Setting the right price for your products is tough.
Too high, and you’ll struggle getting people in the door. Too low, and you risk not only flooding yourself with too much work, but that the clients you do get don’t even value the work you’re doing or your expertise. That’s not ideal either…
It’s a hard call, then, on the price to set. But its not be as hard as you might initially think. In fact, there’s an easy way to cater to a wide variety of clients, at a wide variety of price points. You need tiered pricing.
What is tiered pricing?
Well it’s simple.
Instead of offering one price and one service, you put together different packages that cater to three different price points.
Sometime more get used (lots of SaaS companies these days offer five or more tiers), but I like three. There’s a power in three.
The number three occurs at almost every level in our world down to the very laws of nature. From the three particles that make up the building blocks of atoms (proton, neutron and electron), to the nursery rhymes your parents read you as a kid.
Three is everywhere, and we’re conditioned to it.
You need to tap into this.
Offer three versions of your product, at three different levels.
What tiered pricing actually looks like…
Click pricing on almost any SaaS website and you’ll see this in action, so I won’t bore you with a ton of screenshots. Instead, here’s what it looks like…
- This is the bare bones version of your product.
- This is the product you actually want to sell.
- This is the most premium version of what you can do for a client.
Breaking down the “essentials” package
Under the essentials package is “just enough” to give clients who want a taste of what it’s like working with you, some insight into your experience or the product you sell.
It could be something like…
- $47 for a set of email templates they can adapt to their business
- $99 for a one-on-one consultation call to review a client’s website
- $127 for a short (do-it-yourself styled) version of your course
Whatever it is, these are just a “taster” that a client can buy without a large investment. I’ve seen landing pages sell their basic tiered package for $1, enough to push you to make a purchase, but not enough that there’s any pain involved in the decision.
You’re targeting the fence-sitters here, people who want to learn more about you before they commit to a bigger investment. The essentials package is how you get your foot in the door, to add more touch-points to a prospect who is interested, but not yet ready.
Breaking down the “recommended” package
Under the recommended package, your job is to put together exactly what you want customers to buy, which is also generally the product that sells the best.
It could be something like…
- $799 for the creation of an email follow-up sequence for their webinar
- $1999 for the development of a new landing page layout on their website
- $997 a month for access to your course, all materials and support channels
Think about your core product, and put it together in a way that just SCREAMS value. You want the decision to be a no-brainer, that a potential client is eager to go with this option because it “just makes so much more sense” than the cheaper, essentials package.
Under the title and the price tag, you’re going to need to list out at least 5 to 10 different parts of the package to explain how it’s better than the “essentials” and reconfirm the value they are getting when they buy.
You’re targeting your ideal prospects with this offer, so make sure you’ve made the package almost too good to refuse, and the only logical choice once they’ve hit this part of your sales funnel.
Breaking down the “exclusive” package
Under your exclusive package, the primary goal of this offer is to make your “recommended” package seem somewhat affordable.
It needs to be almost ridiculously priced, but with value that supports the hefty price tag you’re going to stick on it (otherwise you’re going to lose trust with your audience).
It could be something like…
- $8,995 per month to manage their entire email sequences, inside their CRM
- $12,999 per month (plus ad spend) to split test and drive traffic to their landing page
- $17,950 per month for an exclusive, one-on-one coaching and development program
Now there’s a psychological reason for adding such an expensive product here, which I’ll get to in a second, but there’s another good reason to price out a very premium product.
It creates intrigue.
Prospects are going to wonder what you can deliver that’s worth that much, and they’ll start paying more attention to your offer. And this can get the right prospects interested. Not everyone is going to go for the most expensive item in your list, but if you’ve backed it up with all the value they get at this price, the right prospects are already primed to say yes.
Why a tiered pricing strategy works so well…
When you start diving into the science behind “why we buy” one aspect in particular comes to mind. You need to make it as simple as possible for a customer to act, so your landing pages should center around a single call to action.
So why does tiered pricing work so well?
Wouldn’t it be counter-intuitive to offer three different options, and potentially just confuse the target customer? Theoretically yes, but it’s not quite as cut and dry in real life.
When you offer a single choice, it’s a yes or no answer.
The client buys.
The client doesn’t buy.
Your ideal customer just has to make a single decision, “do I want this product?”
But when you give options, it triggers another response in the mind of a prospect.
They start thinking, “hmm, which of these options is the best value?”
So, where a client may have said no to a single offer, they’re now thinking deeper.
Looking for the option that gives them the most value.
And they’re right back in the driver’s seat, controlling the outcome of the sale.
Instead of feeling pressured to buy, they’re the one making a choice.
Using the power of three, a prospect feels like they have control over the buying decision.
But let me let you in on a secret.
You already know your “recommended” product is the best value, because that’s how you set this whole thing up. You’ve bundled the packages this way from the start.
Here’s the magic of “why” it works…
A prospect looks to the cheapest tier first, the essentials, because the price drew their eye.
But on closer inspection realize it’s not actually going to give them what they’re after.
Flicking over to the exclusive package it sounds fantastic, but PHEW, that price, it’s a little out of the ball park for right now.
“Hang on, what about the recommended package,” the prospect considers.
It’s got everything I was actually looking for…
And that price, well it’s perhaps a little more than I was comfortable spending, but it’s better value for me and my business than the top tier one, so let’s give it a go.
You decided at the start your “recommended” package will be the best deal, but by offering a prospect a choice, your conversion rates will go through the roof.
Plus, you’ll also grab sales from those who can only afford the essentials right now, pulling prospects into your pipeline, into your world, where you can gently coax them into a larger investment at a later date, and who knows.
You may even find a couple of whales who just fall into your lap and are happy to pay VIP prices.
It all starts with setting up tiered pricing.