3 Lessons About Setting Your Price Learned From a Vegas Prostitute
"I love pricing. I also love going to Las Vegas, especially when it’s to attend a pricing conference. True, that’s not the reason most people visit, but then most people aren’t as passionate about pricing as I am.
On this particular trip, it wasn’t the conference but a chance encounter on the Vegas strip that reinforced for me the three pricing lessons that are the foundation for any successful pricing strategy.
I was en route from the airport to my hotel when my cab got stuck on a side street. The barrier was road construction. As I sat stalled in traffic, the meter ticked up 20 cents at a time. After much frustration, I asked the driver to pull over, and got out to hike the two miles to my hotel.
here was a beautiful woman at the next corner, heading in the same direction. We started chatting as we walked toward the strip. I told her about my cab ride and she said that she was going to meet friends.
After a few minutes, I asked, “So, what do you do?”
She looked me up and down, then replied, “Anything you want.”
As a na?ve Midwesterner, I was shocked. But once I regained my composure, the next words out of my mouth were, “I’m a pricing expert. Can I ask you some questions?”
She said “yes,” so I asked what she charged.
“I charge $500,” she replied. I asked if she ever negotiated lower prices, and she answered, “If they don’t want to pay that, I give them the names of some other providers who would provide services.”
Pricing lesson #1 -- know your value.
For many business owners this is often one of the toughest lessons to learn, but it’s also one of the most important. Know your value -- based on experience, results you’ve provided clients, how much the competition charges, your unique value proposition -- and price your product or services accordingly. Too many companies undervalue their products.
Then I asked her, “Do you ever charge more?”
“Absolutely,” she said. “If some guy walks up in a fancy suit, nice watch, good shoes, I’m starting at $800.”
Pricing lesson #2 -- segment your market.
Segmented pricing is an often-underutilized opportunity than can tremendously expand your business. Price segmentation includes pricing by region, time, buying patterns, a job’s turn-around time and specific customer needs. Companies need to look for customers with different degrees of willingness to pay, then find a way to charge those customers different prices.
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As we continued walking down the strip, she answered her phone. Based on her side of the conversation only, it was clear she was talking with a familiar client. “Would you like me to get one of my friends and come over?" she asked the person on the other end.
Not one to miss an opportunity, I was ready with my own question when she completed her cal. “How much does it cost when you and a friend provide services?” I inquired.
“Oh, that starts at $2,000,” she said.
Pricing lesson #3 -- have a product portfolio.
Having a product portfolio means offering multiple versions of your product and/or a range of complementary goods or services that enhance the original product. You can create a product portfolio to capture more revenue from your market.
This woman had multiple options available for clients to select from, and the collaboration with a friend gave her a premium package to offer.
Up to this point in our talk, she had been completely open. However, I had one question I hesitated asking. But we had arrived at my hotel, and I decided to go for broke: “If you don’t want to answer this question, that’s fine … but how much did you make last year?”
“I worked almost every day and I made a little over $1 million,” she responded.
Wow!
Now, you might not approve of what she does for a living, but if you want to maximize your income, may I suggest you learn these three pricing lessons this lady of the evening?illustrated:?Know your value, segment your market and build a product portfolio.?These lessons apply to most business structures -- whether product- or service-based -- and across multiple industries."
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