You have a product, service, or potential sponsor and you have no idea what to charge. Some questions you may want to ask
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David Jackson 0:00
So you've got a product or service, you're getting ready to put it out on the market. And then the question comes up. How much should I charge for this? Yeah.
Wayne Henderson 0:11
Welcome to profit from your podcast, proven strategies to turn listeners into a livelihood. Here's your host, Dave Jackson.
David Jackson 0:22
I saw this question come up in a Facebook group. And I thought, surely I have an episode on this. And it turns out, I don't. And I know I talked about this in the book, I'm going to share some things from that I know I have talked about getting sponsors in the past because I talked about Glen, the geek, and his magazine. Tip, I'll have a link to that out in the show notes. So here are some questions. Here are some thoughts when it comes to pricing, your product or service? Number one, how niche is your audience. And what I mean by that is, if you have an audience, or podcast, or service, or whatever it is, it's designed for, let's say, men, over 50, who are overweight. Yeah. And then there's a product that wants to sponsor your show. And they have a product for men who are over 50 and overweight, well, you have their target audience. They don't have to go in Shape magazine, and men's health, and blah, blah, blah. And that meant now you've got their target audience.
Now you might have a smaller audience, but everybody there is quality. It's exactly who they are looking for. Number two, what problem do you solve? And if you think about it, if you have a product or service, then what does it solve? Because when I look at people that are that have sponsors that have products that have services, they're solving a problem, because people will pay money to either save them time, save them money, reduce stress, it's a problem that they have, and your product or service, or your advertiser solve, then in the same way,
David Jackson 2:17
how much time are they going to save? How unique again, going back to how niche, these are all things that you think about, hey, once you take this course, and here's the problem, we'll talk about this in a second, we all undersell ourselves. Because we forget the pain we went through to accumulate the knowledge in our head if it's a product or service, we forget all the times that we went through and, you know, think about it, you get paid more when you go to college because you spent a lot of time reading about this subject. Now another thing to think about, can you make money with your skill, I have hired coaches in the past to help guide me keep me on track, and just give me an outside opinion on what I'm doing. And they are not cheap. They're not. But when I follow their advice, I end up making more money. So consequently, I put out a fair amount of money. And it takes a little bit of time to get that money back. But in the end, I am making more money when I'm done.
So it pays for itself. In the long run. Let's talk about how are you going to charge for this stuff. And in 92% of cases, you want to avoid costs per 1000, better known as CPM. Right now, according to advertise cast, which is a very large company that helps you get connected with sponsors. The average CPM is $25, which is two and a half cents a download. So let's say you have 800 downloads. So if we take point 025 and we multiply that by 800. It is $20. And if you go now if here's just one-way people will go okay, I'll just put five ads in my episode, I'll make 100 bucks an episode. Yeah, who's gonna listen to that? Think about that.
So CPM does not work for many people. So what I recommend is what I call playing the pricing game. And this is where you go well, okay, what if I charge $25 per episode? And you might go, I don't know, I think we can get more than that. I mean, I've got X amount of people listening. You go, Okay, what about 50? You know, like, yeah, that's Oh, okay. And so he goes, Okay, fine. What about 200 $200 An episode and go I gotta come up with a win-win for myself in the sponsors. Okay. Well, what about 125? And you're like, Yeah, I think that you know, basically, go up been down that chain because eventually you're gonna get asked too much. Now I'm gouging the sponsor, or my, I don't think my customer and you think I'm pricing myself out of my customers budget, that's not gonna work but go up and down that scale.
And then here's the thing, when you come up with a price that you are happy with you okay? You know what I'm gonna do $95 An episode. I think that's a good fit for both myself and my sponsor, or I'm going to sell a course. I'm going to do below $39 a month. Okay, great. Whatever you just landed on. It's not enough. I'm just here to tell you is that we undersell ourselves, myself included. And then the other thing you have to keep in mind is your motivation. And I'm really talking to myself right now. I love to help people. I'm a teacher, I love to help people.
So I am torn between charging for what my product is worth. And if I charge it too high, then I'll get less people and then I'll get less people to help. No charge what it's worth. And then keep in mind, the perceived value. little story here. When I first opened up the school of podcasting, it was $5 a month. Five, yeah. Because I wanted to help a gazillion people. I wanted no kind of barrier to join. And I thought, Man, if I could get 100 people to pay me $5 a month, there'll be $500 a month, and at the time, I was just looking for extra money. And finally, a good friend of mine. And this is how you know they're a good friend when they tell you the hard stuff. He said, Dave, do you know anything? Anything on the internet that you can buy for $5? And I went?
David Jackson 7:03
And so over the years, I have raised my price and raised my price. And what I ended up with were people that not only took my courses, but in this case, the courses are how to podcast, they actually created a podcast, I had people that were signing up. And sometimes people say I got no skin in the game. But people would sign up, they would give me money for months and do nothing. Because there was no pain point, which is weird, because you're like, Well, this is my customer, I don't want them to cause I don't want to cause them pain. But if you want people who actually want to consume your products and services, and then use them for whatever it is you designed, so that people go, Oh, that's really cool. Where did you learn how to do that. And they go, Oh, I read this book, oh, I took this course, oh, I have this coach, whatever it is, you want them to do that. And they're not going to do that. If they don't do whatever it is you're selling. If they don't read the book, they don't take the course, if they don't follow your directions.
Another strategy is to use Google to see who else is selling something similar for talking about products or services, or to see if you can find out what other people are charging for sponsorship. And the problem is, this creates what many people call a race to the bottom? I'm going to undercut them who undercut them. And now we're back to that area of perceived value. So sometimes looking at your competition, not look at your audience, how much does your product or service transformed them. And in just a second, I'm going to reveal to you the pros and cons of Black Friday sales, Black Friday sales or just deep discounts in general. And what's so dumb about this is occasionally I will forget this and try one. And it is pretty consistent, that if they don't work now you'll get more sales.
But I just talked about you want people to be walking billboards. That's one of the great ways to have a marketing strategy is to have people consume your products and services to where people go, Hey, how'd you lose all that weight? Oh, I have a coach or I read this book, or I took a course or whatever it is.
I remember once I did a Black Friday sale, where I think I cut the price by like 80%. And that is one thing we're going to talk about here in just a second is what is the cost of your product, but nonetheless, I did this huge discount and had a fair number of people who signed up and again, a large chunk of those people did nothing. They did nothing. They're like that every time I took out Got this little itty bitty bit amount of money from their bank account they didn't even notice. And you might say, well, that's great. That's really not what I'm in it for.
Again, I like to help people. And so there was that. Then the other thing is, and I have to watch how I say this, but there are people. In some cases, look, I am frugal, I am cheap. And I try not to do this. But the people that paid the least amount of money, also then complained the most. They expected me to almost record their podcasts for them and find their ideas. And they really, their expectations, were not realistic.
Now, I don't want to paint too wide a brush of that to say that all people that want to pay next to nothing, expect way more, but in my travels, maybe a little bit, I'll give you one more story, I just did this. And I was like, ah, what was I thinking, I have a lead magnet. When you sign up, you go through, I think he gets about five or six emails from me. And at the end of each one, there's a call to action, there's a call to action. And at the very last email says, Hey, I noticed you've gone through the whole course now, hope you enjoyed it, I can't help but notice that you didn't sign up. And here is a link. And what I thought I would do is 50% off the first month. So it's not a discount forever. It's a discount to get them in the door. And I had somebody sign up.
They then consumed about, I would say 10 out of 14 ish classes, and then asked for a refund. Now I offer a 30-day money-back guarantee. And I asked the person I said, was there a problem with the courses? Did you not learn anything? Nope, loved it, everything was great. I just decided I want my money back. Because I see where you have a money-back guarantee. So I might want to look into exactly, you know, maybe adding some specifics there to like just like, hey, you can steal all my content, put it in your head, and I'll give you your money back. But here again, again, somewhat painting with a wide brush, that may be lower your price doesn't get you as good. I have to watch really you know what I mean by that right?
Now, the other thing we haven't talked about is what does it cost for your product. And this is where you have to think about it. If you're doing a product and service yourself, well, you have an email list, you have a website, you have, you know a media host, if you're doing a podcast, you have all these different things, you have a CRM that you're paying for what is the cost of running your business? And then again, looking at how niches your audience, how, what kind of problem do you solve? How much time do you save them, and then you want to get your money back, you want to do more than break even. And I was looking at Shopify, which is a very popular shopping cart. And they say research research shows that the average gross profit margin for retail is about 53%. So if you have something and it costs 10 bucks to make, well, you want to charge at least 20 is what they are saying. But you have to think about that. And also think about especially with courses, think about the time it took to make those courses, because that is the time that you're saving your audience. Now, granted, they're gonna go through those videos, and they're gonna go through those PDFs or whatever it is you're giving, but you're saving them a lot of time and it took a lot of time for you to create those, and you should be paid for your time. shouldn't give that away for free.
So what is the price of the product is another thing that you need to figure out. But my bottom line on this is, you're probably going to under charge every time I have attended a webinar. Anytime I've read a book. Anytime I've read an article about charging for your products and services or sponsorships, you're probably going to underprice it now with sponsorships. Again, it's really going to depend on how niche your audience is. And what I've done is I've just changed the price. And by that, I mean I started too low. And as I said, I had people that wouldn't buy it because it was too low. I started raising it. And I've kept raising it over the years. I just raised my price again. And I gotta tell you, it feels kind of bad when you almost double your price. And the next day somebody buys it at the new price. There is a very loud voice in your head that goes does that mean the last five years I could have been making twice as much money And it appears the answer is maybe, yeah, you don't want to answer that one. But so you can always go up, it is a little harder to go down. So keep that in mind. The other thing you can do is, pull your audience, pull your newsletter, hey, I'm launching this product, here's what it does. I'm thinking of charging this, this or this, what would you pay to do this and get some feedback now realize a customer's always going to charge. Oh, he's going to pick the lower one. But that is another way.
When in doubt, I say this about all things podcasting. Ask your audience, I have more tips and strategies in the book out at profit from your podcast.com/book. And I'll even sign one for you and send it to you if you're in the U. S, A. And again, that website profit from your podcast.com/book I'm Dave Jackson from the School of podcasting.com. Thanks so much for listening. If you know somebody who is trying to come up with a price for a product or their little, little not sure about things to send them over to profit from your podcast.com/book It's a great book. It's got great reviews and that's the last thing I'm gonna say. If you've purchased the book, and you read it and you liked it, do me a favor and leave a review for it at Amazon. Everything you can find is out at the website. profit from your podcast.com