Value is subjective
If you’ve been around awhile, you know that I LOVE thrifting. It’s got sustainability, it’s got bargains, it’s got unique and out-of-the-ordinary finds. Yes, please.
Therefore, I spend way too much time on Facebook Marketplace. And of course, that means I’ve found a business analogy to bring to you today.
(Caveat: I’ve never even tapped into their shipping feature—I strictly do local pickups and sales. And this is basically the only way I still use Facebook, barring keeping tabs on what’s happening with community events and occasionally checking on a couple Facebook groups.)
Lessons from Secondhand Shopping
So, with secondhand shopping, it’s often—but not always—a race to the bottom when it comes to pricing. Basically the opposite of how I advocate you run a service-based business or an ethically-made product-based business.
Why would I buy a baby gate or a pair of shorts or a desk chair for $45 when everyone else on the platform is selling it for $10? Unless the piece is HIGHLY unique or EXACTLY what I’m looking for or I need it URGENTLY, it’s a no go.
I can’t tell you how many times I’ve messaged a seller to negotiate the price and they wouldn’t budge “because it’s new” or just because they think it’s worth the listing price. But if they needed or wanted it, they wouldn’t be selling it. [Barring extreme financial distress, which I do what to acknowledge as a possibility.]
And what people don’t understand is that it doesn’t matter how much they paid for it. Doesn’t matter that it retails for $65. Doesn’t matter that they used it once. Doesn’t matter that it has sentimental value to them.
Value-Based Pricing
When it comes to value-based pricing, it’s all about how much the buyer values it, not how much the seller does. Just look at the housing market as a macro-scale example.
Nothing—including all our wonderful services that we put our heart and soul into—has inherent value.
People aren’t buying a pair of shorts; they’re buying an expression of their personal style. They’re not buying brand messaging strategy; they’re buying the confidence to show up in a way that feels good to them and that reaches their customers on a personal level, which ultimately increases their revenue. They’re not buying a house, they’re buying a safe neighborhood and a space to make family memories.
Taking Yourself Out Of The Equation
Jordan Gill (Done In A Day creator*) says, “Stay out of your clients’ wallets.” Aka don’t put your money mindset blocks or your personal budget constraints onto your clients—price your offers at a level that matches the value (aka the transformation) you provide.
Jonathan Stark, THE value-based pricing guy, has built an entire business (complete with a daily email newsletter) around value-based pricing and how it’s better than hourly billing. His approach is specifically for project-based work, but even you product creators should consider what your customers are really buying when they invest in your brand.
Yes, you need to factor in your profit margin, your personal income goals, your responsibility to pay team members, etc.
But the biggest factor in your pricing should be the *perceived* value you provide to your *ideal audience,* not the price you’d pay for whatever you’re offering.
Creating Your Value Proposition
So, rather than pricing low for the sake of it, reflect on what it is that people get from working with you. What makes the experience special? What about your approach exceeds expectations? What’s the main thing you’re giving them or removing from their life?
Then price accordingly.
That value-add—your “unique selling proposition” or your “value proposition”—should be seen and felt across your entire brand. (Getting this into a concise statement that actually rolls off the tongue is a core part of my Messages That Matter VIP Day and has been the topic of many of my most recent Quick Win Consulting Calls!)
A whole other layer to this pricing puzzle is not just the value you provide but your brand values. We’ll dive into those next time.
In the meantime, let me know your brand’s value-add. Or reach out if you haven’t nailed it down yet and want some feedback!
This is an excerpt from Toward Purpose & Progress, my newsletter where I share business tips, good news, shoutouts to Founder Friends, and other juicy snippets. Subscribe here for more rants, reflections, and resources.