Pricing Psychology Part 2 – The Impact of What’s Going on in Your Head

In this episode of Live With the Pricing Lady, we're taking a look at part two of Pricing and Psychology. Where we'll be talking about how your mindset influences your pricing decisions. Sit back, relax, and enjoy the episode. Hello and welcome to this episode of Live With the Pricing Lady. I am Janene, your hostess. This show is all about helping you build a more sustainably profitable business. By understanding the tactics and strategies of pricing, we can build your confidence and help you make better decisions. Let me start by asking you a question. What if your pricing problem isn't what you charge, but what you believe about what you charge? Ouch. That's a tough question, right? And I ask it with a lot of love in my heart because I know that there is a lot going on behind the scenes that influences your pricing and your decisions. And that's what we're here to talk about in this episode because while the external aspect of pricing psychology is something we all, you know, are fascinated by and enjoy to talk about, the internal part is the part that's influencing much more than you can possibly imagine. Often when I run rep classes or I give a presentation, I will ask people, what has the biggest influence on your pricing today? Is it the customer? Is it the competition? Is it the cost? Is it you? And 99% of the time, people will pick one of the first three. The reality is it's almost always answer number four, you. You have more influence over your pricing and your pricing strategy than anybody else, and the sooner that you take ownership for that and start taking steps to do the right things in the right way, the easier pricing is going to become for you and the more confidence you're gonna have in it. So let's dig into the psychology, the internal psychology that lies behind your pricing decisions. We're gonna look at this in three sections, why it's important to take a look at this, what the challenges are, and some tips that you can use to start. Shifting what's going on. Why is it so important that you understand this internal aspect? Can't you just be like an ostrich and dig your head in the sand? But we all know the answer to that already is no. You will always, and I do mean always struggle and lack confidence in your pricing if your money and value beliefs are getting in the way. There's just no two ways about it. You have to tackle that in some ways straight on first by create, creating awareness around them and sometimes by shifting those things that are getting in the way or reframing them. What we're going to be looking at today are some different ways that you can do that. The second reason that this is important is that the internal psychology that's going on, and some of it, you may be aware of it and some of it may be going on at a subconscious level, will lead you to undercharge over, explain and hesitate when you least want to. It's really important that you take that ownership for the fact that you are the biggest influence on your prices. You can't point the finger and blame the customer or your competition or your cost structure. In the end, your pricing comes down to what you choose to do with it. The more you know about what to do and how to do it, the more likely you can. It is that you will be doing the right things and it will get easier for you. The third reason. Why this is important is that shifting your mindset or being, having the tools and the awareness to be able to shift your mindset is key to making sustainable and empowered more empowered decisions in your business. Instead of saying, oh, I set this price just because that's what so and so does. You can say, I set this price because it. Fair. It is reflects the value that I deliver and it is market driven, and you can say that because you've done the work and you know it, right? As opposed to saying, well, so and so just told me to, or somebody said A little offer should cost this much. Right. You don't, you're guessing at it, right? You're assuming that what that other person is telling you is correct when you do the work and understand the why behind your prices. When you are able to shift that mindset, then it opens up doors and the possibilities become that you're going to make empowered decisions, decisions that you decisions. You can believe in those. That possibility increases significantly. It's a magical shift. I see it all the time with my clients, so I, I can, can, can say that with an enormous amount of confidence. So what are the challenges that people face when it comes to this internal aspect of psychology? One of the biggest ones is imposter syndrome and that the tone of voice of that is, you know, who am I to charge that? Or why would anybody ever pay me that? So this is a common thing that I hear from people they. Don't believe on some level that they can do that, that they can charge that. And there are many different things that could be influencing that. It could be, you know, they're hearing that in the voice of a parent. I have one one client. Somewhat recently, I guess who, you know, who specifically said, okay, my, you know, my parent has told me that I'm crazy to charge that. Literally it came straight from their parents' mouth. And that isn't necessarily helpful or constructive feedback. And being able to challenge that in your own mind, if that's what you're hearing from some. One in your circle is important, or if it's not, you know, that you've heard that feedback specifically, but there's a little voice in your head telling that, being able to, you know, isolate that voice and, and challenge it and say, Hey, you know, don't say that to me. It's important because if you deliver the value, then yes, you are capable of charging that. And if people believe that you can deliver that value, they would be willing to pay for it. The second common challenge is simply the fear of rejection. Or, and this is when I hear from a lot of ladies, is the fear of being perceived as greedy. I'm gonna lump these two fears into one common challenge here because they are often related. Now they're not exactly the same. The fear of rejection is, basically being told no. And this is a fear that a lot of people have, but the reality is who cares if we're told no? Yeah. Most of us have been told no in many different aspects of our lives at many different times in our lives. And sometimes it cuts to our heart and other times we just go on and do whatever the heck we want anyhow. And so in the context of your pricing, hearing no isn't necessarily a bad thing. So if you can reframe that, then it's going to help you. And what I have to say about being perceived as greedy. If your intention is to take advantage of people and you said exorbitantly high prices as a means to take advantage people, then yeah, you're greedy. But everybody I've ever met in the context of running my business, that's not their intention. Their intention is to deliver a service, a product, or a software at a price that is good for the customer and good for their business, and they're delivering great value. So there is no risk really of being seen as greedy. And sometimes I've had clients who have, been challenged by people on social media. How dare you charge for this? You know, blah, blah, blah, blah, blah. And those types of people who don't understand that you're running a business, I mean, doctors charge for what they do too. So why if you're helping people and delivering value, then there's no reason you shouldn't. So again, with these two fears, a lot of, you know, being able to shift, it will come from reframing. The third one is tying price to time and effort instead of value. This is very much service related and usually when I'm first working with a new client who has a service based business, they're always talking about, oh, it takes me this time, or I have to put so much effort into this. And during the course of our work together, we will shift that. I was like, every time you think about cost, I want you to think about value. Every time you think about the number of sessions, you're gonna look at the value as well, and we're like re-patterning their brains to go to value all the time. So tying your price to time and effort. Is not going to help you because the time and effort are not related to the value that you're delivering. That's why we want you to shift your focus to value instead. So if you're always focused on how much effort you have to put in and how much time it takes, that's actually more related to your efficiency as opposed to the value you're delivering. And that's something you're gonna wanna keep in mind. I'm getting a little bit ahead of myself into tips here. I can't help it with this topic so much. Alright. Another common challenge is simply avoiding pricing, discussions and or decisions. My friend and I, I bring that decisions aspect into it because avoidance is not just in having the discussions, but it's about making the decisions around pricing in your business. So one of my clients last year, she's like, I don't know why I put off the decision for so long to work with you. She'd been looking at working with me for quite a while. But she hesitated. She was just avoiding making that decision. And when we talked about why it came down to her fear, she didn't wanna fear. Feel foolish for not having addressed it sooner. But of course then the longer she waited to do it, then you know, the longer she was avoiding it. And it was like a vicious, a vicious circus. Finally, thankfully something clicked for her and she decided to to work with me. But the point is avoidance. Is a coping mechanism, but it's not one that always helps us. If you are avoiding having pricing discussions with clients, it's very hard to sell things, especially in a service-based business. If you're avoiding deciding what to price. The offer that the client you had a conversation with last week if you're avoiding making the decision on the price for that, then you're not getting the offer out to them in a timely fashion, which is going to impact their decision, right? So avoidance is a common challenge that presents itself when you're having mindset issues or internal psychology issues. The last challenge here is, is when you are feeling a lack of confidence when your mindset isn't in the right place. This is when you get into behaviors like people pleasing, unnecessary discount, and in offering unnecessary discounts. When you feel under pressure. Or what I call preemptive discounting. So the preemptive discounting is when you wanna offer a discount before you, and you've even presented the client a price. Yeah. There's rarely ev ever a valid business reason to offer a preemptive discount. But if you're feeling, you know, if you're feeling that you are not worthy or that. You don't understand the value, even then you're more likely to do these self-sabotaging behaviors like people pleasing, which leads then to unnecessary discounts when you feel under pressure or preemptive discounting. So those are the common challenges that people face when their internal psychology, you know, internal to themselves is off kilter. Now let me be clear about. One thing because these internal psychology challenges also present themselves in larger businesses, like where they have a sales team or a marketing team. They are not immune from these things because it's a team. They also have these issues. And I I just wanna bring you one example so that you know that you're not alone in this. Years ago I was working with a company and they, they were in a price war with. In their market, let's say. And when we met, they said to me there's nothing we can do. It's not worthwhile to do this pricing project because we are in a price war and there's nothing we can do about it. The other guy started it and there's nothing we can do. We just have to wait it out. And that was their approach. It was basically learned helplessness, if you will. Yeah. They just gave up. In that situation, and this can also oftentimes be the case, when you have your own business, you feel like that's not possible for you that you can't do anything about it. So you just kind of give in and you give all your power away. And that's what they did. Well, it turned out not only had they contributed to the price war, but they could also contribute to taking. You know, lifting the industry up out of this situation. It had gotten this too by doing some very specific things with their pricing. So it's important for you to understand that we are all human beings. I know that, you know that. And these internal aspects of human psychology influence pricing, whether it's a one person company or a, you know, 50,000 person company. So I know you'd like to get into the tips, so let's start there. The first thing you have to do is create awareness and audit the stories that you're telling yourself. So if you're telling yourself. I'm not worth it. It's helpful for you to understand where that's coming from and start shifting that story. Say, yeah, I deliver value, I deliver value, I deliver value, right? So you need to shift those stories, audit and shift your money. Stories could be money, success, or worthiness. Those are usually the three areas that we're talking about when we're looking at B Pricing. Second tip. Is to detach your pricing from your personal worth. And I know some of you, it might be you, dear listener, will roll your eyes when you hear that. I know I should do that. I think the key here is to understand how to do that and in my work with people what. Helps them to make that transition most effectively is to understand the economic value of what your work really brings. So not benefits and features, but the real economic value that is going to help you shift your thinking from. It's going to right now because you don't understand the value in an economic sense of what you bring. You're left comparing it to the only thing that you think you know, which is yourself. Now, the reality is you have infinite value as a human being, as we all do. So that comparison is let's say silly at best, but because it's the only like. Point of, of comparison that you have, then you go there where if you understood the economic value, then you'd have a different point of reference that you can be utilizing that is actually more relevant and a healthier point of reference. So if you can detach from your personal worth, it'll be very beneficial. The best way in my experience to do that is to understand the economic value that you bring, that your offer brings your clients. So the third tip. This is often when people feel challenged in pricing conversations they haven't taken the time to practice saying their prices out loud. And this seems so simplistic and it is simple, but it is very powerful. So build comfort for yourself. Build muscle memory by practicing. Your prices and saying them out loud, and especially if you're shifting or changing your prices, then that is a, a good opportunity to make sure you reinforce the right price in your own brain so that it rolls off the tongue when, when you need it to. The fourth tip is to flip your focus. What do I mean by flip your focus? So for example, here are two examples of flipping your focus. First, think less about what they pay you and more about the results they're gonna get. I. Why? Because it goes back to shifting the value, right? So instead of focusing on, oh, they're gonna pay me the same, you're focusing on, I help you dear customer, do X, Y, Z. And that is a much healthier focus, both for you and for the client. Second example, think less about the number of sessions and more about the journey that gets them the results. The number of sessions, especially with coaching, it drives me crazy. People focus so much on the number of sessions, the number of sessions, and the number of sessions is not related to the value in general. The journey you take them on, the way you onboard them. These things are the things that bring results for your customers, and you and your customer will benefit more from focusing on those things. To me, the number of sessions is simply logistics. Yes, you do have to set boundaries. Which leads me to the last and final tip, which is set very clear boundaries for yourself. And the reason you do this is when you don't have any boundaries in your pricing. Then if somebody asks you something that you don't have an, an answer for or you haven't really thought about how you would handle that, then your brain kind of goes into little bit of panic mode and you start making decisions in a high emotional state. As opposed to making a decision from a logical. Cognitive state, right? So if you have thought in advance about when and under what conditions you would offer a certain discount, then when someone says can you give me a 10% discount? Instead of going I don't know. You'll already have thought, well, you know what? Mm. I only offer this discount under these conditions. This client is not doing this. So actually, no, I don't offer a discount for this offer because the price is market driven and it's very much related to the value that it deliver, right? So setting clear boundaries allows you, or enables you to stay in a more let's say. Logical thinking frame of mind as opposed to an over emotional one. And when you're overemotional, then you're more likely to do things like offer unnecessary discounts. Those are the five tips that I wanted to share with you today. Now, your tasks, should you choose to take this task on as a result of this session today, is to identify one mindset or belief you believe is currently holding you back to journal about where this has come from and what it's costing you, but also to think about how you can reframe it, how you can shift your focus. So every time you think that. Thought, what's, you know, a way you could reframe that to focus more on the value or some aspect of value so that that mindset issue won't be getting in your way as much. Now, as you know, this was part two of a two-part series on pricing and psychology. Both external and internal psychology are important to pricing and often issues with internal psychology will lead to poor choices when implying some of those external tactics. So if you don't. Know what to do with your prices, for example, you're feeling uncertain or a lack of confidence around your prices, you may use some tactic that you heard from some guru somewhere on your pricing that actually doesn't fit your business. So you wanna be careful about that. That's why one reason it's so important to address both the internal and the external. At the same time, when you understand the buying behavior of your customer, it will support your confidence and you will make better decisions, which again, is why you need to also understand the external aspect of pricing. So when you trust the value you bring and understand your audience, you create an environment for stronger offers for. Better price positioning for easier sales conversations and for closing more deals at better prices, which quite frankly is what we would all want for you. That is what I wanted to share with you in this episode. I hope you enjoyed this two part series on pricing and psychology. It is one of my favorite topics when it comes to pricing because it is so powerful and so impactful in your business, and there is so much to unpack in there and get into the nitty nitty gritty. We've, you know, scratched the surface on some of this, and hopefully it's given you some things to reflect on in your business. If you'd like to find out more about how to work with me, I suggest you head on over to the pricing lady.com and book a call with me. You can share with me what's going on in your business and I'll share with you how we might be able to work together. That's all for today. I wish you a great day, and as always, enjoy pricing.