Everything in life as we know it is relative. We, as humans, must compare in order to understand value.
- How do you know that a steak tastes good until you’ve had another cut that tasted terrible?
- How do you know that someone is beautiful until you’ve seen someone less appealing?
- How do you know that your services are cheap or expensive until compared to another vendor?
What do all of these numbers represent?
Indicative Value
Prices are, to a certain extent, representations of quality. We live in a world of value.
In the following situation, the amount paid for something represents the degree of love or appreciation one feels.
(image courtesy of http://www.papyrusonline.com/)
Whenever you get a birthday or thank you card, what is the normal process for appreciation?
- Look at the calligraphy on the envelope
- Take the card out of the envelope
- Appreciate the card cover’s graphics
- Open the card to read the message
One last step…
- Turn the card over to see the brand and price paid (or do some of us do this step first?)
Why are we programmed to see how much our friend paid for the card? It’s just a card. The kind thought and message should be the key factors to weigh its worth. It’s almost unavoidable.
The amount paid for a card is indicative of the value placed on the recipient…most of the time.
Mental Shortcuts
A home’s shingle roof should be replaced approximately every 10 years. When mine was due for a change, I contacted two roofers for an inspection.
The two of them did almost the same things. They climbed onto the roof, poked around and did some estimates based on square footage.
- Roofer 1 – quoted me $8,000 with an 8 year warranty. He estimated 3 hours of labor with a dozen men.
- Roofer 2 – quoted me $4,500 with an 8 year warranty. He estimated 3 hours of labor with a dozen men.
I was about to get a third quote, but decided that I was too busy. I thought it over for about a day and this is what I concluded.
Why was Roofer 2 about half the price and guaranteeing the same thing? I wondered if he’s cutting corners to try to save some money.
A roof is something I don’t want to have to fix again in the next decade, so there shouldn’t be any problem with this replacement. It’s settled.
I’m going with Roofer 1.
This was a true story. And this was the same issue I encountered when starting out in the wedding industry.
The moment I discounted, the bride literally asked me, “I know that you’re being generous and I appreciate that very much. I’m ashamed to ask, but are you offering the exact same service as you would with every other client?” If they didn’t ask it, they definitely thought it. You can tell when they want extra things from you – edit this, do that, I want these images swapped out, etc. There is less trust.
This was just like how I would have had minimal trust if I paid a roofer half the price of what I assumed was market rate.
Until today, year 6, there are no leaks. Does it prove a point? No. It just proved that by paying more, I get peace of mind.
Low Balling Does Not Work [most of the time]
Be honest. Would you eat sushi or sashimi that costs $0.25 a piece?
Personally, I wouldn’t. That just sounds “fishy.” But, some would.
Therefore, stop worrying about those who charge a fraction of your rates. They shouldn’t even be considered competitors. The moment you treat them as one, you lose.
Let’s put this into context. A wedding is a once in a lifetime experience. Would most people risk that special day?
I’d love for you to…
- Share this if you found this article useful with Retweet and Facebook buttons below
- Comment what you consider is a “safe” price for sushi :) or other foods
Other Chapters
- Preface: What are You Worth?
- Chapter 1: Psychology of Choosing
- Chapter 2: Choosing is Painful
- Chapter 4: Secrets on How to Handle Discounters
- Chapter 5: How to be Fearless in Pricing
- Chapter 14: 2 Steps for Naming Your Packages
Your turkey loving friend,
Lawrence Chan
P.S. You’d be surprised. As much as I love tofu, I have never tried tofurkey. This year I’m going to change that.
P.P.S. Many have asked why my chapters are out of order. If you follow on Twitter or Facebook, you’d know that I’m writing an e-book on the psychology of pricing and packages. Sorry if I didn’t mention it on the blog.
Anyway, the book should be publicly available soon…hopefully, December 1st at 10AM. I recently hosted a seminar on this information and they all found it to be pretty awesome! Here’s one who applied it within a week of the seminar and succeeded…
David and Drexelle Park Studio -
“The information that Lawrence provided was easy to understand and really helped us strategically construct our pricing and packages…
As a result, we recently booked our ideal bride with ease… [and made sure that our] services were a fit for her.
I highly recommend this for all photographers – old and new [to the industry]…”
P.P.P.S. I hope you found the previous chapters on pricing and packaging beneficial thus far. The book contains A LOT MORE good stuff!
Click HERE.
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[...] Chapter 5: How to be Fearless in Pricing [...]
[...] Chapter 5: How to be Fearless in Pricing [...]
[...] Chapter 5: How to be Fearless in Pricing [...]
Thank you again Lawrence. I do appreciate your insight. I am one that holds true to pricing. Cheers!
sushi safe price is at least $5 per 2 piece ngiri order. but i do agree the more expensive = the better. in fact the BEST sushi in LA (in my opinion & in zagat’s) is at Sushi Zo and get this– there is no menu & no price. it’s all omakase (chef’s choice)… you say when to stop and then they give you a total price. its expensive, requires trust in the chef, but its SO GOOD & worth it!! interesting to think what that adds to all this pricing analysis.
Thanks for the insight into the topic Lawrence. This is something that my business partners and I have been thinking about for a while and haven’t been able to come to what we feel is ideal for our pricing. This is definitely helpful in our pursuit.
dude, you are the only photographer’s newsletter that I haven’t unsubscribed to yet and it’s been over a year. I love your articles! Thank you for always putting a spin and opening our eyes to the business aspect of photography!
LOL thanks Timothy! I am happy that you’re enjoying the newsletters and articles. Let’s hope that I can maintain that.
=D Very informative and inspirational blog.
Lawrence – Thank you for this post. Been routinely using your strategies this last week with 100% success thus far ; )
You. Rock. But you might have known that already!
once again you’ve got it exactly right :)
unless tofurkey has improved since 2000, it is not good. :)
thanks for this insight…my brother went with the cheaper guy when he remodeled a bathroom…it proved “you get what you pay for” 10 times over. i just don’t think many people apply this theory to photographers – and they should!
Oh no! I hope the restroom is holding up.
You don’t think so? Personally, I’d rather pay a photographer $5k any day over someone who is $900. If it’s my wedding, I don’t want any mishaps. I could be wrong.
I couldn’t agree more and I feel the same way. But it just seems to me that even if people value the photography, it is the one thing they are willing to cut costs on. It’s never the cake, or the dress….
I don’t know Alyson, I’ve heard of brides low-balling on the cake and dress before. Just week ago a prospect was telling me how she was pitting two stores carrying the same gown against each other trying to get the lowest price. Some people feel proud of themselves when they get the lowest price on something. We hope to attract the type of clients who understand the value that Lawrence is talking about.
Hi Lawerence! I look forward to your blog posts! I love the way you apply the principles and give so many examples that you can use in everyday life (not just photography). As much as I love vegas buffets, malls & discounts, those are just not places I’m willing to eat sushi! Sushi is a treat for me, so I will spend the extra $$ to eat quality food.
I found your web site by accident while researching ideas for a photo booth I put together for an event. I recently began to dig deeper into your blog and have found it to be not only amazingly helpful, but honest and with REAL business advice.
I’m in the process of building a portfolio and your advise on Chapter 4 just about blew my mind for its brilliant simplicity.
Thank you for this great blog and for taking the time to offer your advise to others.
The tofurkey I had at Thanksgiving last year (one of the ones you cook in the oven yourself) was fantastic. It looks really sketchy, and my uncle teased me about it, but even he admitted it tasted good.
And the information here is awesome!
That’s it. I’m going into the roofing business!
;)
Great post, Lawrence.
What a great post. Very informative. Thanks for sharing this perspective.
Great post. Super valuable information. Thanks again
Lawrence, Thanks for the info especially on pricing. This has always been a tricky subject for us since we have so many “price brides” contact us. You hate turning down work but at the same time low balling yourself shows no value to prospects. What if the photographers work shows quality though but still at a low price, do they eventually just blend in? I’d say yes, due to lack of differentiation. You wouldn’t happen to have chapter on “how to define your target market” coming up would you?
Thanks again!!!!
Sure! Check this out!
http://tofurious.com/2010/08/how-to-create-your-brand/
I’ve never looked at the back of a card for the price!! Does that make me a weirdo?!
[...] Chapter 5: How to be Fearless in Pricing [...]
[...] Chapter 5: How to be Fearless in Pricing [...]
I don’t know Alyson, I’ve heard of brides low-balling on the cake and dress before. Just week ago a prospect was telling me how she was pitting two stores carrying the same gown against each other trying to get the lowest price. Some people feel proud of themselves when they get the lowest price on something. We hope to attract the type of clients who understand the value that Lawrence is talking about.
[...] Chapter 5: How to be Fearless in Pricing [...]
Lawrence, Thanks for the info especially on pricing. This has always been a tricky subject for us since we have so many “price brides” contact us. You hate turning down work but at the same time low balling yourself shows no value to prospects. What if the photographers work shows quality though but still at a low price, do they eventually just blend in? I’d say yes, due to lack of differentiation. You wouldn’t happen to have chapter on “how to define your target market” coming up would you? Thanks again!!!!
[...] Chapter 5: How to be Fearless in Pricing [...]
Hi Mr.Chan! Please forgive me if this is answered in the book. I, obviously, haven’t read it yet…but, I’m reading all of your sample chapters and will probably be purchasing with my next paycheck. I love your writing and how concise and profound it is! Like poetry. Anywho…what I would like to know or have you point me toward in the book, is how do you handle the opinion that such rates might be unnecessarily bloated? I mean, without a 3rd quote or an idea of market value, how do you know you weren’t over-charged and is that something we should be concerned about or is that over-thinking?