Do you worry about what and how to charge customers or clients? Maybe you feel unsure how your current pricing strategy will keep you profitable? Well, you’re not alone!
Many businesses hire Janene Liston, our guest expert, to get their pricing right as well. Known as “The Pricing Lady”, Janene understands pricing strategies and can help you discover where your potential profit is hiding.
She’s a trusted business partner for hundreds of clients and has a wealth of corporate experience within a variety of industries. In this conversation, she demystifies the idea of what your pricing should be and how to do it in a way that charges you up, while maintaining a profitable business.
If you’re ready to make a positive difference in your business, you don’t want to miss this episode.
Listen to the podcast here:
Pricing For Greater Profits And Impact With Janene Liston [Podcast 247]
Do you realize that in your business, you might have money hiding right there for the taking? Have you ever been in a place where maybe you’re like, “I’m looking at my competition out there?” Have you ever thought to yourself, “Why is it that one competitor can charge X and then maybe you or another competitor can charge 10X?” What’s the difference between those two businesses? Those two business owners, those two entrepreneurs maybe like you, have you ever thought that to yourself? Here’s a harsh reality, at least from my experience, and this is a quote from Gary Halbert or Joe Polish. I forget who to give credit to but I’ll give both of them credit, which is, “There’s no correlation between being good and getting paid. It’s one of the hardest truths for most businesses to realize.”
We’re going to help take you behind the curtain so that you can realize that if you are good, you can get paid and you can price yourself effectively in a new model around pricing. A new model that helps you grow your sales, grow your profitability with far less stress, far easier than you’ve been led to believe. Our expert is a definitive expert at pricing. She’s called The Pricing Lady. If you’re worried about what and how to charge customers or your clients, that’s a lot of wasted time and energy. If you’re constantly second-guessing it, if you’re following that like most people, the blind leading the blind, that’s not a fun proposition. Businesses hire Janene Liston, our guest expert, to get their pricing right. If you want your pricing right, you’re going to want to read this episode.
Janene knows how pricing works with the tactics, the strategies. She can help you discover where that money is hiding literally in front of you. You might go, “Who is Janene Liston? I’m not sure I’ve ever heard of her.” She’s a trusted business partner for hundreds of clients. She has many years of corporate experience in a variety of industries. She’s a speaker. She can help solve the problem, demystify the idea of what should your pricing be and do it in a way that gives you joy, charges you up and also makes sure that you’re a profitable business. There’s no point in doing it if you’re constantly going to be on the eight ball. Welcome to the show. I’m glad that we got a chance to connect after New Media Summit. We’ve got to do a shout out for those guys over there because they’re doing some great things. Thanks for making us part of your day.
Thank you for having me on the show. I’m pleased to be here, Dan.
I want to dive right into it. Where do most people make a big mistake around pricing?
I would say one of the biggest things is that they have the misconception that pricing is all about the math when it’s all about psychology. There’s math in there and there are numbers involved. The psychology is what makes the difference and it makes a difference in two ways. One is your ability to communicate and talk around pricing. Not just speak but also when you put pricing on a page. The other part is what are your prices communicating to people? Being aware of both of those things and being able to do it in a way that’s intentional, not to be deceitful but in order to bring about the best business behavior for both you and your clients.
What do you see most businesses do when they’re starting? I have my own view of this. I want to get your view as you work with clients and you ask your client like, “Sam, how did you come up with your pricing for your business?” What is a common thing that you regularly see, hear or observe?
There are basically to go-to methods. Especially in my product-based businesses, they like to start with their costs. All their costs, add a margin to it and that’s their price. You have a second group of people who go to the competition, see what the competition is doing and price somewhere around that. There’s one important thing that both of those methodologies completely leave out of the equation, which is who your customer is? It’s the most important thing in pricing. Pricing, in my opinion, should be based on a deep understanding of who your customer is and what they really value.
Speaking of that, let’s say we’re talking about someone who might be running a consulting business, a coaching business or advisor business looking at pricing. How would you recommend someone gets started by looking at how they frame their pricing? There are a lot of factors so you can speak to whatever comes up here. If someone’s got all kinds of courses and programs, that’s one level. In a simple way, what would be the first few steps to take to be closer to getting it right for that service type business?
First of all, we look at who my customer is and what their real problem is. Before you even decided what you’re selling, you can narrow down the price based on who you’re selling to. Anything out there in the world service product, it has a starting price somewhere between zero and infinity. I know that sounds a little bit cheeky, but it’s true. If you look out there, there are people who give it away for free and there are people who charge an enormous amount of money for something. If you’re targeting, say college students versus targeting executives in their 40s, then you have a very different price. You can narrow it down that zero to infinity to something more specific in order to solve whatever problem they have or need or desire they have or transformation they’re looking for simply by saying, “I’m going to focus on this targeted market or this.” You say, “This is how I’m going to do it.” Step two is what am I offering to do that? You can further narrow that down even more based on the way in which and how much value that methodology or that product delivers. We get into strategy and we check the market place and we check costs. To me, it always starts with the who, the what, my strategy and then I check my positioning against the competition and I check that it’s profitable from a business.Pricing should be based on a deep understanding of who your customer is and what they really value. - Janene Liston Click To Tweet
If you struggle with, “Why is it that my business doesn’t seem to be as profitable?” First of all, be wary of the comparison game. It’s easy to see the tip of the iceberg and not see the full iceberg underwater or see the bloom of a plant or a tree and not see the root system that’s been built and what it is there to support. Be wary of that. I encourage you to take Janene’s guidance on focus on the who first, most wait until last. Start with it first. The who solve all kinds of problems in many different ways of building and growing businesses. Janene, I’m curious, most people have a reason why they do what they’re doing. Can you share with our readers why are you compelled to share this message of a new, better pricing strategy for success in business?
When it came to getting into pricing originally, I stumbled into it. I’d worked in marketing for years. I started my career as an engineer designing buildings and left that. I ended up in product management and more of a technical basis but I was doing pricing stuff related to that. A company hired me as their global pricing manager. My boss and I were having a chat one day and we realized that neither one of us knew the full extent of what that was or could be for the company. I found a certification, I got into it. I left the corporate world because I wanted to go out and help more businesses. I’m always a fan of the underdog, the little guy, whatever you want to call it. There are a lot of small businesses out there and it’s a challenge having a small business. It’s a challenge at times getting people to take you seriously or getting your message across. Everybody has the right to a certain level of financial freedom. This is my way of bringing that to a group of people in an area where it can be quite difficult.
It almost seems to a degree you have a strong lead-in with pricing and you’ve got the expertise and that’s your 10,000 hours so to speak. In addition to that, you’re also broad enough that you also become a strategist for them from a marketing point of view and you have that unique combination beyond numbers which is a pretty rare and invaluable skillset to be able to have. Janene, you talked about the idea of the who first which is a great strategy. Going to the what and then you start looking at unpacking that and looking at the rest of the marketplace, whereas most people seem to start first with the other. What would you say? How would you respond to the idea, this is a Gary Halbert or Joe Polish quote, “There’s no correlation between being good and getting paid and the mistake that most people make with that?” How would you see that tying in with pricing?
We’d all like to think that there’s a strong correlation and in some ways that there is one. It doesn’t necessarily have to exist either. Some people are better at selling than other people. They may have an advantage in that context in terms of being able to lay the groundwork for communicating value and therefore, building the rapport and the relationship in order to get a higher price. I strongly believe that if the value is not there when somebody buys into it, it catches up with you. People can get away with that for a certain period of time but I’m not sure that it’s sustainable.
You need both. You need to have good delivery. The word you used initially was transformation. What is the transformation you provide? That’s what you’re selling, that the solution to a problem which is coming back to the who. If you don’t have that, you’re going to get exposed. You’re going to be found out and/or your prices either can be too high or too low. If you do deliver transformation and if you both deliver a breakthrough or an amazing outcome and/or an experience or all of those combined, it sets you up to charge a premium price for what you have to offer. Talk about the idea of premium pricing. If someone is new, how could someone go about looking at themselves and positioning themselves to be premium pricing in the marketplace?
There are a couple of things here in that context. One is premium pricing only works if that’s aligned with your target customer. If your target customer is a savvy sales shopper, then premium pricing isn’t a great strategy for you. There are some people out there who shop based on how much they can save. Premium pricing is not aligned with the customer. That’s one piece that’s important. I see a lot of times people are saying, “I’m premium-priced.” Premium price but then they’re talking about a customer who isn’t a customer who would necessarily pay for that.
It comes back to having the wrong focus. Not focusing on your end-user, your end-client, your end-customer.
They’re all the way through. On the other end, you can’t charge people. I heard this all the time in the corporate world, “We sell commodities. We can’t do anything with their pricing.” Think about coffee and water. Coffee and water are two things that you can get almost for free. Water definitely can put a cup out in the rain. You see people paying enormous amounts of money for a special coffee and coffee beans and coffee machines. In the end, it’s just a cup of coffee. I would guess that the price range for a cup of coffee is pretty wide and for water as well. I won’t mention the brand but there is a brand out there and they have the highest mark-up of any consumer brand in the world and its water. It’s fizzy water, that’s all it is. People will pay an enormous amount for it because they perceive it to be better or they want the prestige that comes with sitting with that bottle of water on their table at the restaurant.
This is such a simple but powerful point you’re bringing up. I was in the store and I was looking to get some bottles of water and I saw the Smartwater. The Smartwater for a single bottle of this particular size and such was $3.99. It’s so funny when we think about the difference between who tested it? All these different things or is it positioning and packaging? How could you differentiate yourself or position yourself with this idea of pricing to go, “It’s not truly a commodity. How can I position and package myself if that’s who I want to serve the right way and provide the breakthrough, the transformation and the solution to that would pay this amount?” What if what you offer you could increase your pricing by 10%?
One of the best things that you could do immediately would be to go raise your prices by a minimum of 10% in the next 30 to 90 days. Yes, you will lose a few customers especially if you’ve been around for a little while, if you do the math, the increase in the amount of revenue/ultimately profit to your bottom line versus what you would lose by having that slight increase. What you would find is you’d be losing the people that are not your best fit customer anyway. They’re the ones that complain the most. They’re the ones that drain you and your team’s energy the most. It’s a slight 10% increase. You’ve got to do your own homework and you’ve got to decide that for yourself. What would you say to that strategy? What are your thoughts on this?Everybody has the right to a certain level of financial freedom. - Janene Liston Click To Tweet
If you have a product that has a gross margin of 40% and you decrease the price by 10%, how much more volume do you need in order to breakeven? The answer is 33%. You need to increase your volume by 1/3 in order to break even, which is huge. It’s a huge amount. In all the years I’ve been doing pricing, I’ve only seen that strategy work once where we decreased price as a strategy in order to be more profitable. Not only did we not be more profitable, but we didn’t even break even. The challenge with that is that you have to have a plan. Where is that extra volume going to come from? In most industries, prices are not that elastic. We have this false sense of security. If I dropped the prices, everybody will come and buy it. It’s generally, in many cases, not true. What even makes it harder is that you have to be sustainable with it. Once your competition sees you dropped the price, if it is a cutthroat industry, they will react. They’ll drop their prices, then you’re not selling more anymore. You’re even further behind the eight ball as they say. You’re living in a price war.
That’s not a fun place to be. If I hear you correctly, you’re given the consequence of thinking that cutting your price is the smart business strategy for greater profitability when that’s flawed. It takes the same amount of work to sell anything, whether it’s a low price or a high price. It takes the same energy. It doesn’t make a lot of sense but if I’m selling a $30 program or I’m selling a $30,000 program, it takes the same work. If it takes the same work, where does it make sense maybe to put the most and I’m using a complete context. Janene gave you the facts and the numbers. If you decrease your price 10%, it means you’ve got to do 33% more work. Is that what you want? Do you want more work? If you want more work, then slash your prices and then put yourself at a price. Where on the other hand, what if you increase your pricing by 10%? I don’t know if the math will work exactly.
If you increase that price, you can lose 25% of your customers and still breakeven with the 40% gross margin. Let’s be clear about that. It’s not for every product or service.
What if you’re at a 70% margin?
It starts to get less.
Your margin might be lower. It could be, hopefully it’s not, but let’s say it is. On the other end, what if it’s higher?
What happens when it becomes higher, the impact is a little bit less. If you start getting into the question of what’s easier, raising your price by a few percent or gaining another customer. I always tell people, “How painful is it for you to raise your price by 1%?” If somebody gasps, then I think you’re doing something wrong in your market. Up to 5% or 10%, nobody should be gasping too much. If you are, then there’s a bigger problem than your pricing, in my opinion. Don’t let me give the wrong message here as well. Lowering prices can be a strategy. My point is that you need to have a good plan behind it. Where is that extra volume going to come from? How can you make that sustainable?
That is such good advice. As you’re reading this, if you’ve been following us for any length of time, you understand that not only do we suggest most of the time raising pricing but then how do you have more of your clients get more of your stuff? It means they’re buying more, there’s more opportunity, which means your margins can go up if there’s a strategy behind it. If you’re looking at this as transactional one-to-one, quit the business because transactional businesses don’t succeed anymore. It’s got to be transformational. It’s got to be a lifetime relationship or a long-term relationship at least and/or at least the idea that you’re in the relationship business, the relationship economy now, whatever business model that you’re in. As we wind this down, we’ve scratched the surface. There are many tangential angles that I’d love to dive deeper into. For the sake of time, if people want to go deeper with you, to get some of the science on this new way to look at their pricing model, to create more growth and more profitability. Where can they go to connect with you, learn more about what you’re up to? Where can they do that?
In general, they can reach me at ThePricingLady.com. I have a checklist and a video series that they can have access to that is focused on what to do when my customer says, “That’s too expensive.” They can get this at JaneneListon.com/GTF for Growth To Freedom.
Have you ever had someone who you made an offer, your team made an offer, a staff member made an offer and the client said, “That’s too expensive?” If you have or you’re concerned that you might or your team has, then I want to encourage you to go get this tool right now. Go to JaneneListon.com/GTF. If you want to get more of what Janene has to share, she’s got so much insight, wisdom, and strategies that she can share with you. You can go to her site at ThePricingLady.com. Janene, what’s something I should have asked you that I haven’t?Premium pricing only works if that's aligned with your target customer. - Janene Liston Click To Tweet
One of the number one questions that people ask me when I say that that’s what I specialize in is they say, “You can specialize in that?” I’m certified. People are like, “You can get a certificate in that?” I say, “Yes, these days you can.” It’s only been for several years that that’s even been possible. I’m not even sure if it’s been available for more than several years. In many ways, this whole concept of focusing on pricing, it came out of the travel industry. If you think about how a seat on an airplane, what pricing was done many years ago versus now, you can see the evolution or even a hotel room, very dynamic pricing. Not all industries use dynamic pricing. What has happened is companies have understood that in most businesses, pricing is the most significant profit lever that you have. While they’ve spent most of their time focusing on costs, they realized if they’ve focused on managing their pricing better, they had a much stronger leverage point. When you do both together, then you’re moving things forward. Yes, you can be certified in that. The other thing I would say is people may notice when they go to my website that while I’m American, I’ve lived overseas. “Where are you calling from, Janene?” That’s the question.
Where are we connecting from?
I live in Basel, Switzerland. I’ve been here for several years.
What is special about Switzerland for you? Why are you there?
For me, it’s home. It’s the first time I ever felt connected to somewhere that I lived. I did leave Basel for a few years and went to another part of Switzerland and then I came right back. It’s the first time I’ve ever returned somewhere as well. It’s a beautiful, easygoing life.
What were you known for in high school?
I was the nice one.
Tell us more about that. What does that mean?
I got along with all the different groups. I wasn’t too offensive to too many people. I was kind and nice and I got along with people. I was at a reunion, somebody was saying something and they’re like, “Don’t ask Janene. She’s too nice. She likes everyone.” If that’s the worst thing I’m known for, I can live with it.
What is something most people don’t know about you?People will pay an enormous amount for a product because they perceive it to be better or they want the prestige that comes with it. - Janene Liston Click To Tweet
My friends know this but other people, I have a normal fascination with bridges. I love bridges and I think they’re beautiful and fascinating. I get excited sometimes when I see. I was on a road trip here in Switzerland with a bunch of friends a few years back and I was driving the car through some valley and we came across the bridge that I studied in university. I was so excited, I started screaming, “My bridge.” Now, every time I’m with them and we see a bridge, they all start screaming.
I could almost see some custom branding for you, which is related to little bridges, little pricing, little profit.
I have my five steps to pricing success is an arched stone bridge. It’s for a very specific reason. I am integrating that into my branding.
If you’re intrigued by what Janene has shared with you about this idea of pricing, you’re looking for a new model, maybe re-engineer, recalibrate your pricing for greater profitability, greater growth, greater impact. I would encourage you to go check out what she’s doing at JaneneListon.com/GTF for this essential toolkit that is going to help you and your team when someone asks or says, “This feels too expensive.” What you can do or what you can say when someone says that to you or go to ThePricingLady.com? What do you consider the number one activity that most entrepreneurs or business owners would be well-served to be engaged in more regularly than they are?
I’d say selling, especially when they’re starting out. I have to say at times, I catch myself on this as well. I call myself out very lovingly here. Don’t always spend enough time selling and not being pushy and salesy but so busy working on being on social media or putting this and that together that we’re not in front of customers enough, talking to people and understanding.
How would your business be impacted if you did two things now? One, you looked at re-engineering your pricing model. Maybe you’re already on track but go through an assessment and analysis and go through what Janene has available to you at ThePricingLady.com to understand if you’re on track, but maybe one little tweak could help you grow your profits 10%, 20%. Would that be worth to you? Number two, what if you followed her guidance and lead and focused on more selling activities on a regular base and you built that discipline? How would that impact your business? Would it help you create more growth? Would it help you create more freedom? Would it create more opportunities in your marketplace? Chances are the answer is yes. If you don’t want those things, then don’t pay attention to your pricing. Don’t go out and focus on selling. Do what most average businesses do, which many times is nothing, which is why the failure rate of most businesses is 95%. We don’t want to see you become that harsh statistic. You want to cross that bridge and be in a better place of certainty and freedom and growth. Pay close attention to what Janene has been sharing with you. What was the strongest influence for you as a kid?
It was my parents, both of them. When I hear a voice in my head, it’s my dad’s. They both did but his voice was maybe the stronger one. When I play tennis, I hear his voice, “Put it away,” in my head. I also did competitive swimming and I hear him encouraging me but also pushing me forward to do it better. He also always told us, “Don’t ever think that you’re the best at anything because there’s always someone else who can show you that you don’t know it all.” As harsh as that can be, it’s also very true. I’ll never know, even in pricing, I don’t know everything that’s clear. Having that humble attitude towards things as well is also very important.
It sounds like you’ve been encouraged by a coaching mindset and you live by a coaching mindset in your value system which is evident. You sent over something, Janene, that I want to highlight as we wrap this up is you had mentioned that when you were going through a crisis at one point in your world, there was a question that you asked yourself that opened a gateway for you. It’s gotten you on the path and journey you’re on right now. That question, although simple, can help everyone benefit from creating a healthy view of their business and life. I personally don’t believe in balance. I believe in more of an integrated life because if you want to be great at stuff, you’re going to be obsessed at certain times at those things. Great athletes, they’re in winter ball, they miss Christmas with their family. It’s part of the deal. That’s having this obsessive for greatness and achievement. You asked this question and I found it so simple but also inspiring. Tell us about the question. What was that question, Janene? What can our viewers learn from this experience?
The question was “Can I get well if I stay here?” Let me give it a little context. I had worked for many years in the corporate world and I was working in a company. I had a fantastic job. I loved what I did in it but I found myself in burnout in the end. I realized it wasn’t the right place for me ultimately. First, it was at the doctor’s office. The doctor told me I wasn’t allowed to do anything for a month. I could make doctor’s appointments, but no other appointments and schedule nothing. Get up in the morning, ask yourself what you want to do and if you want to do something, do it. If not, don’t. During that time, you’re doing a lot of self-reflection. I asked myself the question because the company offered me another position. I thought to myself, “Am I going to be able to get well if I stay in this company, in this job?” I realized that the answer was probably not. At least it would be much more difficult. The first thing that I need to do is get my health back. Without that, I can’t be there in any other capacity. I didn’t realize the toll of what I experienced at the toll that had taken on me until I ended up in this burnout and having health problems for the first time. For me, that was a revelation. It led me to start my business.
That is so powerful. I want you to think about the layers of this question. Ask yourself, take personal inventory and a couple of different levels for your business, for your personal, for your health, for your family, for your relationships. If I keep doing this, “Will I be well? Will you be well?” If you stay where you’re at in your business doing what you’re doing, are you going to be well? Are you going to be healthy? If the answer is maybe or no, then what could you do today to make a shift? How about your health? If you’re in a health situation, maybe you’ve been trying to lose weight or maybe you’ve been trying to get healthier rituals or meditate, whatever. Doing what you’re doing, if you stay where you’re at, are you going to be well? Evaluate. If you keep doing what you’ve been doing, is it going to give you what you want? If the answer is no and if it’s related to pricing, if it’s related to being able to grow your business based on a smarter, new way of building your pricing model then I want to encourage you to go deeper with Janene. Go check out JaneneListon.com/GTF. Go check out ThePricingLady.com. Janene, what are 1 to 3 action steps you hope that our viewers, our listeners take as a result of our time?Don't ever think that you're the best at anything because there's always someone else who can show you that you don't know it all. - Janene Liston Click To Tweet
I hope they take a moment, get themselves a little bit of time this week to think about their customers. Think about their pricing in the context of their customers. That would be the first thing. I’d also like them to think about what their prices are communicating out in the world. A lot of times we put prices out there without very much purpose or intention beyond earning money but we’re not paying attention to what they’re communicating and it can be communicating things that are making it more difficult for us to start and sale and also to serve our customers. Those are the two most important things.
I want to encourage you, what would have to happen for you to focus in and tune in to your perfect clients, your ideal clients, your customers? What will that pricing be for them? Separately, what does your pricing mean in the marketplace? What is your intention with your pricing? How is it showing up in the marketplace? How is it best serving you? How’s it best serving your potential clients? Is it serving the way you want? If any of those types of things are a little bit off or they could use massaging or if you want to get an extra set of eyes, of expert eyes, and expert view to help identify, then go check out Janene. You can go to JaneneListon.com/GTF to get this incredibly simple tool guide. If you ever hear or ever come across, “Are you too expensive or this feels too expensive?” What are you going to do? This gives you an action plan to do that and/or go to ThePricingLady.com. Janene, it’s been awesome to have you here with us. Thank you so much.
Thank you so much. It was a great pleasure, a great conversation. I look forward to hearing from the community and being able to answer people’s questions as well.
I want to encourage you to take action with what Janene has shared with you. Worst case, check-in on your pricing. Is it what you want? Whether you do it on your own, you find someone like Janene who is an expert at this that can help support you. There are tools to support you with this. You don’t have to be in the dark anymore. You might have money hiding right there and available to you. If you take these couple simple steps, a couple of little tweaks, tip one domino, it will tilt over 1,000 and create greater sales and greater profitability. If you never want to miss an episode, go to GrowthToFreedom.com/subscribe. Seize the day. Make it a great week. We’ll see you next time on GrowthToFreedom.com.
Resources mentioned in this episode:
- Janene Liston
- Gary Halbert
- Joe Polish
- New Media Summit
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About Janene Liston
Worrying about what & how to charge customers costs – your time, energy and money. Businesses hire Janene to get their pricing right – to increase revenue and profit. She knows how pricing works – it’s tactics and strategies. You know your business and industry. Together we’ll discover the money hiding right in front of you.
Janene is a Certified Pricing Professional – a most trusted business partner. She has 20 years of corporate experience across a variety of industries. She’s been a speaker at the Professional Pricing Society and other pricing industry-related conferences. Her passion for pricing is contagious. Her commitment to helping you is unrivaled.