What's Your Preconceived Value?
Now that you’ve seen that speaking fees are not your sole concern (and possibly not even your primary concern), let’s start exploring how you can go about pricing your products and setting your fees.
An important consideration in pricing your products (whether they’re physical resources or programs that you present) is the resource’s “preconceived value”. (Not its “perceived value” — which we’ll talk about later. This is its preconceived value.)
Here’s what I mean by preconceived value. When you go into a bookstore, what do you expect to pay for a hardcover book? About $25, maybe? And what would you expect to pay for a softcover book? Let’s say, about $15… even though it might contain exactly the same information as the hardcover book! And, of course, an e-book containing the same material might cost less than $10.
Now what if that same information was recorded by the author on a set of 3 DVDs? Now you might pay $30 to $50. However, if the exact same information were recorded onto a single DVD, you might expect to pay less than half that amount.
Notice in all these cases that I didn’t say what the content of the book (or DVD set or whatever) is. So here’s the thing — the content (more specifically, the benefit that the content provides) determines whether or not people will buy the resource, but the medium strongly influences (or possibly determines outright) what people will pay for the resource. That’s its preconceived value.
How can you use this to your advantage?
Recognize that, within reason, people regard a greater “quantity” as worth more. Customers will pay more for a set of 3 DVDs than for a set of 2 DVDs. They’ll pay more for a hardcover book than a softcover book. A longer book is generally perceived as “worth more” than a shorter book. (This concept even applies to intangible resources, such as e-books. All things being equal, a 150-page e-book is considered to have a higher value than an 80-page e-book.)
Of course, there are exceptions. For keynotes, speech length generally has no correlation to its value. But longer training programs are generally considered to be worth more than shorter programs… even if they cover the same material.
But actually, you can turn this idea on its head....
It seems to be a contradiction, but if you can think of a reason why brevity is a benefit, you can actually charge more. Many a student has happily purchased a CliffsNotes book summary to avoid reading Moby Dick (which they can get from the library for free). Time-strapped CEOs might pay more for an intense one-hour coaching session than they would for an equivalent, but slower paced, three-hour coaching session.
Back when I was performing computer training, I made a lot of money by reworking an industry-standard 80-hour training course, and teaching it in only 40 hours. Companies were thrilled to reduce the loss in productivity of their programmers and engineers by cutting their training time in half.
A third approach is to redefine how the resource is labeled. As you’ve already seen, your customers expect to pay $10 - $30 for a book. But take exactly the same material and publish it in a 3-ring binder as a “manual”, and you can charge hundreds of dollars for it.
Or rather than selling people a ‘manual’, sell them a “system” instead. (People will pay hundreds of dollars for a manual, but they have no idea what they should expect to pay for a “system”. A “system” has no preconceived value at all.)
This applies to programs as well. Randy Gage doesn’t offer seminars, he conducts “universities” or “intensives”. Tom Antion doesn’t give training courses, he offers “Buttcamps”. Quite simply, people often assign a preconceived value to seminars, but there is no preconceived value on “Buttcamps”!
When you come up with a new label for your product (whether it’s a tangible resource or an intangible program or service), it loses its preconceived value and you have the opportunity to redefine the price you charge.
So a resource’s preconceived value has a definite impact on the price or fee you can charge. If you want to charge more than a resource’s preconceived value, you either need to trumpet the extra benefits that the product provides (justifying its higher price), or simply do away with its preconceived value altogether by changing the resource’s “label”.