How We Solve

The 4 Step Process to Pricing for Value

Podcast, Sales

Ep 8: The 4-Step Process to Pricing for Value

If you’re an entrepreneur, there’s no doubt you’ve struggled with pricing: How do you ensure you’re charging the best rate for your services and offerings, without leaving money on the table?

On episode 8 of the How We Solve podcast, we invited Paul Klein to explain positioning and pricing. He’s a position expert, entrepreneur, and business consultant. He also hosts his own podcast — Pricing is Positioning.


Paul’s backstory:

In the late 2000s, Paul was doing very well for himself. He was settled with a $150k/year job at the height of the recession. He could settle in and coast to retirement at 55. But by 2009, Paul couldn’t do it anymore. He wasn’t excited, and he was bored — so he took the entrepreneurial leap into full-time consulting.

Here’s what he discovered in his decade of consulting:

Every company struggles with pricing, whether they are entrepreneurs, mom-and-pops, solopreneurs, to Fortune 500 companies and startups. 

So, in 2018, he pivoted again, away from his consulting business, into pricing strategy. Now, he helps other coaches and consultants with their pricing and positioning.


The problem: ‘Most people undervalue their expertise’

Every entrepreneur knows the double-sided pain of pricing. Every dollar counts, especially in the early days, so you never want to price a potential client out, leaving much-needed dollars on the table.

On the other hand … are you charging enough?

Most of us undervalue our expertise, our products, & our services, because it just comes easy to us.

And this is where the first battle lies, Paul said: convincing yourself how much you’re worth. If you don’t value your services, neither will the market. If you think you aren’t worthy of those higher rates, then something happens with your thoughts, your actions, and the way you present yourself to the market, an employer, etc.

You’ve got to have an unwavering belief in your value.

Once you have that mentality settled, you’re ready for Paul’s 4-step process to pricing:

Step 1: identify which type of service business you want to be

Essentially, there are 3 types of service business:

  • A commoditized service business. You don’t want to be here — it’s a race to the bottom.
  • A productized service business. This is where you create one product and it serves many people (ebooks, an e-class, etc.).
  • A customized service business — Where the highest value work lies.

Where do you want to be?

You certainly don’t want to be in the first category. Typically, you’ll want to position yourself in the third, most valuable category, as a customized service.

Step 2: Price on value

Here’s the mistake most entrepreneurs make when it comes to pricing;

They think it’s all about their offering and solutions, and they price accordingly.

But this isn’t about what you can do — it’s about what the client needs.

You must shift your thinking to learn more about the client’s needs and their desired outcomes. Then, you tailor your solutions to those needs, pricing your services to the value you are providing them. 

Pricing on value will set you apart from people who are selling from their own wallet.

When a potential client comes to you and says they want to buy your product or service, if you hand them a huge proposal which explains all the bells and whistles of your solution … you know what happens next?

The prospect skips to the back page, looks at the pricing and compares you to another competing product. 

When the conversation is about your solutions, you’re treated as a commodity.

But instead, if you have a conversation with your client, listening and diving deep into their needs, you’ll gain 2 things:

  1. You’ll have a relationship with your client.
  2. You’ll set yourself apart from the competition, because you aren’t just treating this prospect like another commoditized arrangement.

Step 3: Control the comparison

Always provide 3 pricing options, a good, a better, and a best

With that framing, your customer isn’t making a decision on whether or not they should work with you — they’re making a decision on how they want to work with you. 

Step 4: Anchor high

When you say, see, or hear a price, that price will always anchor the discussion & the value.

You want to set the expectation very high, early on. You can even say an absurdly high ballpark number in the beginning, and studies have shown this actually doesn’t hurt your chances of landing the project, Paul said.

But this isn’t about manipulation — whatever you charge, you should always be delivering more value to the customer.

My overarching goal is to eradicate the world of hourly billing.

– Paul’s life goal

This interview is part of the How We Solve podcast. To hear more from industry experts who are solving everyday business problems, check us out on Spotify, Apple Podcasts, and on our website.

This episode is featuring

Paul Klein

Paul Klein

Business Scaling + Pricing Strategy Consultant for Existing (and Aspiring!) Business Coaches & Consultants

How people can reach Paul:

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