8x Your Prices With Positioning
The amount your customer will pay depends on how valuable they perceive your solution to be
I read A LOT and love stumbling upon like-minded people with a perspective that resonates. This past week, serendipity prevailed and I found Jason Cohen’s treasure trove of excellent blog posts.
One of the posts stood out to me. Because it highlighted how pricing is a function of positioning. Great positioning allows you to maximize your price.
How Repositioning a Product Allows You to 8x Its Price
Insight: When you understand what *motivates* your customer, you can *align* your solution to best fit their needs.
It's all in how you POSITION your solution. Picture the following scenario:
Customer X:
Marketing customer spends $40k/month on AdWords
For 200 qualified leads at a cost of $200/lead
This is considered good in their industry/niche
Now, let’s look at a couple of value propositions that differ wildly:
Value Prop #1
"We can cut your cost per lead in half"
We charge $5k/month so you save $15k/month
Value Prop #2
"We can double your leads for the same cost per lead"
We charge $40k/month for this solution
While both scenarios benefit the firm AND the customer, one is far superior because of how it's positioned.
One approach shares in the savings (25%), while the other focuses on helping the customer meet their ultimate goal (growth). That approach allows them to charge 8 times more because it aligns incentives.
What ultimate goal?
Marketing departments are not interested in spending less. They are mandated to produce more qualified leads to fuel revenue growth goals.
So, when a clear path is presented to them that:
Can reliably double their lead count
Does so at the same unit economics ($200/lead)
Doesn’t require them to do any additional work
They jump at it.
No one wants to go back to their leadership and report how they can reduce their budget (prove me wrong). But if they can share a way to improve their effectiveness, based on the metrics they are measured by, that’s a stand they’d take. No-brainer.
The way the solution is positioned makes the conversation for growing the Marketing budget straightforward. Because it aligns with their motivations.
Here’s how the conversation should play out:
Marketing: “We currently spend $40k/mo to generate 200 qualified leads. If we spend $80k, we’ll pull in twice as many leads. It’s just a matter of budget. Will you okay the spend?”
Leadership: “200 more qualified leads per month?! That will definitely help us meet our growth goals for the year. You’ve got the budget, make it happen.”
How the money is spent is not as important as what it produces. Your solution just happens to be the easiest path towards achieving their goals.
Provided you can deliver. That’s crucial.
Takeaway
While saving customers money gets a ton of fanfare (and is important), helping them grow is almost always the better position. This is a skill (and mindset) I have to work at every single day.
So, I challenge you to revisit how you position your solution. Can you see a way to align with your customer’s growth goals? If you need help, just reach out to me or let’s hash it out in the comments.