People, Pricing, and Value. It’s About Time
This has nothing to do with selling people, but then again, it kinda does, but not in that way. The most valuable thing in business, or life for that matter, is not a product, or what it’s worth, it’s your time, and what it’s worth. People who buy services seem to forget this. That is why it is your job to show them the value of your time.
Now you’re thinking, “Great! How can I sell my time and make a profit?” That’s not a new thought, it’s done every day in workplaces across the World. If only our time wasn’t a limited resource, because a 24-hour day doesn’t stretch as far as one might think, when we consider that we have to eat, sleep, rest, play and exercise to remain a healthy production unit. Add in family, and life responsibilities, and you begin to understand that working for yourself and making money off your time can be a risky proposition. But make no mistakes about it, the more you see yourself as a producer, the more finely you can tune your hours, expenditures, and investments to help you succeed.
Looking at Penny Profits is a good way to start economizing. Penny Profits are the amount of money that you make from selling a good or service, minus the amount you paid for the product, or the amount you put into providing that service. Because we’re looking at time, the service industry is a good place to start. Imagine you designed mobile wallpapers and desktop artwork. The amount of time that you put into your design does not cost you anything, but it takes away from the time you could be spending working on a more profitable product or deal. On top pf that, you have to look at what it took out of your pocket to make that artwork, the new computer you bought ($1,500.00 financed for $111.00 /mo.) and the Adobe software you subscribe to ($12.00 /mo.). To figure out your penny profits, you add your monthly expenses, 111.00 + 12.00 = $123.00 and then you subtract the amount that you made from selling wallpapers, and that will equal your Penny Profits. If your wallpapers are priced at market value, you will sell one wallpaper for $1.00. It would take 123 wallpaper sales just to pay the monthly bills that it took to create those wallpapers, and remember, you still have not paid yourself yet for your time.
Paying yourself a salary is one of the most important things you can do when you are self-employed. It’s not good enough to assume that you will take what remains after your pay your monthly business bills. After all, you have your own personal utility, rent, food, entertainment, education, health bills etc. By establishing what salary you are going to pay yourself monthly, you have a better idea of the value of your time. A person who wants to make $60,000.00 a year can expect to work a 9-5 week at That’s $5,000 a month, $166.67 a day, or $18.52 an hour. You have to account for your time/ salary as an expenditure for making the wallpaper, so you add your monthly salary to your monthly expenditures, that’s $123.00 + $5,000 = $5,123.00. Automatically, your wallpaper becomes way more expensive to produce.
Now, the question you all want an answer to… “What’s my profit?” But not so fast, you still need to establish a price for your wallpapers in order to determine that, because at a dollar a paper, you’ll need to sell 5,123 individual papers a month in order to break even on your investments. All of a sudden, you start to sweat. You know that there’s no way, given the traffic you have, that you are going to achieve those kinds of sales, especially not with the artwork you were able to create in just 4 hours, time. Here you have two options 1) raise the price of the wallpapers, which risks alienating your customers 2) increase your wallpaper variety, which means putting in extra hours of investment that you won’t get paid for. Here is why the second option is best.
Now that you have a variety of wallpapers, you have the ability to cast the net further, with the potential for multiple transactions, and the ability to see which papers are preferred. You have inventory so you can play around with pricing and quantities. Obviously, the better selling papers should be priced higher than the others, because they are more valued. This is an exciting prospect, because it allows you to offer what is perceived as a discount to the customer, on the other papers that are not as highly valued. Value to the customer is key. You must make them understand the value of what is being sold. Yes, value as in less expensive, but also, value as in Quality. Once your value is communicated, your high-end buyers will be satisfied, as well as your low-end buyers, and that’s when your net is cast widest.
By pricing the more downloaded papers at a higher margin, you become able to offer the less desirable papers at a lower than market price. If a wallpaper usually costs around $1.00 your comparable wallpaper for $0.75 is going to look like a great deal. Meanwhile, you have your monthly expenditures in mind, so you price your more wanted wallpapers at $2.00. It’s a long shot but depending on how you value those better liked papers, it’s more likely that they will sell. “Limited Time Only,” “New,” “Premium” “Limited Edition” are all ways of justifying a higher price, when what really justifies it is the customer’s sales, or, the paper’s proven like-ability. Making something rare increases its perceived value, which justifies the higher price to the consumer, and even though they can’t see the backend sales, you know, that strategically the move to increase their price is justified. See now why you just invested un-paid hours in increasing your stock’s variety instead of just hiking the price per paper on a limited stock?
Value can be perceived by pricing or quality, and people buy valued items, but really, the pricing that draws people is about your time. So, get out those time sheets, work-back schedules and status reports for your home businesses. They may take time, but you’ll find them very valuable.