If you’re selling things like oranges, accounting services, securities, or gold… it’s pretty easy to come up with your price points.
Each of these items has multiple existing marketplaces, so all you need to do is use these marketplaces as a starting point, and then use superior marketing to increase your value up from there.
But what about things that don’t have a marketplace? How do you price these items? And, even more important, how do you justify the value of these items to your buyers?
For example, things like workshops… informational products like books, manuals, and CDs or DVDs… and other goods and services that don’t have an open marketplace. It’s not so easy to determine pricing for these items, is it?
No, it’s not. Which is why, today I’m going to show you one way of doing this.
I call it the “Opportunity Cost” valuation method.
In economics, opportunity cost is what you are losing out on, with other opportunities… by spending time and money on something else.
For instance, I can fix the plumbing in my house for most basic plumbing repairs. Or, I can hire someone else to do it for let’s say an average of $75 bucks an hour.
So if I make an average of $1,000 an hour, then my opportunity cost of doing the work, is $925 an hour. Meaning, for every hour I spend working on my plumbing — I’m saving $75 bucks an hour by not hiring a plumber, BUT… I’m LOSING $1,000 an hour if chose to work instead of sitting underneath my sink or toilet.
Of course, not everything is measurable. Sometimes you just have to use common sense. For example, what’s your opportunity cost to hire someone to do something for you, versus hanging out with your family?
It’s a LOT — especially if you don’t get too much family time, right?
You bet. But the point is, everything you do has an opportunity cost, and this is one way of making valuations.
Like this:
* If you are selling workshop DVDs or Audio CDs, you can compare them to the price of buying a plane ticket, staying in a hotel, missing work, and then paying the price of admission to the event. Typically, this costs FAR more than the actual DVDs or Audio CDs will, so the value proposition is skewed in favor of your buyer — and that’s great.
* You can compare your information to what it would cost you to spend time with the actual publisher of the products. For example, my book and all 6 CDs and DVDs that come with it, and the free issue of Seductive Selling that comes with it… costs $97 bucks.
If you actually had to spend all the time with me, to get this same information, it would cost you somewhere north of $50,000.
Again, the value proposition in doing this is skewed HEAVILY towards my buyers — and that’s great.
* Let’s say you’re selling some kind of rare fruits or herbs or things like this. Someone can either buy them from you, or they can again, get on a plane and fly all over the world to pick them up. Then they’d have to deal with customs, hotels, the Department of Agriculture rules and regulations… the amount of time and effort is potentially endless — if they even knew where to look in the first place!
OR… they can simply plunk down “X” dollars and get them shipped overnight from you.
Again… value proposition in is skewed HEAVILY towards your buyers, and that’s great.
Just remember, when you’re using this technique, the most important thing… is to be specific and spell out all the details and steps involved.
Oh, and don’t use words like “opportunity cost.” No one wants to buy something from someone who’s using big words like this in their sales pitch. And plus… depending on your audience, few people will actually know what this is.
Talk to you tomorrow.
Now go sell something, Craig Garber
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