by Michelle Heinsimer
After months of hard work, literal sweat and only a handful of tears, I clicked submit, held my breath and hoped for the best.
It was the start of my latest product launch and if this one didn’t work, it was probably going to be my last. Over the prior year, I’d launched 3 different product lines, each one better (and more profitable), but I was still struggling to find the “right” thing. The product that would make my heart sing, bring joy to my customers and finally turn my part-time hobby into a full-blown side hustle. I didn’t know it at the time but this launch would not only blow all of my previous launches out of the water, but it would also 10x my revenue and profits and to think, it almost didn’t happen at all.
Only a few weeks before I’d been fine-tuning my designs and reviewing final samples. Excitement coursing through me. I was sure this was it. This was “the one.”
In my excitement, I thought it would be fun to share samples with some of my girlfriends and while they ohh’d and ahh’d at the sweet designs and silky soft fabric, I made a nearly fatal error. I asked what they’d be willing to pay for the product.
I already had a price in mind and I wasn’t looking to sell to my girlfriends, I was just interested in their opinion (and, ok, maybe a little validation that my price was the “right” price.) I was expecting something in the ballpark of my planned price but instead, one of my friends spit out a price that was barely $2 higher than what it cost to make it.
My stomach dropped.
My heart raced.
For a brief moment I thought it was all over. There was no way I could sell them at that price. Not if I wanted more than a part-time hobby.
I took a breath, smiled, and promptly changed the subject.
I got home that night and reviewed my work. Had I done the math correctly? Yes. Did I feel confident about my production and material choices? I sure did. Did I still feel excited about the designs themselves? You bet.
I could have let my friend’s opinion derail my plans. I could have canceled the launch, lowered the price or tried to add more to an already excellent product to justify the price tag. I didn’t do any of that – I knew I’d done the hard work upfront to validate my launch strategy, the product itself and the price. I was ready. One opinion wasn’t going to stand in the way.
I launched my line a few weeks later at a price that was 50% higher than what my friend said she’d be willing to pay. Within 3 weeks it was my best selling (and most profitable) product. Over the next year I 10x my total shop revenue and I now have customers who come back regularly to purchase gifts for friends. There is truly no bigger compliment. Or better validation that there’s nothing wrong with my price.
As entrepreneurs, it’s natural to want feedback from the people around us. Our work is exciting but often it’s also very isolating and asking for opinions is a fun way to involve people we love and respect.
But when we ask people how much they want to pay for something, especially out of context, we risk ending up with unhelpful opinions that are just that, opinions. Not based on data or fact. Based instead on each person’s unique biases about how much they think they’d be willing to spend on something.
People tend to respond to money questions conservatively – “I’d rather not pay more than $30” or “I’d probably we willing to spend $20.”
But the reality is our willingness to spend money is dependent on so many factors – how much money we have in our wallet that day, whether we’re searching on Amazon or Anthropologie, how lux the packaging is, whether or not the lifestyle presented in the product photos is the kind of life we really, really want to have, etc.
Ultimately, our willingness to spend (unless it’s something like toilet paper and even then we’d probably shell out extra for the right feature), has less to do with how much we’re willing to pay, and a lot more to do with how much we value the experience we believe a product will give us. And that value is hard for people to put a number on, particularly when they’re not in the market to buy what we’re selling or when they’re asked out of context.
So the next time you’re tempted to do what I did and casually ask a friend or even a fellow entrepreneur what they’d be willing to pay for something, take a step back and ask yourself:
* If their opinion isn’t in line with what you’re planning to charge, is it going to cause unnecessary drama and derail your plans?
* Are you asking because you need help? If yes, is this person equipped to help you?
* Are you asking because you’re feeling nervous and unwittingly outsourcing your confidence, hoping they’ll tell you the “right” answer?
Ultimately you’re the only one who knows the true value of what you’re offering and only you can decide if a price is the “right” one.
Michelle Heinsimer is a product pricing coach based in sunny St. Pete, Florida. A former retail consultant for one of the top consulting firms in the US, she helps product-based business owners ditch the drama and use the data to confidently set product prices. You can grab a free copy of her roadmap to profitable product pricing at www.mandkcollective.com