PSU Insight

Setting Your Fees and Prices

Should You Do It Backwards?

Now that you’ve explored how to set the price for your resources or the fee for your programs, let’s explore a somewhat radical possibility — the idea that determining the price for your products the traditional way is completely backwards from the way you should be doing it.

To see what I mean, let’s consider a different industry — the automobile industry. Do you think a major car manufacturer designs a new car, and then figures out how to price it? No! First they determine where in their product line a car is needed, then they determine its price, and then they design the car!

For example, our hypothetical car manufacturer might determine that they need a $60,000 sports car to appeal to middle-aged men with high discretionary incomes. Knowing that, they can determine the characteristics that the car needs and they can determine the cost to manufacture such an automobile (to make sure that they’ll make money on producing the car). Only then do they design and manufacture the car!

Many other industries do it the same way — first they determine the price (among other factors) that a product should have, then they develop the product. Yet speakers persist in writing speeches and then trying to figure out what they should charge for them!

So here’s my suggestion. If you already have product (resources or speeches) developed, then apply the guidelines you’ve explored in this course to pricing them.

But from this point forward, vow not to develop another product before you determine what to charge for it. Instead, analyze your entire product line and determine where you need to develop resources. Determine the characteristics of each individual resource (including its price), and only then develop the resource.

Once you start doing it that order, pricing your resources and speeches becomes a much less frustrating activity.