Trading Value with Money

First, I want you to understand what business is. In a simplified manner, business is nothing else than trading money against some form of value. This can come in all shapes, like products or services. The faster you understand, that your product or service needs to deliver value to your customer, the better you can make your product as well. So if your product is not giving any value to the person using it, it won't be successful. Making a very good product is the first step. When that's the case, you can continue thinking about how you want to price it. And we want to chase for high price tags because we also deliver high value. Both are connected.

My Hexagon of Value

I collected six important aspects a product needs to fulfill, to earn the title to be a "high-value product" that also has a high price tag.

1. Relevance: Address current needs, pain points, or interests of your target audience and solve them with your product.

2. Practicality: Make it easy to use and work with. Make it actionable and user-friendly. Your product needs to solve a problem!

3. Return of Investment: As touched on earlier, make sure your product generates money for your customers. This can be theoretical (e.g. course) but also practical (e.g. template).

4. Cost-Effectiveness: Make sure your product is the most cost-effective solution for your customer, while still bringing you the highest ROI possible for yourself.

5. Reliability: Products that can be trusted to work safely and reliably each time they're used have high value.

6. Durability: Products that are well-made, durable, and long-lasting often have higher perceived value because they don't need to be replaced frequently.

Apply those six aspects to your product to make sure it's valuable. Now, the next step is to price your product well.

The 50x Rule

I love to test my pricing and have proof that it's fair as well. Ask yourself if your customers can reach an ROI of at least 50x if they buy your product. Ideally even more. You can calculate it very easily with the 50x rule: Your price x 50 = Your customers' potential revenue.

Let's have my online course framer.money as an example: The course costs $149 as a minimum price. The knowledge and skills it provides, let the person build a Framer template business with a revenue of $10,000+.

This means the course has an ROI of 67x (10,000 / 149 = 67) of the entry price. And $10,000 is just the revenue I communicate on my landing page where I sell the course. I did over $30,000 in the first half of 2023 and going to double this by the end of this year. While taking action on the steps that are mentioned and explained in detail in this course.

So technically, it's not a 66x ROI, but a 400x by the end of this year. If we look at it from this angle, the course is massively underpriced, isn't it?!

Anything that enhances earning power is a worthwhile investment. So build products that earn people more money. Pretty simple!

Don't Undercharge Yourself

Many individuals who have much to offer often undervalue and undercharge for their services. Why is this? Seek for pricing your work high. There are various reasons why. Firstly, you invested so many years in learning this skill. Maybe you even paid for university. You already paid so much money by yourself. Also, the time you needed for all this is now gone. Don't make the mistake of not taking enough money for this. You deserve it if you get better every day!

Believe in You(r product)

The price of your product directly reflects what you think of its worth. So make sure to create a high-value product of which you can be proud!

Wrap-up

Business is the trade between money and value. Make yourself or your product as valuable as possible. Price it confidently right with the 50X rule. Believe in yourself and price higher over time.