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Improperly pricing your product or service is one of the most common methods of entrepreneurial self-sabotage. There is a whole lot more to consider when pricing your product than just simply calculating overhead and profit margins. Pricing is psychological.

Recently, I made the decision not to purchase something because I thought it was too cheap. I had considered joining some group coaching. The webpage I looked at was incredible and the coaching itinerary had everything I wanted and then some. I was excited to sign up, and knowing what other similar courses cost, I was prepared to spend a few hundred dollars a month. When I got to the bottom of the page I was amazed to discover that it was only $47/mo. But I wasn’t excited, I was confused. 

I began to wonder if the course was actually as great as it said it was. Surely if that person really believed in their product they would have charged more. Eventually, I decided that it was too much of a risk to my money, and more importantly my time, to sign up. In my mind the $47 investment became a greater risk than a $300 one. The person offering this course sabotaged their own sales by being too cheap. Everyone loses in a race to the bottom, so quit being cheap, and price your products appropriately.

When pricing your product, keep these 3 simple rules in mind. 

Your product should be priced in proportion with:

  1. The problem it solves for your customer
  2. The type of customer you want to attract, and
  3. The value which you want your customer to place on having it

Remember this: The moment you make a mistake in pricing, you’re jeopardizing either your reputation or your profits, and sometimes both.

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