Captain’s log, stardate 20200106
Sent by Jonathan Stark on January 6th, 2020
My wife is an avid knitter. She knits constantly. She teaches knitting classes. She sells knitting patterns on Ravelry. It’s a thing with her.
About a year ago, it came to my attention that there is an artist who makes gorgeous knitting needle gauge rings. I immediately decided to buy one for Erica.
The artist makes the rings in 14k gold and sterling silver. Erica’s preferred color palette is warm and she favors things from the gold color family over silver, which is a much colder color.
Note that she doesn’t really care about something being made out of gold… she just likes a gold color better than a silver color. For example, she has a number of watches and bracelets that are gold colored, but certainly not made out of gold.
So, I bought the gold version of the ring. It’s important to note that I didn’t buy the gold one because it was made out of gold… I bought the gold one because silver would not have matched all her other stuff.
The gold ring was about $1,000 USD, which I considered to be a perfectly reasonable amount of money for me to spend on the occasion and for a present that I knew she would absolutely love.
Fast forward a year. I wanted to buy a matching version of the needle gauge ring for myself. I don’t wear gold colored stuff… my colors are silver and black.
So I went to the artist’s website to order a size 13.5 version of the needle gauge ring in sterling silver. The price was only $150 USD. Huh? At first, I honestly thought it was a mistake. Maybe I was on the wrong website or it wasn’t the same ring or it was an earring or something. But no… I was in the right place. The silver one was just WAY cheaper than the gold.
You might be thinking to yourself, “Of course the silver one is cheaper than the gold one! Silver costs less than gold!” ... but that would be completely misunderstanding how people value things.
I was planning to spend about $1,000 USD, which I considered to be a perfectly reasonable amount of money for me to spend on the occasion and for a gift to myself that I knew I would absolutely love.
When I realized the silver one was a fraction of the price of the gold one, my initial emotional reaction was one of disappointment. Why? Because $150 was a LOT less than I wanted to spend. It wasn’t a big enough splurge.
The lower price made it less special.
Here’s the thing…
Your prices are the clearest signal of value that you can send to your potential clients. Pricing yourself too low is just as detrimental to your business as pricing yourself too high. Maybe more so.
Ideally, you should strive to attract clients who are expecting to pay a lot, and then meet their expectations in your proposals. You’ll both be happier.