Boom, shake the room, Fire Nation, JLD here, and welcome to Entrepreneurs on Fire, brought to you by the HubSpot Podcast Network with great shows like My First Million, Stories About Companies That Grew From Nothing Into Legit Businesses. Today we'll be focusing on how to stop underselling yourself, to drop these buy bombs, I am bringing Robin Waite on the mic, he is a husband, daddy, cyclist, and surfer. During his spare time he helps coaches, consultants, and freelancers to be fearless and confidently charge more. And today, Fire Nation will talk about how to price your stuff correctly, why charging by the hour is fundamentally unethical.
We'll talk about discounting and money mindsets and how to increase our prices and so much more when we get back from thinking our sponsors. The HubSpot Podcast Network is the audio destination for business professionals who seek the best education and inspiration on how to grow a business, whether you're looking for marketing, sales, service, or operational guidance, the HubSpot Podcast Network hosts have your back. Listen, learn, and grow with the HubSpot Podcast Network at HubSpot.com.com. So a lot of the time when people start up in business, for example, they're told to go and look at the competition and follow and do exactly what they do because that's where success lies.
And for me, I've always pretty much done the opposite of what everybody else does and created enormous success as a result of it. So don't always follow the crowd. You can always go in the opposite direction from time to time. I like that Mark Twain quote, which is, when you find yourself on the side of the majority, stop and reflect because there could be a reason that you are and it might not be a very good reason.
So Fire Nation, as I shared about at the beginning of this episode, we're going to talk today about stopping underselling yourself. And it's time to just simply stop underselling yourself because if you're hearing my voice, you are likely underselling yourself. And let's just get right into a problem because pricing is just a major issue for so many people. I mean, there's probably one of the top questions I get when I'm speaking of podcasters or just entrepreneurs in general about their course, their podcast or sponsorship there, whatever it might be.
Why do people end up just pricing their stuff to their competitor? And why is that a bad idea? The reason why it's a bad idea. So imagine if you're as a local service provider, I don't know, let's say, for example, you build websites for a living.
There's probably like 20 different web designers in your local area. It's Steve's looking at what Dave's charging, Dave's looking at what John's charging, John's looking back at what Sharon's charging and Sharon's looking back at Dave. And the reality is none of those people are actually pricing experts. They're all kind of looking at each other, kind of thinking, well, the other person must know what they're doing.
So charging the same as what everybody else is charging is often one of the biggest mistakes. And the right way to do it is to, I mean, I'm not suggesting don't go and look at your competitors because there is some gold which you can pull out of there. But the mistake is assuming that what they're doing is right when actually it might be the wrong thing to do. So we recommend that the first thing that you should do is actually look at the goals you set for your business and identify economically how many products do you need to sell in order to achieve your ideal turnover within your business and then use that as a market for how much you're charging as a starting point.
And also the other thing to remember as well is that out of those 20 service providers that are out there in terms of your competition, you've only ever got three choices when you price your products. You could go in at the cheapest because that's how you think you get clients. You could go middle of the road because you don't want to be perceived as the cheapest, but also you think that if you're too expensive that will repel people away from you. So you kind of go middle of the road to be safe.
But there's always one person out there in your industry who is the most expensive and there's a few clues here. So they're the most expensive, but they've probably been around for the longest. They've got the most Google reviews. But somehow, whilst they're being the most expensive, they're still able to get clients.
So it's not even really profound. It's just it's like really obvious that you can be the most expensive and still run an incredibly successful business and pick up clients. By your nation, there's a lot of things that Robin just went through. I hope you're really going to chew on because it's a tough game.
We're not going to say that this is easy. If it was easy to price everything that everybody would be doing it perfectly in this world we know would be an interesting place. I'm not saying be better or worse or just be more interesting. There's a quote that I think really resonates here, which is a Seth Goding quote, which is the problem with the race to the bottom is that you just might win.
I mean, think about that. Like if you're just like, I'm just going to go lower, lower, lower, I'm going to be the lowest. Well, the problem with the race to the bottom is you just might win. And is that really a race that he wants to be winning?
Now I'm going to be really expounding upon all the things that Robin's going to be talking about as we continue going through this process of stop underselling yourself. But I want to start with a very strong word, unethical. And you use it very strongly, Robin. Charging by the hour is fundamentally unethical.
Expound upon that. 100%. And this is one of the more controversial things which I say. And I have people divided over this and sort of banging on my door.
So I strongly believe that charging by the hour is fundamentally unethical because let me give you an example. John, you're going to have to be my stooge for this. You're going to have to bear with me. I'm going to stick with the website and I'll just buy the way I used to run a website design business years ago.
That's the reason why I come back to that. But you're in the market for a website. So Steve comes along. He's going to sell you this website.
It's going to take him about 20 hours and he's going to charge you 50 bucks an hour. Is that cool? So he goes away. What he forgot to tell you was that he's not terribly good.
He's going to go away for three months because he's so busy because he sold too many cheap websites. So he eventually comes back and he says, John, here's your website and you go, where's the blog? Where's the shopping cart? It doesn't look very nice.
What results is that going to get me? So he then says, well, oh, the blog, yeah, that'll be another 10 hours. 50 bucks an hour. You've got to pay for it.
Is that okay? No. Now most of us ethical moral upstanding human beings and we wouldn't just bump up the price. But now you're annoyed.
John, Steve's annoyed and everybody's a bit. There's a lot of resentment kind of building up here. Okay. Now on the flip side of that, we've then got Sharon.
So Sharon, she's an absolutely kick-ass developer. She is brilliant, right? But she doesn't know what Robin knows about pricing. So Sharon says, listen, I'm going to build your website.
Take me about three weeks, but I can pretty much guarantee it's going to get you three to five leads a month, you know, adding the item. I'm pretty confident my ability to deliver it. It's going to get found on Google and things like that. So Sharon goes away and she builds it in half the time as Steve.
And so yet she builds a better website, but she's only going to get paid $500 for that. So that's the second shift. It doesn't really add up that she's better yet. She gets paid less than the guy who's not very experienced.
Now the third person comes along. So we've got Roger. Roger knows his worth. Okay, Roger comes along and he says, John, right?
I'm going to build your website in three days flat. Okay, I can guarantee that in the next 90 days or by the end of the next 90 days, it will be delivering 10 to 15 guaranteed leads for each and every month. And I'll tell you what I'll do. I'll give you my prices in a second.
What I'll do is if we get to 90 days and it's not delivering those leads, I'll just say, I'll give you a refund, but I'll also pay you $1,000 for wasting your time. Is that cool? No, a brainer. Absolutely.
It's $10,000. Is that right? Yeah, if you give me those leads, I'll do it. 100%.
So you can see that like now we've done the flipper, it's Roger gets great results and outcomes and they're guaranteed and he's willing to put his money where his mouth is. And so whilst he's 10 times the price of the other two, you just get much better results off the back end of it. Fire Nation, I hope you're really absorbing this and maybe thinking about, hey, how are some ways that I can apply this to my business? How are some ways that I can guarantee results?
Or if I don't get those results, the money goes back, but I know because of my skills, because I'm expertise, I'm going to produce, I'm going to give those results. And then guess what happens? That next level of thing happens, which is referrals. People become your evangelist.
They start saying you just have to use this person like, yeah, of course, they're a little pricey, but I mean, think of what you get long term. You get the best. That's what you want. And this just comes to one of the biggest concepts that I must such a believer in, which is people will be the path to the doorstep of the best solution for their problem.
If you can identify a real problem in this world and become the best solution to it, you will have people beating a path to your doorstep. If you're the second best, they will ignore you because people want the best. They want the best solution. So how can you do that and then wrap it up in this thing that Rob is talking about here?
So Rob, anything you want to end on this area before we move on? I work a lot with coaches, consults, freelancers and people like that. And unfortunately, what they make up for in certifications, unfortunately, they lack in basic business skills. So I see a lot of coaches, for example, who come out if they do their International Coaching Federation certification or whoever they trained with.
And they're kind of like shoved out the door with a message, which is, hey, go and charge 50 bucks an hour and get your first three clients. And actually, it sets a really bad tone of struggle for them, unfortunately, when they first start out. So I guess my message for anybody listening to this, if that's you, there is a better way to start to think about how you charge for your time and really got to get solidly focused on the results and outcomes you deliver. Another way of putting it is productizing your services over hourly rates.
So focusing on having a product, productizing your service over just the hourly rates. So expand upon that. Yeah, 100%. So the productizing of a service happens in a couple of steps.
So the first thing is, so take a therapist, for example, and working with therapists is quite hard work because there's an ethical side to this where according to their code of conduct, they're not allowed to offer guaranteed results for obvious reasons. You're working with the mind, the body and things like that, which are unpredictable at the best of times. So I'm going to work with therapists because they're a hard example to work with, which probably isn't the wisest thing to do. I don't know.
But the first step though is imagine if you had a therapist and you said to them, well, listen, they're working with something, I don't know, like stopping smoking or, I don't know, some kind of transformation basically. I always ask the question, on average, and average is the key word, on average, how long does it take for you to get the desired outcome result with your clients? And quite often you'll get something which is like, well, you know, 12 weeks, okay. And so then you say, okay, well, how many hours are you actually, well, how much do you charge per hour currently?
And they might say something like 50 bucks an hour, okay. So the first part of productizing a service is actually to kind of package up those 12 weeks that average number of sessions and then multiply it by the hourly rate and get used to selling that first. So now all of a sudden, now we do a 12 week transformational program, which is $600, for example. And I always tell them that then we move into step two, which is to, right, now you've got to get used to selling packages to go out and pitch the next 10 people a $600 transformational process.
And then invariably they come back to me, I've taken hundreds of clients through this, and invariably they come back to me and they say, well, actually, we've sold three out of the 10 at the 600 pounds. And you know what, Robin, I've already put my prices up. So this is a point where now hourly rates are a thing of the past. They're focused on this transformational progress, which is happening over a predetermined period of time.
The outcome is predictable because that's a step by step process and it's for a fixed fee. And the beautiful thing is, now that you've got that fixed fee, you can start to experiment with that. So if you pitch 10 people at 600 bucks, we'll go and pitch the next 10 people at 800 bucks or 900 or 1200 bucks, depending on your level of confidence and the number of leads and queries which you're coming into at that point. And invariably, the conversion rate actually doesn't change that much.
They go and pitch the next 10 people and they get two, three or four people signed up. So we put the price up again. And we just, it's a really neat way of just incrementally increasing the prices. You don't just go out there and charge five times the amount, albeit some clients have done, but you kind of gradually just work your way up after you've proctized that service.
Barnation, this is a whole new and different way of thinking about these type of things. And again, I just really hope you're saying, Hey, how can I apply this type of thought, this type of process, this type of system to my business? And if you think Robin's even close to being done, dropping value bombs, you got another thing coming because we're going to be talking about increasing prices, discounting. We'll talk about some insights in the money mindset as well.
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So Robin, we're back and let's be honest, we all do want to charge more, but let's get specific about how we can increase our prices, increase our rates. Cool. So again, you're going to have to be my stooge for this, John. So we're going to have to try and maybe, or if you don't have an example, maybe work with work on a client or just make something up.
Okay. So let's say, for example, we've gone through the productization process on one of your products. So give me an example of a product and then we'll work around that. Let's use one of my old products, webinar on fire, where we would teach people how to create and convert webinars.
Okay. So and how much does it cost to sign up to that? $500. Okay.
So $500. So you and I both agree that John, that's way too cheap. Okay. It's too cheap.
Way too cheap. Right. So we both agree. Okay.
Now, if I went straight out there and said, right, John, go out and charge 5K for it. What would your immediate thought be? No one's going to buy it. Nobody's going to buy it.
Okay. So I can guarantee that some people would, John, because you're John Lee Dumas. However, let's pretend in this world that 5K is just too outrageous. That's a 10x price point.
Okay. But what we do is we're going to rewind a little bit and we're going to start that 500 pound price point and I'm going to do a little Dutch auction with you. Okay. I'm going to gradually increment that price.
And when you get that knee jerk reaction, that gut reaction, and it's a bit like, that's the point where we're going to stop and have a little chat. Okay. So get bear with me. Go out and pitch the next 10 people at $2,500 because that's, you're just outside your comfort zone.
So that's a safe enough space for you to confidently get out there and start pitching at that increased price point. Fire Nation, you know what? All the magic happens outside of your comfort zone, not inside your comfort zone, outside of your comfort zone. And what do you have to lose?
Like give this a test, give this a try. I mean, it actually works for me. That means I'm making 5x on every single sale. And so what if I only sell like, you know, like 10 or 12, like last per month overall, I'm making way more money because I have 5xed my prices and gone to a place that, hey, I'm actually being able to test this market out and see what people are willing to pay.
And you know, if I come up with goose eggs for the next couple of months, I mean, that might be telling me something and I, I drop it back down, but I'm probably not going back down to 500 because now that seems way way too low because, you know, now that I'm outside my comfort zone, I kind of like how it feels out here. And another thing that you hate, Robin, is discounting. Why? If you go out to the marketplace and your prices are too cheap, you're accidentally discounting without even really realizing it in the first place.
So that's the first thing to bear in mind with this. But what most people don't realize is that they think that if they just offer, say for example, a 5% discount on their same products or service, so we offer discounts in order to introduce or artificially increase demand for our product or service. That's why most business owners offer discounts, okay? But if we discount by 5%, most people assume that you've just got to sell 5% more in order to make the same profit in your business.
But actually the numbers are stark. So over here in the UK, we've got an organization called the Chanted Institute of Management Accountant, Terribly Exciting. And they did a study and they looked at all of the businesses throughout the UK on average and worked out what the average gross profit margin was in those businesses. And they worked out that by the time, you know, if you offer a discount, by the time it's the money falls down through the profit and loss account, iron expenses and overheads, there's like a compounding effect, which happens.
So if you offer just a 5% discount, you've actually got to sell 14% more of the same thing in order to make the same profit. And you can then keep on sort of ratcheting that up. So a 10% discount means you've actually got to sell 22% more of the same thing in order to make the same profit. And then by the time you get to about a 30% or 40% discount, you've actually got to sell more than double of the same thing in order to make the same net profit.
So discounting can be incredibly damaging for a business without people really realizing it. It's the same reason as well why on the flip side, if you increase your prices, so if you increase your prices by, say, 5%, well, actually, you can afford to have 14% fewer clients and still make the same amount of profit. And the numbers keep on going up that way as well. The perfect business for me, actually, we live in this world where we've got the internet knocking on our door and in our pockets all the time, it's a global marketplace at your fingertips.
And everybody's out there like marketing like crazy. Well, actually, I believe that a good business is one where you've got half the clients and you're making double the profit. Fire Nation, I mean, think about these numbers. Like, this is really eye-poping.
Like, I never would have thought that a 5% discount could equate to a 14% and less than that. I mean, the numbers just keep compounding and getting exponential. I think a lot of this, Robin, has to come back down to people in their struggles when it comes to money mindset. And I think that you probably deal with a lot of money mindsets, which is why some people struggle having their rates at reasonable places or increasing their rates to that kind of uncomfortable zone because there's just some real money mindset issues out there.
So can you give us some insights into money mindset? We're born with several different blueprints and I'm going to caveat this because I'm not a psychologist necessarily. I'm an avid enthusiast and I read a lot about psychology and various things like that. And especially around mindset when it comes to entrepreneurs and business owners.
And one of the really stark ones is that our financial blueprint, our money blueprint, is actually instilled in us by the time we're sort of around about three to seven years old. And I've got two daughters. I've got seven and a four-year-old daughter. And I don't know about you, John, but when I was three, I could bet.
And my girls, I could barely count at three years old, let alone add up. And also, like, there was no real concept of a fair value exchange. All I seem to get off my girls is, Daddy, can I have this? Daddy, can I have that?
So, yeah, when we then become, you know, turn into grownups and we then rely on this blueprint to rule how we handle money within our businesses. So, like some of the common things which I hear is I've got a cash flow problem, right? And most business owners don't ever really have a cash flow problem because cash flows into the business and it flows straight back out the other end of the business. The problem they've actually got is making more money and then keeping it.
And that's one of the first things. And the reason why our money blueprint is instilled in us at such a young age is like, 99% of us aren't born with a silver spoon in our mouth and tons of money. So invariably our parents would have been arguing when we were little around things, like, we can't go on that holiday, we can't afford it, we can't buy that car, it's too expensive. You can't have those shoes that you want and you're there like staring at your mates' trainers and they're really cool and you want them to.
They're too expensive, you can't have them. So, throughout our lives when we're kids we've had all the scarcity, like just pounded into us and unfortunately many adults, like we have to spend, it takes years to kind of unpack that blueprint and start to give it a more positive blueprint. And one of the ways to look at this as well is many, many sort of people in business have this very emotional attachment to outcomes in their business. So, if you're very heavy focused on sales, for example, and somebody says no, they, you know, $2,500 for this amazing program which John is doing, that's too expensive and John, you know, you might, you could choose to take offense to that, you know, fear of rejection, that's what's going on there.
And the reality is like in business, like what's the worst that can happen, you know, no, actually isn't that bad, you might lose a bit of face, you may not make the money, but the world still spins around. And so, a lot of the time people sell products too cheaply because it's like Pavlov's dog. Every time they sell a product, a little bell goes off in their head, the reticular activator system kicks in and says, oh, that's a nice feeling. I'll keep on selling cheap products because I sell them more often.
Not realizing the damage which it's doing to your business. For the reasons we talked about it, we're on around discounting and things like that. And then if you sell products that are more expensive, you have to wait a little bit longer. You've got to be more patient.
You're going to get more rejections because your conversion rate might be slightly lower. But you have to wait a little bit longer for the yeses. And I hate to say it, but, and it's in part because of what the internet has created over the last 30 years. This like, this, this on-demand world where we get instant gratification.
For some reason, we expect that that is how business works and we've lost our ability to be patient. And actually, the business owners who I think have the best, the most, the best success, which we see externally, obviously, are the ones who have developed this innate ability to be patient, to wait for the sale, the right prospect to come along at the right price, at a price point that is economically going to stack up for their business and make them profit. And so what happens here is rather than being on this cycle where we're doing sell, deliver, sell, deliver at cheaper price points, the moment you start charging more money, you have more time to deliver a better quality product which produces better results and outcomes and produces more money on the back end. And the whole world, imagine it's like a, imagine John's at the center of this universe.
And if he's not pricing enough, you know, if he's not charging enough for his products, the sales cycle of doom is like, it's like, sell, deliver, sell, deliver, it's like a, it's like a gravity field around John. But if you have the confidence just to step into your, you know, understand your worth and your value and slow that process down, it's like that gravity field just expands and we charge a little bit more, we have more time to deliver a better quality products, get more money at the back end before we then have to focus on where our next client is coming from, you know. And I have a, we actually kind of have a mantra, fearless business, which is slow down, create space and charge your worth. I even had it printed on a coin, which I sent a client switch to remind them, just to like, if they find themselves on this frenetic sales cycle of doom, they're doing it wrong and they need to just slow down.
Slow down, create space, charge what you are worth. If you're doing those three things by your nation, your life is getting better. So Robin, you shared a lot of awesomeness this entire episode. Break down the one key takeaway.
You really want to make sure a fire nation gets from everything that we talked about here today. Give us a place that we can go to find out more about you, any call to action you may have or gift for a fire nation. Then we'll say goodbye. I think people have probably got the message by now, you know, be fearless with your pricing.
Just be, be ready, brave. And if you're, if you're struggling to understand your worth, then do go and speak to a coach. It didn't have to be made. But go and speak to a coach about how you can find creative ways to charge more for your products and package them up.
I've got a great gift actually for listeners as well as my book, Take Your Shot, which I'm happy for people to go and download a copy from feelers.biz. If they're based in the UK, it will be a paperback copy for everybody else that's a PDF available for that. And then that's the best way probably for people for everyone to get in touch as well, if they want to follow this conversation on. Fire Nation, you are the average of the five people you spend the most time with.
You've been hanging out with R Dubs and JLD today. So keep up the heat and head over to eofire.com type Robin, R-O-B-I-N in the search bar. His show notes will be there and it'll pop right up with everything we talked about here today. Best show notes in the Biz, Timestamps, Links, Galore.
Robin, one more time, give us that URL that Fire Nation can go to for this book. Absolutely. It's fearless.biz forward slash fire. Fire Nation, you know this.
You are the average of those five people. So keep hanging out with awesome people like myself and Robin. And Robin, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side.
Awesome. Thank you, John. Hey Fire Nation, today's value bomb content was brought to you by Robin and Fire Nation. I've created a treasure trove of free courses for you.
I teach you how to podcast or unamask my great funnels that convert, come up with your big idea. And it's all free. All you need to do is visit eofire.com slash resources to start learning today. I'll catch you there or I'll catch you on the flip side.
The HubSpot Podcast Network is the audio destination for business professionals who seek the best education and inspiration on how to grow a business, whether you're looking for marketing, sales, service or operational guidance, the HubSpot Podcast Network hosts have your back. Listen, learn and grow with the HubSpot Podcast Network at HubSpot.com slash podcast network. Looking for a business coach who has helped thousands of entrepreneurs just like you to increase your profitability by an average of 104% per year, all for less money than would cost to hire a full-time minimum wage employee. Schedule your free consultation today with Clay Clark, a former Small Business Administration, arch newer of the year at thrive time show dot com slash fire thrive time show dot com slash fire.