of the month. So they sell out fast. Actually, scratch that. I don't want to use this as an example. This is like a made up example when I could use a real one. There is a restaurant here in Newport Beach. It's a cafe. They only stay open till 1.30 in the afternoon. And they only do cinnamon buns every weekend, but they do a limited amount.

28:11And so it's a tiny little cafe. And oftentimes you'll see a line out the door and people in the line, it's like pandemonium. It is the craziest experience. People are saying like, can you hold my order? And the hostess, bless her heart, to the front, she's like, sorry, we can't hold any orders. You can only make the order at the table. And then other people will say, I'll pay double. Just hold my order. I want to pre-buy my order. Can I order it to go and then have them heat them up when I get into the cafe? You guys, I was in this line being like, what are these cinnamon buns laced with? This is crazy.

28:46But people were driving orders due to the limited amount. That is scarcity. And I mean, y 'all, we experienced during the pandemic, right? It's like you see pictures of people in Costco buying 897 rolls of toilet paper. Like how many years do you think you will not be using toilet paper? But what was it? Scarcity. This is the psychology of buying. So if you know that there's a psychology of buying, look at your offers and think, is there a particular point in time that I might be able to drive a limited amount of time to buy a limited amount of offers? So you want to start thinking what is going to make a person make that decision faster.

29:20And this plays into the fifth strategy. So I think that the fourth and fifth strategy are very similar, but the slight difference. And this is going to be showcasing your product and service. And then you want to show like, whoa, there's a lot of demand for this. Okay. As much as we would hate to admit it to be the truth, it is just the truth. People associate popularity with value. It makes you cringe, right? Because you're like, yeah, but how do I become popular? So I'm more valuable. Like, why is my offer not as valuable as that other offers? Just because they have more followers, they have a bigger newsletter list, or they're just having to be friends with those famous people.

29:53Listen, I don't make the psychological game. It's just how people often perceive it. So people associate popularity value and it makes things seem more exclusive and prestigious when other people want it. Okay, hold on. Time out. Is it prestigious or is it prestigious? See, I say prestigious, but maybe it's just because I think that's the way the Brits say it. And I just think everybody in England sounds smarter when they talk like prestigious or prestigious. Let me know. Let me know. Send me a DM. Let me know, do you say prestigious or prestigious? I'm so roll with it. So popularity makes them seem more prestigious.

30:32And what happens during this is something is floating along that lines. People have fewer hesitation, right? Cause they're just like, man, this thing has had sustained popularity. This thing has been more exclusive. It's been so much more successful in the market. When people see that again and again, they're more likely to make a decision faster. So let's bring out an example. Let's say there's this really popular taco truck called Tomas's taco truck. And Tomas has homemade pickled radishes, mango jicama, or I'm sorry. Okay, hold on a second. I say mango jicama because that's how you say it in Spanish, but I'm probably going to get people being like, what did she just say?

31:08Let me try that again. Mango jicama slaw, mango jicama. Okay. He has like the whole nine yards, like Tomas has a taco truck or actually should I say, en español, la toda la enchilada, right? Like you go to his taco truck and he has it all. Now, every night there's a line stretching around the block for his specialty tacos. There's a lot of hype on social media about Tomas's tacos. And they're like, oh, these are a must try. And then people are taking photos and they're like proudly sharing it. It's like, look at tacos at Tomas's. It was worth the wait. You know, that kind of content is worth its weight in gold because the constant demand and the social proof.

31:47It makes the taco truck seem like a really special treat. It's worth the wait. You want to talk about it. So how can you apply this to your business? Buy your most popular offer. Why not? Why not? Label it for what it is. Label it as the most popular or the most loved. Now we see this a lot happen in like tech offerings. Like if you want to buy like a SaaS offering or a software product, you'll go in and be like, they give you like three monthly options or four monthly options and they'll label it like best value, most used. And I'm going to like, call me basic, y 'all call me basic. But if I go to an online retailer and I'm very unfamiliar, I will click on the tab that says bestsellers.

32:26Does that make me basic? It probably does. But I don't have time to go through and like, let me find the voice of this brand. I'm really just going to be like, let me see your best stuff. If I like your best stuff, I might order it, test it out. But basically what they're saying is here's the fastest way to get to a yes. And you've probably seen this like on Amazon when they're like, the store's choice or X amount of hours to get it before Monday. This is inciting people to make a psychological decision faster. And this leads us to our sixth and final pricing strategy, which is to offer tiered pricing.

32:56This doesn't work for everybody, but kind of lodge it away and see, could it apply to your business? When you're offering different pricing tiers for products or services, you're going to be catering to different customer segments. It provides options based on customers' needs and budgets. And so when you have a few more options, it's going to be increasing the likelihood of conversion. So if you want a full breakdown on tiered pricing, I recorded another podcast. That podcast was focusing on creating a digital course. I loved creating it. We got a lot of great feedback. If that's of interest to you, I'm going to link it for you in the show notes because we go much deeper into it.

33:31But there's a few things that you might want to consider when you're... If you... When? If you are offering tiered pricing. Number one, Tiered pricing creates accessible options for more users. So even if somebody is joining at your lowest tier, it increases the chances of them upgrading later or buying another product in the future when you create other things. And studies show that somebody who bought from you is four times more likely to buy from you again in the future. So getting somebody in on a lower tiered might really help in that ascension model for your customer. Number two, it can create a higher ticket volume.

34:08So having two or three options leverages the psychology of perceived value. So this is going to motivate a buyer to go for the higher tiers to gain access to additional features, additional benefits. And it also applies with tiered pricing simply for savings. I have seen, let's just say a digital product offered for, let's say$1 ,000 pay in full. And then I've seen that same offer offered for$1 ,300 in two pay. So you would be able to pay two payments of like$750. $750? Let me do that math. I don't do public math. No,$650. So one-time payment,$1 ,000 or two payments of$650. Now that client is going to be paying more over time, but smaller monthly payments make it more affordable.

35:03And then if you went to like a three pay, they would be paying more, a smaller amount per month, but they'll be paying more overall. This is just getting people into your orbit, knowing that if you do a great job, they're not going to be a one-time buyer. And then the third one is that you can create a downsell or something as like a catch program thereafter. Now this is going to keep people from going to your competitors if they can afford your other offers. So think about this this way. I have seen somebody make an offer. And if somebody can't afford the offer, they will follow up in an email sequence, offering them something considerably less expensive that is somewhat satiating the desire, but not offering the same solution.

35:43This is what you call like a downsell is if you have an offer, say for a thousand dollars and people can't afford it. Well, then later on in the sales cycle, you might be able to pitch them an offer for$250 that has less benefits, less teaching, less bonuses, things like that, just to initially get them in and as customer and then get them started in the Ascension model within your organization. Okay. You're like, Jasmine, you're talking so much. I know. I know. I care about this stuff because I've made so many mistakes over the years. I've learned a lot over the years. And so this is my distillation.

36:11I can't wait to rerecord this podcast in a year or two years and talk about all the other stuff that I have learned. So you might be wondering, how do I use this pricing strategy for my offer? And first, let me tell you, there is no right or wrong because no business looks the same. I want you to take one thing and test what works best for your audience. You might even use several of these strategies just for one offer. So I'm going to tell you for our upcoming offer, your biggest launch ever. Y 'all, I feel like I want some laser horns. I am so freaking excited for this thing. But one of the reasons why I'm so excited is I have been able to launch in public, which means I am launching a program to teach people how to launch.

37:03So I don't want to get like super meta on you, but like I am doing the thing I want to teach people how to do. For so long, I had offers and there were digital offers and I would put them out there and it was fine. It was getting me a little bit of money. And I was like, whoa, look at me, I'm doing something. And then all of a sudden, when I shifted the structure and the strategy and followed things diligently and then spent like, no exaggeration, hundreds of thousands of dollars over the years on consultants. Like I paid a consultant$50 ,000 just to go through an email sequence for me to figure out how to optimize it.

37:35That's bananas. That is not accessible for a lot of people, but it was definitely worth it for me. And I started learning how to strategically amplify how to do this. And so as we put out this offer for your biggest launch ever, and now that I know the psychology of pricing, I wanna talk about how we're implementing a lot of these decisions in what it is we're doing. So this is a live course experience. I am teaching this course live. It is not recorded in advance of, like I'll be teaching it and then it's recorded and people can watch it, but I'm doing it because I want people to finish it. I'm doing it because I want people to not feel alone.

38:06I'm doing it so people have accountability. I'm doing it because I'm sick of people buying courses and then not finishing them. So it's just like, dang, let's do this. Put the fire under your booty. you had an offer. Let's go. Let's get more people to do that. And so what you're going to see is how we have priced this offer. You're going to see it priced with a 99. Why? We're telling people that we're raising the price after the doors close. And that's if we actually decide to launch it again in the future. If we decide to do that, we have the option and we will use the option. We will absolutely charge more.

38:36We want people to be like our first sojourners. We want to do this and say like, we want big case studies. We want big testimonials. And so it's like, let's get in, let's do this. And so first we are going to be offering bundling and bonuses and we're going to have different incentives for purchasing. We're going to have different incentives and bonuses for showing up live for paying in full. I am literally using this podcast as an example of what we're doing in real time. And going back to that, y 'all, every bonus that we have put out, I wanted to look at that bonus with the same eyes that I did that 101 captions is that bonus just as valuable or do people want it just as much as the course that they would just be like, I need this thing now.

39:20Secondly, we're creating a sense of urgency with a hard deadline to join. We are closing the doors and we don't know when or if we will launch this. I am looking at all of this as an opportunity to test the market. What does the next level entrepreneur want? How do we get people doing six and seven figure launches based on the things that I have learned over time? Okay. So now I want to decide, and I'm going to talk about deciding the dollar amount to charge. Here's my, y 'all, this is so super simple. Now I do not pretend at all to be a pricing strategist or, you know, the go-to price analyst.

39:56I just am here to offer new ways to look at similar things, to create a new belief around a fact. Step number one is to consider your cost. Step number two is to compare to others in the market. Step number three is to consider your ideal client's willingness to pay. And step number four is to test and iterate. Okay, let's start with step number one to consider your costs. I want you to look at both your direct and indirect expenses. So what does this mean? Well, software, materials, team hours, your label. So now let's talk about deciding the dollar amount to charge. Here's my super simple framework to price your offer.

40:33Now, I am not pretending like this is the supreme way. All I am preferring to do is have you think slightly differently about how you've processed and priced things in the past. So remember, the goal that I stated at the beginning was to help you form new beliefs around facts. So I'm going to name each step before diving in. Step one is to consider your cost. Step two is to compare to others in the market. Step three is to consider your ideal client's willingness to pay. And step four is to test and iterate. Starting with step number one, consider your costs. I want you to look at both your direct and indirect expenses.

41:13This means software, materials, team hours, your labor, if you've invested in a mentor, and any additional expenses that played into creating your offer. Calculate your total cost and then add on a profit margin that you find fair and reflective of the value that you provide. Again, I went back and I'm like, at minimum, as a good safe place to set a standard as a gauge, it'd be 10 to 15 % as a suggestion. Step number two is to compare others in the market. Now I want to start off by saying clearly from the outset, this is not at all intended for you to say, well, I can't charge that much because that person charges that much and they have more experience, they have more followers.

41:57They have more credibility. They have more education. No, no, no. But then at the same time, I don't want you saying, well, I must charge more than that person because I've had more experience. I've been in the game longer. I know more what I'm doing. Heck no. Do not set your prices in comparison, but have a general idea of what the market standards are. I always believe the more educated you are about your market, the better and more confident you're going to feel about your pricing. So to start, maybe find like three competitors offering similar products or services and check out the features, the benefits, the duration, support level, or anything else that they're adding to their offer to create value.

42:35Identify patterns in their pricing structure and use that insight to inform, not change, not set, just to inform your price. And this is going to help you from under or overcharging your offer. It's going to help you stay competitive in the market without devaluing your product or service. But remember how we said there is luxury pricing and there is not so luxury pricing. And both business models are totally profitable. Louis Vuitton and Walmart still totally profitable, but they understand their market and they understand who they're serving. Step number three is to consider your ideal client's willingness to pay.

43:11It's important to understand their preferences and perceived value. And there are two ways that you can do this. Number one, you can ask them directly. I recently did this for that upcoming course that we're launching. It's not even a course. It's a live course experience. Yes. Don't get it twisted. Y 'all well, you're changing the game. But I reached out to people who I want to buy this course. I legitimately told them straight out, I am creating something for you. Let's talk about your pressure points. What have you invested in? What are you missing? based on what you've invested in, what has not transpired and what value would you put on that?

43:49I'm not asking, can you tell me the core, like how much I should charge? No, no, no. I'm just trying to get aggregate data of what they spent and what they want solutions to and what they would pay for that solution to see if my offer can get in alignment with that. Or if you're not asking anybody directly, you can indirectly gather insights through Instagram polls. You can do email surveys. You can do Google searches for data and analytics. Literally go to Google and type in your question. Any question, you would be surprised what data exists out there that people are sharing. Now, this is going to let you in on historical buying decisions, somebody's willingness to impay, market trends, what people are willing to pay more for.

44:28And they might even be listing some of the objections they have towards a particular thing. I'm telling you, Reddit and Facebook groups, a trove of valuable information for reading and getting into the minds of prospective customers. Now, let's break it down with an example. Think about it this way. If you're a career coach for people graduating college trying to find their first job in their field, they probably don't have a lot of money to pay for a premium price for private coaching, but they might be able to afford a lower ticket, lower touch offer. Now, if you find out that your price isn't reflective of your ideal client's willingness to pay, you can do one of three things.

45:07You can adjust your ideal client. You can adjust your offer or you could adjust your price. Now, please understand that I listed them in that order because what happens is somebody's first reaction to not getting the purchases that they want from an offer immediately is, oh, I've overpriced it. But have you really? Or could you just change who you're marketing to, somebody who has more money? Could you change what the offer is to attract somebody who's looking for slightly different things? Or perhaps when you know that you're fully drilled in on the offer and you're fully drilled in on who is buying, well, then maybe it's time for you to assess pricing.

45:47But remember, there's three different ways of looking at the changes that could be made. And so settle in on that before you get to step number four. And this is where a lot of people are like, oh, I'm uncomfortable. Yes. Step number four is to test and iterate. Implement your pricing strategy. It's only after you put out an offer and you put a price on it that you can make adjustments. Please understand, very few people get it 100 % right 100 % of the time. It is so normal for people to engage with their customers. It is so normal for people to adjust pricing. It's so normal for people to adjust the offer.

46:28That is normal. And sometimes as business owners, we want to say, I should have this figured out or other people aren't struggling with this. Or why do I always feel like such a fool? Do not place those beliefs on a fact that 99.99 % of entrepreneurs are fluctuating their prices depending on a myriad of factors. This is normal. You are normal. This is the norm. So buckle up, baby. We're building out how to price our offer for today, which it was flash, might change in the future. Now, like I've said, this is not one and done work. You just want to make sure that you're constantly looking at your pricing and aligning with your business objectives.

47:10And you want to say, how do I serve this business? And how do I serve those customers? So once you've done all four of those four steps, you can then make an informed decision about pricing your offer. Now, we're going to review what we just talked about in a moment. But what I really want to do is I want to invite you to my free masterclass, how to create a promotional launch plan to double your revenue in 60 days. I don't know if you can hear in the background, but JD and Luna are just, I think they're having a, like a dance party and JD is yelling. And if you can't hear it, God bless it because I'm raising my voice into this microphone, hoping you don't hear the salsa dance party that's going on.

47:46Cause I'm trying to keep this uber professional. Okay. But you want to know what? Let's salsa dance. You know, it's like, I'm just going to show up exactly how I am. One of the things that I talked about was when we were placed with adoption for our daughter in 2020, we had 24 hour notice to get to Las Vegas. And despite our best efforts to plan, when you're in the adoption process, there's no such thing as planning for maternity leave or paternity leave. There's no time like you're in it. And all of a sudden a child drops into your lap. And so I was so proud that when we were placed with our daughter, we were in the middle of a pre-launch promotion.

48:24We were in the middle of gearing up for one of our biggest launches. And I am so proud that the structure and the formation in our plan that we've been using for years was going and moving without me having to be the driving force behind it. And so for years, I was like, this thing has changed my life. This launch plan, the way that we do it in the particular methodology and why we are hard nose about following what we know freaking works is because it works. And so I'm teaching a masterclass. I am teaching you everything that I learned and all the mistakes, creating a promotional launch plan, because I want you to double your revenue in 60 days.

49:03I know you're saying, wait, wait, what? And I am saying, oh, yes, absolutely. In this live class, you're going to learn the exact four pillars that I use for my seven figure lunches. And I want you to learn how to implement them. Like you're not going to come here and like, it's going to be a walk in the park. Oh no, no, no. You're going to come and you're going to learn how to create a sales page that keeps people understanding what your offer is and keep them interested. And then drilling down like what we talked about today. Oh yes. And finding out that dream price for what it is. Good. It's getting you prepared for this.

49:34Exactly what you need to know to create a masterclass that converts to sales, which is why I'm teaching a masterclass because remember what I said, I'm launching publicly. I want people to see what the heck that we're doing. Also, the key to building an email funnel that converts your readers and keeps people interested. Y 'all, I am telling you, we have frameworks of what actually is palpitating to get people to continue to read. And I will say all day, every day, that the emails and funnels and communication from myself and the team are what converts customers, not the biggest splashes, biggest social media marketing opportunity.

50:08That totally helps in awareness. But right now, when you are in a sales mode, your focus, the way that you show up and what you're doing specifically in your business to promote your offer has to change. Also, you're going to learn my step-by-step framework on defining a crystal clear conversion message. Okay. You can go to jasminestar.com forward slash launch. I want you to secure your spot. I'm going to be teaching these live classes. You can come on for business coaching and Q and A. I'm going to be opening my launch model. So you see every dang piece of it and then learn all the mistakes to avoid that I have made over the years.

50:41Okay, so now let's review what we've talked about today. And if y 'all are noticing, speaking of launching, I am putting out content in advance of these live classes to prepare you to make a financial decision that's gonna change your life and business. So I wanna be very forthcoming that I want you to do for your offer what I am doing for my offer. I am literally living this launch out loud telling you simply follow the framework because this framework has been proven again and again and again. Remember earlier in the episode when I talked about Insta 180? That was the very first course I ever launched.

51:24And I had other physical products. I had launched eBooks. I had launched video tutorials. I had launched email templates. I had launched systems and productivity resources for photographers. So, you know, I just thought that putting out a course would be very similar to other stuff that I've done. I created courses for other organizations to sell. I just didn't know what I was getting into. And then when I actually put together after learning all of these tiny pieces, making content for other people, making courses for other people, I thought to myself, I think I'm going to try this thing myself.

51:56I was not expecting on that very first launch to make$255 ,000. I was not expecting that. And that is the power of having a launch plan. And that is the power of showing up with a strategy. And that is the power of putting your nose to the grind and saying, I'm tired of playing small. Oh, okay. Y 'all, I am like, I'm so excited for this class. Okay. Let's go back and let's review what we talked about today. We talked about why pricing is so critical for business success and it's because it directly impacts your bottom line and it can impact the perceived value in the market. We went through five different psychological pricing strategies that can increase conversions.

52:37And I'm going to go through them again. Number one was the decoy effect. When you introduce an additional less attractive option to make the other options seem more appealing. Strategy number two was odd versus even pricing. The third strategy was offering bundling and bonuses. The fourth strategy was creating scarcity and urgency. And the fifth strategy was showing your product or service has demand. And the sixth strategy, the final one, was perhaps offering tiered pricing if it's in alignment to your offer. We then went over a simple framework to price your offer and those steps were, number one, to consider your cost.

53:12Number two, to compare to others in the market. Number three was to consider your ideal client's willingness to pay. And finally, step number four, which is my favorite and least favorite, test and iterate. Understand that nothing is set in stone. It is normal to always evaluate and reevaluate your pricing. And so all I want to provide in this episode is a way for you to apply a new belief to a fact. Thank you for joining me on the Jasmine Star Show. Y 'all, I make these solo podcasts. They are a labor of love. The team and I think to ourselves, what do you need to hear right now? What conversations can we have that are going to open your eyes to a different possibility?

53:55What if by some chance, this one podcast episode is the tiny key to unlock a new way of thinking for you? I would be so eternally grateful for you to subscribe to this podcast. And better yet, join my live class at jasminestar.com forward slash launch. Y 'all, I want to see you. I want to see the podcast contingency show up. Like always, thank you for listening to The Jasmine Star Show.