« Side Hustle School

EXTENDED CUT: Pricing Your Product or Service


When you’re starting a new product or service, how do you know what to price it at? Good news: there’s a simple method you can use that will take you less than 10 minutes to apply.  Side Hustle School features a new story EVERY DAY of someone who started a hustle without quitting their job. You’ll learn how they got the idea, how they overcame challenges along the way, and what the results are. You need a hustle! Share: #SideHustleSchoolShow notes: SideHustleSchool.comTwitter: @chrisguillebeauInstagram: @193countries

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
They saw docile schoolmasters. This is critical about welcome to something I shall recording today Live from San Francisco have just returned from Mexico, in fact, in time to bring you, this month's extended cut now, if your new, or also because spent about thirty episode since our last one each month we have one of these. She'll episode diving into a particular topic, as requested by you or, if not you personally other listeners, so we still have a Ellie story, of course, but this is something a bit different so far in the and it cuts, we have had the power of observation review of nine starter platforms, how to build a way site in ninety minutes, a simple marketing plan, a tool you can use to choose between different ideas when you more than one like a lot of us do and last month, was behind the scenes of a million dollar Etsy shop. The links to these episodes are at sight of school dot com? Slash extended to you miss me
or, if you knew you can just go, there lesson from your computer or your phone or download for later and now today how big an easy method to price your product or service had lots. Of course about how do you actually decide on a price for something well, as just mentioned. I do in fact have an easy method for you. It's very different from what other people teach something that is especially relevant for your first sight, hustle. So if your new to this road might help you a lot? You will derive right into this topic after the brief message from our sponsor So, let's begin with a reminder that the site hustle way is a different approach all around from what you may have heard elsewhere, what you hear when you ask other people for advice, my lifelong, He you dont have to live your life, the way others expect and yours one run your new business. The way others expect I mention this because if you start to look online or ask around about pricing all kinds of info and opinions. Mostly they, including some sophisticated pricing strategies. Now, when I even say that phrase sophisticated pricing strategies like if your eye
Can it glosses over you're, probably the only one I am deafening, can I talk to you about something sophisticated, at least not pricing strategies. Because at least when you're getting started it. Maybe as well Have we not something you need to worry about, in fact, you today a much easier way that intuitive and simple I alluded, this recently by the regular episodes, and I got a lot of questions about it, so it first. Lost everything relates to your goals. As always, why are used he's aside hustle. What do you have to get out of it? What do you want to look like in three months in six months in a year and here a very relevant question that you need to answer. That question is what is your time worth This is something that I can't answer for you know it I can answer for you, but you should spend time, thinking about it and you should have an answer- even if you not show that answer, if anyone else it may help to think about what you get paid for an hour's work at your day, job like even if not an hourly employ you can do. Your salary into fifty weeks or whatever it is divided, forty hours a week or how many hours you work, and can I forgot what
rough hourly wages, and there is not much helpful is in most cases your site, also, income shouldn't be any less than this like you should make less per hour with your site hustle than you do for your day, job in ideal, will actually make more. So then, what start thinking about pricing. Your goal is, whenever you're selling, whether to at your service and we'll talk about both of those your goal- is to rate at least your minimum acceptable standard of income for time spent, and if you get more that's great, but this is the minimum so, for example, if you decide this site, hustling thing is only worth it too if you can make fifty dollars an hour at it, the nuts your minimum do? I just shows that as an arbitrary number, everyone such different. The point is to figure out what your time is worth to you. Support for this podcast comes from progressive, say
money on your car. Insurance is easy with progressive. It's an average savings of seven hundred ninety six dollars for customers who switch and save. In fact, customers can qualify for an average of six discounts on their auto policy with programme. Save including discounts just for starting a quota, mine or owning multiple vehicles, get your quote online at progressive dot com and see how much you could be saving national average annual car insurance savings by new customer surveyed. Who saved with progressive in twenty nineteen discounts very and are not available in all states, and situations? Now I mention products and services. We're gonna make a distinction here with a product, you're selling, something the service you're doing something. So there is some overlap, of course, but generally you can think of a product as something that people by and then you send him something or otherwise they collect something or they download something
exchange money for some kind of good tat. Good could be physical or digital and with service their exchanging money for something to be done? So, let's look at you'd apply this pressing model to both a service more product. Let's actually began by talking about a service, I'm gonna use the exam while from just a couple of episodes ago chapel two o seven about the Brooklyn Confetti photographer. And that's where I was about someone who, among other things, was doing these really fine photo shoots with people, were she bond them with confetti and then took their picture? if a niche- and I think she charged something like a few hundred dollars for a photo session now. First about your Actually, charging hourly for your service will not easy enough if you like a coach, my rate as a hundred dollars an hour then boom you're done figured it out courage when deciding on number be sure you consider the extra time you spend on stuff for an hour, coaching someone you might spend twenty minutes preparing for it. You might spend thirty minutes following up on it. You have to think about Your time, not just the direct time, but still it's pretty simple if it
not charged hourly. Then you think about the overall time it takes you, create or provide the service? so young? I was there Brooklyn photographer mentioned in that story, a public at these wrong, but let's say something like three hundred dollars for a photo session. How could she have come to that price, using this pricing model. Maybe two experimenting he's discovered that each fellowship takes an average of five hours. That includes the shooting as well as the preparation. Photo editing the confetti clean up and her number, or service is sixty dollars an hour, determine I'm gone well, three times. Five is three hundred dollars and that's how, this example. She could have come up with rain or dollars for that service. One final note before we shift products, If you have some costs for your service, then you wanna make sure you factor those into, but of services have very few costs. Or they have some start up costs, but they dont have very many ongoing costs and this example once the honors up and running, she doesn't have any ongoing costs or she has very few. Let's say party had
equipment. Charity had the skull. It was just a question of providing a service so think about the time it takes you to create or provide it and base your minimum price on that. Ok. Let's look at an example of a product. We have very similar principle, is just a bit different. How you apply it so a couple hours after your nose. So too? Oh nine was a polish bartender living in the UK who makes a weapon. That sells cocktail equipment. Now these are physical items. They get a couple of cases he makes them before, whose parties purchasing them and then reselling so obviously with his pride there are substantial ongoing costs, for he has to pay for mature else or yes to pay for products he's gonna resell, even though not directly providing a service, I would suggest that he still thinks his time he's trying to decide what to price these items for, through an example, something you manufacture. If it costs your ten dollars, to make something you obviously don't wanna sought for eleven dollars
you're gonna, sell a whole lot of them. Most of the time with a product does ass, whether your manufacturing, something or your reselling the stand. As for the retail price to at least be twice what it cost you to make it or purchase it. So if this guy by them mothers, let's say, and the mother com, just ten dollars. Each he published in southern for less than twenty dollars each. So let's do that standard, but in either case both the service hustle and the product us all, based on this minimum, acceptable income which is what you decide for yourself. It doesn't mean it can't be more, but that's the baseline, if you can't make it work at that level and you should probably try experimenting with something else so before we go on. Let's look at a few more principles. A pricing first one is that there are probably a range of I says that will work if you're selling those mothers he might actually able to sell them for more than twenty dollars might be able to sell them for all the way up to thirty dollars. You dont really. For sure where that range is gonna top out, but your goal. If you're selling sex thing is to maximize, and you want to try to get to the high end long ago early in the show this example of?
our teacher, who created some differentiation and he promised to teach people, the most awesome guitar lessons in the universe, and he was really smart about this, and he started out at twenty five forty dollars an hour, and I think, if I'm not mistake. And he got all the way up about seventy five dollars an hour. So here was he found a range of prices if someone's going to pay fifty dollars or seventy five dollars for Qatar lesson, wouldn't you want seventy five, but this also brings up a good point here: all the way from twenty five to seventy five. Why didn't he keep raising his price and the answers as there is a natural ceiling somewhere like, even though he was able to charge premium for these lessons at a certain point, I'd say you know why or how awesome those guitar lessons? Are I'm not going a hundred dollars an hour, a hundred fifty or whatever the prices have Second, most often guitar lessons in the universe from somebody else whose cheaper so there's a range of price as your goal, is to get to the high and second child too little is as much of a pie as charging too much she a very common mister
people who are saying something for the first time the price is too low and I think it's because they're afraid or they kind of undervalue themselves, and you have to remember people are sceptical of low prices just like they are really high prices. If that guy's guitar lessons five dollars an hour, a lot of people think why are they worth anything Why are you going to do that? So you don't go to I, of course- but you also run the risk of not succeeding. If you price, too low Third, I already highlighted briefly that general retail cost is a hundred percent mark up or more so, The publishing business, because I'm an author- and I know you look on the back of a book. You'll see a real hell price or what's called a list price. Let's say that prices, twenty five dollars for a heart cover buck. The publishers, gonna provide copies of that book to distributors, including bookstores, including Amazon, dot com other on retailers for fifty percent of less price, so
Twenty five dollars, they're gonna, sell it for twelve dollars in fifty cents, then the bookstore within a double their cost, from twelve hours and fifty cents to the retail price at twenty five dollars, and that's how they money and if their books they want to promote, they might just count them, but even if a discount them twenty percent, for example in this- the booklet. Sulphur twenty dollars are not making as much but there is still making profit because they pay twelve hours and fifty cents for that. But it is very common in retail. Just remember it's usually a hundred percent mark up or more next. It may be helpful to look at the competition there is anybody else doing what you're trying to do and see their pricing at just say understand what they're doing and whom their targeting you're necessarily want to follow it, you might different idea or approach, but it might be a good benchmark for you if you their prices too high. Then, of course you might want to sit pricing under them? If you think you can do, better job than you might price higher or you might, I think about them at all, because you're doing your own thing, but at least this
you are aware of the general environment. So I know I give you several principles, their pernicious. The most important thing most important thing, there are several ways to determine pricing ultimately, you'll want to raise your price to the higher into the range of what some will be willing to pay. But when you first meetings, You might have an idea of what that is, so this simple form. Should help Figaro your time is worth and base. Your using decision on that. I want you to have I'm your side us on what you look forward to it to be something you enjoy working on. Why don't we Yet that aside, hustle is not a hobby or if it is a hobby that makes money it's hard, an income generating project without end up, as we read the special episode. I want to say, thanks to everyone who sent questions about this heard from several point one, the other day. It was very helpful if you don't follow me it is my name at critical about, what's on your mind, because that's gonna inform when I do next for the next extended cut, thanks again to respond
for today, which makes the show freed everyone and Last but not least, thanks to you the listener as well, because you're really went allows the show to continue. This was helpful to you, give me a shout online. Let me know how do we quickly? China beside side, all but book, which will be out in September, goes into this much more detail, with several illustrations, which make it even more simple inspiration is good, inspirational. Action is better go get to work.
Transcript generated on 2020-08-06.