Captain’s log, stardate 20180602
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Max Price Formula: The Second Needle
Sent by Jonathan Stark on June 3rd, 2018
A few days ago, I presented you with a formula that describes my mental model of the three things that dictate the maximum price a buyer is willing to pay for a product or service:
( BUYING POWER * DESIRE ) / AVAILABLE OPTIONS
Yesterday, I talked about the first needle, BUYING POWER. Today I’m going to talk about the second needle:
According to Google, desire is “a strong feeling of wanting to have something or wishing for something to happen,” which I think is a nice concise definition of exactly what I’m referring to by DESIRE in the Max Price Formula.
Here’s a longer definition of desire from Wikipedia:
Desire is a sense of longing or hoping for a person, object, or outcome. The same sense is expressed by emotions such as “craving”. When a person desires something or someone, their sense of longing is excited by the enjoyment or the thought of the item or person, and they want to take actions to obtain their goal. The motivational aspect of desire has long been noted by philosophers; Thomas Hobbes asserted that human desire is the fundamental motivation of all human action.
This definition is broader and more comprehensive but still aligns with (or more specifically, contains) what I mean by “desire” in the formula. I especially like the last bit about desire perhaps being the fundamental motivation of all human action.
At the risk of stating the obvious, desire is something that exists in people’s minds. It’s not an objective, inherent quality of a person, place, thing, or outcome. Sure, we might say something like “the East Side is a desirable neighborhood,” but “desirability” is not an objective quality of the East Side. What we actually mean is that historically, lots and lots of people have expressed a desire to live on the East Side.
This distinction - the objective vs subjective nature of desire - is critically important to understand. It is very easy to mistake one’s subjective desire as an objective truth. This sort of misunderstanding is expressed in conversation all time with statements like, “The most droolworthy watch in the world is Patek” or “a brand new Range Rover is worth $80,000” or “the East Side is a desirable neighborhood.”
Each of these statements leaves out a critical piece of information - namely, to whom? Desire does not exist in the abstract. It’s a feeling that exists (or doesn’t exist) in a buyer.
Speaking of buyers... let’s talk about moving the desire needle in your buyers.
What do your buyers desire?
This is a bit of a trick question because first you have to define who your ideal buyers are in order to answer it. If you are trying to be everything to everyone, you can’t answer it because everyone desires different things.
Not everyone wants to live on the East Side or to wear a Patek or to drive a Range Rover.
But let’s say you know who your ideal buyers are. What do they desire?
- A promotion?
- More leads?
- Regulatory relief?
- Less customer churn?
- Better search rankings?
- More discretionary time?
- Improved employee morale?
- A better close rate?
- Bigger impact?
- More profits?
Every single one of these desires could potentially be advanced with software development, graphic design, photography, copywriting, or whatever else your craft might be.
But if you try to attract buyers by talking about how good you are at your craft instead of connecting the dots for them about how your craft can help them achieve what they want, they will not be motivated to buy because you haven’t tapped into their desire.
Decide who your ideal buyers are, find out what they desire, and connect the dots between what they want and what you do in your marketing.
Tomorrow, we’ll look at the third needle:
P.S. Are you sick of the feast/famine rollercoaster? Check out my book -> Hourly Billing Is Nuts
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