Price vs. Value: Why Your Product Isn't Too Expensive

Hello and welcome to the show. Apologies before I begin because today is a late night recording and I'm not in my audio booth so expect to hear some noise bleeding in from the background. Now let's see. OK, so listener shout out and I'm shouting out Uzoma or Ranibo. I hope I'm pronouncing your name correctly. He's a copywriting coach based out of Lagos, Nigeria. He we have exchanged a few LinkedIn messages. Of course, he found me because of the podcast and he was real grateful about the business wisdom that I put out over here on the podcast and let's see what else.

And he also said that my sales and marketing strategies are profound. And I'm really grateful for the kind words. And I'd like to thank Uzoma Oranibo and all of the podcast listeners who share his sentiments that I'm going to do my best to make sure that your confidence in me is justified. So keep listening. Also keep sharing if you find any content here valuable, so share with other people. Then if you think there's anything here that needs clarification, connect with me and I'll answer.

I definitely answer all my messages within A 12 ish, 24 hour ish window. So reach out and let's have a chat. So today I'd like us to make a detour from what we're discussing. And that's because I had a chat with some folks earlier, all two people who are an employee of a client of mine. Well, OK, Well, we had to have the pricing conversation because I noticed that it's something that keeps coming up time and time again.

And for some reason, we can't seem to get sales people to get rid of this pricing thing in their heads. Although in my own case, I would say I was lucky because of some experiences that I had very early in business. And I'm going to talk about it as the podcast, you know, as we continue with this podcast episode. But I'd like to talk to those who are not the owners of the business. I mean, if you are self-employed or you're the business owner and you have pricing hang ups, you know, I understand because, you know, we start off the business in the beginning.

The business is you and you are the business. So it's OK to take things personal. I mean, I understand 100%. But The thing is, if you have a job to do as a salesperson or as a customer service person, as a marketing person, you really can't have hang ups over whether the price is realistic or not. The thing is the price is the price. Someone is definitely selling out those prices. Your job is to figure out whether you can sell at this price or not.

I would advise you guys to take the challenge, try and sell at those prices if you think it's unrealistic. I think you should might be harsh, but I really think maybe you should look for another organization where people sell cheaper enough and you have more faith in what the other business owner is trying to do. But we shouldn't give ourselves all these pricing hang ups. So any of the employees in question are responsible for selling expensive installation systems things in the electrical space.

I haven't been talking about them yet because the Commission is still ongoing and I prefer to wrap things up with the client. Be sure that everybody's happy and we're able to achieve the goals that we started off in the beginning. So it's only when I'm done with that, that then I make podcast episodes about that. So I might talk about them in detail in the future. But this is pretty much what I told the team that the function of price in a business right now, currently world over,

pricing is either cost based or value based. You're going to find other theories of pricing, including what's it called, auction based pricing, you know, like Google and what's this other one, the taxi people, the taxi people, the Oibo taxi company, what's it called? Bolts and the rest of them. So where the price goes up or down depending on the level of demand, you know, things like that. So yeah, they're all those fancy theories on pricing.

But for average folks like you and me, you'll find that the cost of your business or your services is going to be either cost based or value based. Cost based just means you're taking into account the fixed or variable costs that go into producing this thing. How much do you pay for NEPA? How much do you pay service people? How much are you paying for fuel? What else? All those costs, fixed costs, variable costs, everything together.

And if it costs you, you know, you just add everything together and then how much do you want to put in your pocket to drop down on top average it divided by the number of customers you think you're going to get and that's it. That's your cost. Now the thing about cost based pricing is this, especially if you're in a place like Nigeria where in recent times inflation has just gone really crazy. The cost of the input, OK, well labour, the cost of labour has been staying fairly ish constant.

We only just had an increase in the minimum wage. That's for those who are government workers. So you can say maybe the cost of labour is fairly constant, but the cost of materials keeps going up and up and up and up and up. So there are some businesses where to be honest, if the business is running on a cost based thing, you have no control over that. If the price of cement has gone from X to Y over the course of the last four months, then the cost has changed.

It's that simple. It is either the business owner will keep quiet and swallow the loss himself or the business owner is going to put it on top of the goods. So if you're a sales person or you're a marketer for this sort of person, it's not in your hand. If it's cost based, it's cost based. It's that simple. If the cost of fuel has gone up, if the cost of wires has gone up, if the cost of cement has gone up, or if it's an eatery and the cost of beans and Gary has gone up, if it has gone up,

it has gone up. It's that simple. It's none of your business. Your job is to sell. Your job is to do social media marketing. Just do your job the best that you can. Your job is not to say Madam, we can't sell more fufu because the price is high, Madam. If you bring the fufu low, then we'll sell more. That's not your place. Your job is sell the best way you can. If it's cost based, it's cost based. Then there's the value based pricing.

Value. The theory behind value based pricing is this, that when you're going to sell your product or your service, you're going to put a price that people in the market are willing to bear. So The thing is this, yes, you might think you're Olga or you're Madam that the product is expensive, but the question is, is there one other person, maybe two or three other people who are selling at that price range? You will find that the answer is yes.

You will find that there are also another 4-5 or six who are selling higher than the current price range and they're still in business. So looking at things from a value based pricing perspective, if the market can accommodate XYZ prices which are your own level or higher than then what are you complaining about? The thing is you try and figure out these other people that are selling at our price, how are they doing it?

All these other people that are selling above our own price, how are they doing it? What are the tips, the tricks, the techniques, the tactics do whatever. Let's try and figure out how are they doing it because chances, the chances that you are the most expensive person in your market is very, very low. Trust me, you might think your prices are high right now go and look in the market. You'll find one or two people who are priced more than you.

So bottom line, what I'm trying to say is this, if you're the business owner and you're afraid you understand just your price up and down, no problem. I, I feel you. It's something that we service based professionals we face all the time. So I get you. I feel you, but that's a different conversation. I'm talking to people now who are the employees. Just remove your mind from this whole pricing thing. The price has been fixed.

It is fixed. Can you settle it? Take the challenge, rise to the occasion. If you really can't sell it and you don't believe you're better off moving someplace else where The thing is cheaper. So don't tell you Madam. Reduce the cost of your rice and your fufu. Just go to a restaurant that sells cheaper food and you'll be fine. So summary, you have nothing to say about the price. Stop worrying about the price. Try your best, do your job.

You will find that you're going to be better off for it because if you take the challenge now and learn how to sell based on value, the more expensive item when you move from here to another business, you're going to be able to command a better salary, better commissions because of the skills that you've been able to get. And then one day you're going to have your own business. And when you do, you will find that you're not going to be going through those price mood swings that certain people go through.

You know, when you're the business owner, you'd be worried aha is my price too high? Is it is it damaging my profits? Was my price too low? Was my price too? This once you get into that habit of learning to sell, learning to sell on value, you're going to be much better off for it when you start your business. But anyway, the story that I hinted to you guys earlier, I guess I might as well just say it now. I, when I started off in my wedding photography business, I

got a very harsh baptism early in my career. And I'm happy that I did because for me, this pricing thing, so excuse me. So for me, this pricing thing is not, is not theory, it's practical. I've lived through it and this is what happened to me. This is not them say them say I'm telling you what happened to me. So I finished law school and did digital practice like a year and a half, then went for masters after masters, worked in the civil service maybe another 3-4

years kind of. And of course, you know, while abroad, I met a couple of people, came back to Niger, started this wedding photography thing. That was before we did the the export business, the aggregate export business, me and my brother. So one of my classmates was now getting married back in Aberdeen. Everybody knew I was handy with the camera, so she reached out. I said no, I had no problem. Now they'll hook you up.

So she said how much? I told her 250K. She started pricing back and forth, using me to price Groundnut, no Wahala, there's no problem. We're classmates see finish and then plus I didn't feel too confident about my skills at the time because for those of you who've been listening for any length of time, you would remember that the first job I tried to quote for wedding photography was I sell 400K. And the bride now said, oh,

thank you very much. You want to use me to build house. And I was like begging her to stay on the phone when I'm just saying that that whole thing rocked my confidence. Then from that 400, I moved down to 50K. So it's from 50K weddings. I started building my confidence back up small, small, small. So I told her, 250, we begin the press back and forth. I can't remember how much we agreed, but this is the thing you have to bear in mind. 250K,

she said, too expensive. Now this is what happened. The photographer that they went with is a guy called GD Alakija. You guys can Jack him up on Instagram. GDGIDE. Sorry, GI. Yeah. JIDE Alakija. ALAKIJA, I want you guys to check this so you see that this is life. I'm not making stuff up. So GTA is a Nigerian born but does his thing in America. So back then it was considered the top photographer. But I've been out of the game for a while, so I'm not sure you know who is who, like who's the top Nigerian photographer and or whatnot.

But yeah, he's still in the game shop. SO250K. He said I was too expensive. No problem Jidi Alakija, that's the person they got and at the time more than a decade and a half ago, they paid him over a million naira to come and cover their wedding. Now I'm not shitting you guys, I'm telling you guys the truth. I live this on my own self. Somebody was pricing ME250K then left me, said 250K was too expensive, left me and I went to go and pay over one M to go and bring somebody else come and photograph the wedding.

So for me it was a very big baptism. That is when I learned first hand not reading business book. I learned that look, there's a difference between price and value or perceived value. And it's part of what set me off on this path that I am on today because I have lived it. So me, I didn't have the liver or the skill set or the experience or the expertise or the whatever to charge 1M plus. But clearly somebody else could and did and I saw.

So for me, the challenge was now to learn how to sell or get the credibility or the expertise or the whatever to move my earning potential up. So for those of you who are still stuck in this whole price, price, price, price, price thing, I pray you don't receive the kind of baptism that I received. Because for some people, it crushes their confidence. Now some photographers who actually leave the space because of this sort of thing when you're trying to pull your own market, you're trying to charge once more, 150, two 100K people continue to price you, continue to price you.

And then meanwhile you see other people outside charging 506 hundred. And then some people just give up on like, man, I'm not in this thing anymore. And then they they leave and then they go do something else. If you have a rich uncle who hook you up, you get a job in NPC. I've seen one or two people. You know, that's how they left the game. But just know that. So excuse me, there are some legitimate concerns about price,

but because price is the easiest thing to tweak, to tweak it is the first thing, the default thing that most people are going to fall are going to start adjusting. But no, learn how to sell on value or learn how to sell on perceived value or learn how to sell on packaging or learn how to sell on whatever it is that you want to call it. You know, when I was in Lagos, that's how negotiations used to say any small thing, they'll say packaging, packaging now on our packaging.

Yeah, no problem. Learn the packaging, stop tweaking the price. So price was not the problem in this case, but value or the perceived value. So me Tavajima, perceived value of 250K too expensive. GD Alakija, perceived value of 1 M is worth it. Transfer the money to GD Alakija, fly him down, let him cover the wedding. So it's about value or perceived value. Now this is an extreme example is an extreme case, but it proves the point that I'm trying to make, which is you right now thinking price, price, price.

Too expensive, too expensive. You might not be able to sell a million naira package. Somebody else is clearly selling a million naira package. Stop giving excuses about the product or the service being too expensive. Focus on a few things. Focus on the person who is doing expensive value proposition in your industry or in your space. See what you can imbibe from that person and then improve your market. Because this price, price, price thing, you only go down, down,

down, down, down, down. It's it's backward. How do you say it backward ever for whatever. That's what happens on price. I've seen it happen amongst ready photographers. You see somebody, the guy or the girl has a good game like correct photographers, strong artist, but you feel like you can't hold your 250. Then you start charging 200. You feel like you can't hold the 200. Then you start charging 180. You feel like you can't hold the 180.

Then you start charging 150. And then unfortunately, regime change, somebody else will enter. They remove your scarcity, price of everything will go up. You now start struggling more than you struggling before. I've lived this before. In fact, we are living it right now. Before now, before the election, you probably were saying my price is too high, my price is too high. You'll be removing a small, small. You remove 50K, you remove 20K,

then tenable comes in. Then what happens then if you all goes up, we're now paying close to 700. OK, well not in Abuja anyway, but in Makudi. Mum see them, they're paying like 720 per litre. If you reach Popsy's place, Boco, like 750 per litre and you are struggling before elections now you're going to be struggling even more. If I forget this price thing, please. Sometimes the thing just makes me mad. But anyway, I guess you have to receive the baptism that I

received to realize that a modest pricing thing is not as simple as it seems. It's not as simple as if you remove 29 from your price, then people will start pouring and and you're going to get rich. Doesn't work like that. So figure out the people that have expensive value propositions. What are they doing? We'll Start learning. Make sure that your lead generation is set up so that the people that you're speaking to are the people who are likely going to buy.

Sometimes the problem is just that you're speaking to the wrong person. Try to look for how you start talking to the right people. I to do the wedding photography business when I moved to Abuja because my wife is in Abuja and shortening back and forth Lagos, the thing was not working out for me so I moved to Abuja. So one of the first things I did since me I'm a face to face kind of person. I always like to start face to face, talk to people, shake their hand, get an appointment,

go to their office, you know that kind of thing. So I started off with. OK, well I didn't start off like that, but I used to go to wedding fairs and I also used to go to marriage classes in church. I quickly found out that going to the parishes in Maitama and maybe Al Sokoro, you know, you get some kind people that used to go there. But then going to the cathedral in Area 8, also a certain, how do I put it? I'm not trying to sound the latest here, but let's just say the earning potential of of the hi, how will I put it?

And I'm sure you guys get what it is. I'm trying to say. There's a certain kind of people that attend Asokoro and Metama parishes and there's a certain kind of people that attend the cathedral in Area 8. And I quickly learned that, look, me staying in Area 8, talking to people who look at me and say that that's at the time, back then that my 300 was too expensive. Meanwhile, I know that in this Abuja where I am, that people that are charging 500, charging 600, I knew that look, I have to leave this Cathedral place because if I stay here in Cathedral week in, week out,

these people are telling me too expensive, too expensive, it'll do damage to my confidence. I was speaking to the wrong crowd. I removed myself from Cathedral where people are pricing me Groundnut, and I decided to go to other places where people had more realistic price expectations, and then I was having much more fruitful conversations. So yes, sometimes you have to remove yourself from that situation where people are using you to price groundnut, then have money conversations early so that both parties can move on if you're too far apart.

That is why I keep telling my people, anybody that I'm working with, that at some point you have to say, oh, OK, I understand what we're talking about. So far from all the things we've spoken about, we can go with option A, Option B, option C, Any of these will work fine to solve the problem, but it could cost between XYZ and 123. Is that something that is beyond your budget? Put it out there and then keep quiet. If the person starts to fumble,

you know that OK, this is not my person, they're freed and leave them. If the person says he's well, he's duel Busha, but is he negotiable? Can we price you now know that OK, there's room. You can have a realistic conversation with this person. Bring money expectations up early, bring it up respectfully, politely, and bring it up often. Don't spend six weeks yawning with somebody only for the person to tell you in week 10

you're too expensive. If the person is going to say you're too expensive, the person most in all honesty was going to say you're too expensive from the beginning. It is better to find out after you guys when you guys are just in talking stage two conversations. It's best to find out there and kill it now for you to be follow up chasing, toasting, building rapport. You now enter week seven, week eight and they're now saying you're too expensive.

Let me talk to my husband. Let me talk to my brother, let me talk to this person, let me talk to that person. So Monday conversations, expectations, bring it up quickly. Anyway, I'm rambling too much about this whole price thing, but just to let you guys know that tweaking your price is not the way forward. It's a downward spiral for those of us who are artists, you know, wedding photographers, Carpenter, cake artist, caterer,

things like that. All these pricing thing, you'll mess with your head if you have come in and you have set your price for your cakes based on what you've been seeing outside or based on how you calculated everything. Your prices is either cost based or is value based. Have you fixed it? Just leave it if you're charging, OK? I don't know anybody who's charging 30K for a cake. Now for a birthday cake. Well, if you're charging 30K for a birthday cake, you see that your mid size, some of them are charging 30K, maybe some of them are charging 50, but 30, you feel you're comfortable with that, keep that price at that 30.

The challenge now is how many of that 30K cakes can I sell? If I'm selling two a month, let me see how next month I can sell 3. If I managed to stabilize that, three, no problem and I'm doing 3 cakes for another four or five months, no problem. Then for later half of the year, let me see how I can do that Three. Let's see if we can enter four, maybe even enter 5. But the whole pricing thing, thinking that if I cut my price down from 30K to 25K, then people will now start rushing my cake and it doesn't happen like that too.

Don't try and lower your price into prosperity or whatever because it doesn't happen. It doesn't work that way. And if you're an employee, the challenge is very simple. Auger or Madam has fixed the price. They have fixed it. The only challenge now is try and sell at that price. If you don't believe in the product then just move and make your life easier because there's no point staying in the job. January you're quarreling with your boss, everything is too expensive.

February you're quarreling with your boss, everything is too expensive. July you will still quarrelling and then guess what? December you will still be quarrelling. What kind of ways is that? To live your life, you sure have to work every day stressed, feeling under pressure, being given what you think are unrealistic quotas and then you're always give an excuse and then our guy is always thinking you should sell more about them is always thinking you should sell more.

Just simplify your life. If you don't believe, just move and go someplace else that is in line with your own price. But before you leave, let me assure you this is what is going to happen. If you're in this place and the price is 250 and you think it's too expensive and you go and find somebody who is selling at 200, you think no problem, I can sell this. Let me tell you what's going to happen. You enter that place, you will find that the same excuses people are giving at 2:50, they will start giving at 200.

You will now start quarreling with this, your new Olga or your new Madam telling them the price is too expensive. That is what is going to happen. Anyway, let me get off my soapbox. I'm gonna harass you guys too much with my price rant. So that's all for today. Connect with me on WhatsApp. The phone number is 08064662140 and the country code is +234. For those of you who are not Nigerian, also connect with me on LinkedIn just like our guy Uzoma or Ranibo did.

And you can confirm the spelling of my name so you can search for the right person. And you also get my e-mail address from the link where you're listening to this episode. So thank you very much for your time and attention. I'll catch you guys at the next recording.