PSU Insight

Setting Your Fees and Prices

Want vs. Need

Knowing how much it costs you to produce your product (whether a keynote, a book, or a training program on DVD) is valuable in setting your price or fee, but it’s only one consideration.

Another important question that you’ll want to ask yourself is — how important or desirable is your product to your potential customers? What benefit(s) does it provide them? (If it’s possible to calculate it, what is the dollar-value of those benefits?) Possibly most importantly, do they need the resource, or want it?

Let’s examine ‘need’ and ‘want’ in more detail. Without getting into a lot of sales psychology, when someone needs what you’re selling, there’s an increased likelihood of your making the sale. However, because they need it (but don’t necessarily want it), they’ll probably pay as little as possible to acquire it.

Keep in mind that they may not be ‘paying’ only in money. They could be paying in their time, for example. If that’s the case, emphasize your book as a “quick read” or your training program as a “crash course” — whatever saves them time. If you must compete on price (money), you should set your price low enough so that your prospects see no benefit in looking further for a solution to their problem.

On the other hand, when someone wants what you’re selling, they’re generally willing to spend more money… if they decide to make the purchase. The likelihood of making the sale is lower, and so you must counter with additional marketing which stresses all the benefits of their having the resource.

The ideal, of course, is to provide something that your prospects both need (so the sale has a higher probability of occurring) and want (so you can charge more money for it). And the perception of “need and want” is how you want to focus your marketing efforts.