Ep 5 - The Price Is Right: Navigating Profit, Perception, and Practicality in Business

  Welcome to this week's episode of digitally done where we are talking all things pricing. And I know that this is an episode that many people wait on. And I know that this is a question that I get asked a million times. And ladies, I'm sure you're the same. We will do a quick wraparound because in case you've missed this or in case this is our first episode. Hi, I'm your host for today. I'm Sam winch, but I'm joined by two wonderful other ladies as well. Nikki, do you want to start us off in a round Robin and tell us a little bit about you before we get stuck in. Okay. So I'm Nikki Kelly and I'm the founder of wisdom, which is a learning and content management platform for anyone who's sharing courses online, selling courses online, building communities, or running a coaching program. Hello. I am Lizzie. I am a copywriter and copy coach for small business owners and entrepreneurs. And really what I focus on is equipping these fabulous humans with the skills and confidence to find, use and amplify their signature voice. I always love your wording and I am Sam Winch the course creator, not the lunchtime food. But today we're not talking just about courses. We are going to talk all things pricing. And this is a really sticky one. Ladies, I don't know if you find the same when you talk to your clients and your customers, but how many times you've asked, what should I charge for this? And it's an interesting one because there isn't a right answer to this question, right? I've. I've yet to come across one. Yeah. I've yet to come across one right answer for how much should this be. Um, but I don't find clients find the, how long is a piece of string answer have very helpful. So we've got to come up with something else. That's not just how long is a piece of string. So let's talk all things pricing. Now we were having a bit of a debrief before we hit record. And one of the interesting concepts that we came up with were two of the concepts that we came up with. I think that is worth us touching on here today. Is profit and then value perception. And I think that while we could just tell you to charge 5, it's really not very helpful because we have no idea what your current expenses are or what's gone into your product or what the value of your product is or what's involved with running it. So let's still call things profit first, and then we'll move on to the perception of value. Nikki, I am going to start with you because I know you have a few things to say when it comes to profit, but what is profit? What does that even mean? Well, to me, it means you're getting some sort of return on your investment that you're putting into whatever it is that you're creating. And look, based on my background as a buyer, I'm all about the numbers. So profits a huge thing for me. And You know what? When you start a business, it is sweat equity. So some people do think that when they're pricing something, it's really just based on a value perception. And I agree entirely. There is a value perception there, but there is also the fixed cost, variable cost and all that sort of stuff. But I won't nerd you out on all that sort of stuff. a business studies in year 10. And then clearly not retained it particularly well. When we talk sweat equity is obviously that's the, oh, I say obviously, but it might not be obvious to some, but sweat equity is that it's the time we put into something, but it's not the only expense, right? Although a lot of our man hour goes into the building, what are some of the other expenses that people might have during this sort of creation process? Mm Well, there's obviously the costs, the running costs, you know, like some people just don't take into consideration, but they're things like, like when I say fixed costs is, you know, the costs to actually run your business, the physical things that you might have to incorporate, such as, you know, subscriptions that you have to commit to, to cloud tools that you might be using, or even, you know, support staff you might have, you might not have employing people, but you might be, you know, utilizing Consultants or whatever it is from overseas or wherever as well, their costs, they could be variable. But yeah, there's a number of things that do have to be taken into consideration. Yeah, I find that? um, when I'm talking to clients about courses as well, especially if the course is the only thing they want to sell, right. They want to make all their money selling courses that we have to consider all the business expenses. And we often have that conversation about, Oh, it's not that much money. It's just, you know, 30 a month on Thinkific or whatever. Like they just pull a number out for the software, which is cool. But that's not their only business expense, but if courses are their only income, we need to consider things like their GST, the money they pay their accountant, the money ...