How to Accurately Price Your Products and Services – Ask Clay Anything

Audio Transcription

Two men, 13 multimillion dollar businesses, eight kids, one business coach radio show. It’s the thrive time business coach radio show with Dr Zellner and Clay Clark

all thrive nation. Welcome back to the thrive time show on your radio and today we’re talking about how to accurately price your products and services. My name is Clay Clark. I’m the former US SBA entrepreneur of the year and the father of five human kids, Paul Hood. How are you doing this morning, my friend? I am amazing clay. It’s a great morning. I’m excited to talk and share and learn frankly. So how are you this morning man? I am excited to talk about today’s topic because I feel like this is going to be very helpful, very practical for a, I would say at least three quarters of the listeners out there. If you’re in a small business, this topic is for you. It’s how to accurately price your products and services from page 69 of your book. I’ll look under the hood, which all the listeners can buy ’em on Amazon.com and look under the hood with Paul Hood.

So let’s get into this real quick. So first off, the business model, whatever business you have, that business exists to serve you. Let me repeat that. No matter what kind of business you have, that business model exists to serve you. So I want us, I want to just dive deep into that idea first and Paul kind of share my experience. I’m going to give the majority of the segment to use so you can kind of share what that means to you. So I’ll give an example. Elephant in the room, that’s one of the businesses that I’m involved in. Elephant in the room. It’s a men’s grooming lounge. When we built the business, I want to make sure that it serves me and it also has to serve the three P’s. So imagine it’s like a stool in sitting on the stool is me because the stool exists to serve me.

Okay? The stool exists to serve me, so I’m sitting on the stool. The stool, the surface of the stool of the stool represents me and my happiness. Now, the three legs of the stool are like this leg. Number one, we have got to have great people, got to have great people. I don’t care how much I’m excited about the business. I don’t care how awesome my business plan ends without great people. It’s not gonna work. The second, we’ve got to have a product that people are passionate about it. We have to make a product or a service that the people love the product or the service has to be awesome. Now, the third, we’ve got to make a profit because I see so many business owners who don’t get that idea. You could have great people and you can have a great product, but if you do not make a great profit, nobody wants to work for a homeless man. Nobody wants to work for a business owner who has car that doesn’t work.

Nobody wants to go, hey guys, you want to come over to, uh, the holiday parties. It’s, I’m the boss. I want to have a holiday party at my house. And the employee say yes. Where’s it at? And you say right over there at the intersection of one 69 and 71st, right? If they go in that, in that, in a housing addition, a no, no, no. I mean right there at the intersection. You meet over there by those, those new houses? No, no, no. You mean by those apartments? No, I mean I literally live under that bridge. That is where I live because I am so humble and so servant minded and I’m so all about serving my team and living below my means and man, I actually, we don’t make any profit at all. You guys get paid. The product is awesome, but I never make a profit at all.

So I actually live. I kind of view myself as a modern homeless profit. I live underneath the overpass because I refused to make a profit because I care so much. Paul, about the community, about the employees, about my customers that I don’t make a profit. No, no, no. You have to make a profit. So Paul, let’s get into those three legs right there. Sounds good. So the, the product, talk to me about why does the product that you’re offering half to be awesome as you’re factoring in, how to accurately price your products and services. Why do you first have to design a great product? What clay? Have you ever heard of a guy named Tj? Tj. Tj. Tj, yeah, yeah, yeah, yeah. Okay. So he, I was listening. I’m a little tongue tied this morning. Um, I was listening to him and he says, you know, I don’t.

Every time I listen to me, he says something profound and I just got to stop and write it down. This morning. I was listening today and he said, the value is determined by sacrifice where there is no sacrifice. There is no value. Oh, come on. Yeah, that’s strong. I’m. If you sit down and you just save on those words and thinking about real quick, can you say that again? Paul is kind of get my, I want to get my mirror in Asia and just get the marination go. Seriously. This is. Say it again. Oh, here comes value is determined by sacrifice where there is no sacrifice, there is no value. So yeah, so whether you’re sacrificing money, you know, we exchange time for money, we exchange our efforts for money and then then you go and buy things. So the general public buys things and, and so they are sacrificing literally when they exchanged money there, they’re sacrificing the most invaluable thing to have.

And that was the time that was used to generate that. So you have to have a product that has value to convince people to sacrifice that money that they could be using for other things. And so you have to solve a need. You have to create excitement in, in what you bring to the table. And uh, sometimes you know, let’s say you’re a plumber and so sometimes that excitement is just to fix things that are broken. And so that’s, I think if you, if people would think about and understand that the consumer is sacrificing their time, that created that money to buy their product, I think they’d have a better view of, um, kind of what they’re trying to push or what they’re trying to sell. And I want to hammer, I want to

come into agreement with what Paul just said and give you very specific examples. Years ago I was working with this bakery, true story and this lady made unbelievable, profoundly awesome cakes. I mean the kind of stuff where she was winning awards, but the place where you would go to meet her for the consultation, if measure you’re getting married and you’re going to go meet with this legendary bakery you’ve heard about, you know, this lady who can just really make cakes. You go in there and Paul, tell me how this would work for you. You go to this obscure shopping center and the ceiling tiles are super low and they’re stained. They’re like Brown stain, but they’ve got know white ceiling tiles and it looks like it was decorated. Um, you know, by somebody who worked for the department of motor vehicles or it was decorated like they took over a, um, a local, uh, uh, you know, Dmv, a local tag agency and it just, it looks really, really rough.

I mean, wasn’t good. So I proposed this to her and you tell me, Paul, why I would do that as a business coach. I said we have to move downtown Tulsa or someplace iconic and let’s be next to a hotel or a business that’s thriving. Okay? And let’s make sure the windows you can look in and you can see you actually decorating the cake. You look through, you’re always seeing your people at work. And then let’s call it kc meets art. So we’re going to hang frames from the ceiling so it looks like the cake, the sample cakes you have are actually in frames. And then we’re going to have a screen and on that screen it’s going to show all of the cakes being made. And, and then we’re going to have the floor. It’s going to be like checkers from the fifties. And we’re going to have this.

Oh, we’re gonna do a new logo, new website, new new, all that stuff, new photos of everything. I get all that done and then we’re going to give people free samples. When they come in, they’re going to get free samples of any flavor you want, any flavor you want. So when you come in, you get a tour, you get free samples and Nim. W we’re gonna do is we’re going to raise the prices right now. All your prices were raising the prices by 15 percent right now in order to afford to give people free samples and to provide that ambience, it helped her dramatically improve sales. We’re talking about a woman that used to do like $3,000 a week of sales. We would go to like 22,000 a week in sales. Can you share with listeners why we were able to charge more as a result of the branding? Paul [inaudible]? Why we had to raise prices? I mean, could you could have a lot of people out there have they want to offer the free cake? They want to offer the awesome office experience. They want to offer these things.

They’re not charging enough money to do it. Can you please walk us through why that branding and perception. It’s so powerful. Yeah. Clay. Well hang on. I need you to clarify something because you know, just like always when you speak, I take notes because you know it just every now and then I’ll just get a little nugget and its, it’ll make me a lot of money. Did you say new pictures or did you say nude pictures? Well, that right there.

That’s where the client, where the situation got a little weird.

I said we’re going to put nude pictures everywhere. Doesn’t buy cakes. Naked bodies everywhere. And when you walk in you will be so offended. No, no, no, no. New. New, new. Okay. Let me change that. Let me tell you my notes. Nude. I had to change that, my picture quick in my notes. So what, what happens is you get that wow factor there. So competition, um, you know, if you, it’s very rare that somebody will develop a product or a service that is just so revolutionary, nobody else can do it. So what you have, what you have to understand is you’re competing, you got competitors, and you’ve got to have that wow factor and the reality is is you’ve got to, you’ve got to get them in the door. Once they’re in the door, then you can show them your amazing product, but clay, what you’re really good at is just getting them in the door.

Whether that door is a virtual door on the internet or it’s actual door when they walk in. And so what you’re talking about is somebody walks by and you go, oh my gosh, I got to walk in and see what’s going on. There’s a lot of what’s, what are these picture frames have to do with with the cake and what are the. And so you’ve got that wow factor to actually open the door before they even taste the cake. And then once you get them in and you see the value again, value sacrifice, they’re going to be a customer for for a very long time.

So I advocated raising the prices to improve the branding. This is the part where I got a lot of pushback on advocating, raising their prices too for the branding. Then the second part I got pushed back on was, hey, we got to hire great people and this really, really irritated a lot of people because I said, hey, the people you have right now are not good. I mean like, what do you mean? I’m like, you’re hired people. I’ve literally, you’re paying them eight, 25 an hour and you have some of the most wretched a mean, angry, contained chorus people. And I know this because we’re recording the calls now and when the phone is answered, it’s terrible. We’ve got to raise prices and hire good people and this is a true story. We hired some people that use, they used to work at starbucks. By the way, starbucks does a great job hiring people. We hired one lady who used to work, um, I can’t remember. She was, she was at a very nice hotel in downtown. We got her and these are people that are, you know, more of like 12, an hour plus commission or they’re not gonna. Think about that. Job, you know, 12, an hour plus commission or they’re not there. They’re going to think about that job. Can you talk to me, Paul, about why you can’t underpay and then expect to find good people on the planet earth during today’s economic system?

Absolutely. Yeah. I’ll give you a very specific example. Um, I, I like to go to starbucks. I’ll go into Mcdonald’s every now and then. And, and uh, even though they have the same systems, like across Mcdonald’s, I’ll go in one Mcdonald’s and people are happy and smiling. I’ve gone into Mcdonald’s. It’s very consistently. You walk in there and the people are yelling, the workers are yelling at each other, arguing out there and, and they don’t use bad language, but they’re literally not happy people. I swear we need some fries over here right now. I will come to freaking Mcdonald’s. They swear. Yeah, go sit down. I’ll get to you. I get to you. Yeah. So you know, you, it’s, it’s the same thing with the cake analogy. What you’re talking about helping hers is the perception. You know, I don’t remember what that Sitcom used to be, but you know, everybody wants to go where somebody knows their name and cheers. Yeah. So I, you know, I walked into starbucks and they’re in the. I don’t know if they’re psychic or what, but they know my name. Hey Paul, how you doing this module? Have a great day. Thanks for coming in. And Paul, you’re going to go on this one. Mcdonald’s and you know, the only way. No, yeah, yeah. You feel like you’ve got to put your boxing gloves on to get your, your mcnugget.

Welcome to freaking Mcdonald’s. Whatever your name is. If you want to sit over there, we’ll probably get to you or whatever. Shut up. Shut up. Shut up. I’m trying to be nice to have freaking customer. That’s exactly. What was your name again? Mitch. All Right, Mitch, welcome to Mcdonald’s.

But you know, like you said, when you get them in the door, you know, you do all this hard work, all this money to get them in the door and if they don’t have a positive experience when they walk into your establishment, they’re not coming back. So it’s not about getting them. You’ve got to get them in and then you got to get them coming back. And so just like anything, a football team or whatever, you’re only as good as your weakest team member.

This is so huge. Somebody needs to get this. You’ve got to have the three p’s before you can build a business that serves you. GotTa have great people factor that. Write it down. What does it cost for you to have great people? Great second. You got to have a product that wows people. It can’t be just good. I went on and on and on helping this lady with her cake business. It was unbelievable how much growth we had, but I felt like I was just fighting her every single day. I’m like, listen, the plates that you’re using to serve the cake samples are terrible. Get Nice plates. I can’t afford it. Okay. Raise prices to raise prices. My loyal customers. How wide is your loyal customers? Live in a bus. Stop it. Stop. Because when you have crappy products, it attracts people. Who are you?

Have you have bad customers? The a bad employees? It’s it. They call it in the book, good to great. He talks about this. It’s called the doom loop, but it’s where you have really low prices and really, really low expectation customers and really low motivation employees and it just who welcomed to freaking Mcdonald’s. I swear. Welcome. How are you? Good. Good to see. Shut up back there. I tried to make some freaking price. Anyway, back to Mcdonald’s. Hello, I’m in the kit. You’re going to have a weird culture when you have low prices, low product, low, low, low quality product, low paid people. Step up your game and you’re out there and you. You don’t have an accountant that is proactive. Step up your game a little bit, my man. Step up your game and look for an accountant who’s as proactive as you are. Go to [inaudible] dot com. That’s hood CPAS.com and Paul Hood, my good friend and cohost of the show. We’ll give you a free copy of Warren Buffet’s book, snowball and an hour of his time. It’s a free consultation. It’s a copy of Warren Buffett’s book. Get it today at hood Cpas, CPAS DOT com.

What time you got money to burn,

how to accurately price your products and services. A business exists to serve you. The stool you’re sitting on, figuratively speaking, exists to serve you, but the legs, the legs of the stool, legs that your business is built upon, that you’re that the business that serves you, is built upon is you must have great people. You must have a great profit and you must have a product that wows people, but you’ve got to factor in what does it cost to make a product or service that actually wows people. I’m here with my company Dj Connection Dot Com. I always gave the bride after the wedding, a outback gift certificates and movie tickets. I always mailed it to them afterwards. Well, what does that cost? I never met with a couple without wearing a tie. I always wore a tie or guys wore suits. Our office was very nice.

What does that cost? What does it cost? Offer a service that wows, right? Then what are you going to pay your great people? Were you going to pay these people? What are you going to pay these people? Now that you’ve done that, you’ve got to figure out, okay, how much money do I need to make per year to achieve my life goals? John Lennon, the legendary musician and member of the Beatles once wrote when I was five years old, my mother always told me that happiness was the key to life. When I went to school, they asked me what I wanted to be. When I grew up, I wrote down happy. They told me I didn’t understand the assignment. I told them that they didn’t understand life. John Lennon, think about that. So elephant in the room. That’s one of the businesses I’m involved in. All right.

Elephant in the room. We need a total of 1000 members for me to achieve my goals. 1,000 members, right? Clay, was that just a guess? Did you just get that number? Did the math on it? I realized it for a thousand members. My brother in law, Justin could, uh, the guy who came up with the idea, I came up with the name of the company and a lot of the branding was justin’s idea to open a men’s grooming business binder with a thousand members. He would never have to work again. And at 2000 members that would support he and the franchising of the company. There’s costs when you want a franchise, something at 3000 members that would support both. He and I were, we neither one of us would have to ever want for anything ever again and it for it, that’d be hot. And so, uh, but we knew what we would appear ourselves per member approximately.

Okay. So in the whole time he made a little more per member than I did because he was involved in the day to day operations. At first she was actually managing and running and training all the people for me. I was building all the systems. And so for anybody out there and says, well, what do you pay yourself? I pay myself $2 per member of which are roughly 4,000. Okay? So that’s, that works. And so, but you have to eventually sit down and Paul and say, Gosh, how many customers do I need to have to actually break even? That’s step one. Then you gotta write down how many customers do I need to live my lifestyle? Talk to me, Paul. Why do you have to sit down and say, this is how many customers I need now that I know about having great people and having a great product. And why do you have to know how many customers you need just to break even Paul Clay,

you know, in anything in life you have to identify, you have to identify and quantify what success means and why you’re getting up everyday. You know, do you think, uh, your favorite football coach in the nfl? Do you think he, he just gets up at the beginning of the season, say we and our, whatever we win, we win, we lose, we lose. And now he sets a goal for the end of the year and that’s to be in the super bowl and then you have to back into what does it take, what activities, what performance level do we have to have to get to those goals? And so you have to identify and quantify what success is. And so you know, we sit with the start with the end in mind and we and, and it hood cpas will help you define or create the system and the process and the plan too so that we can execute that plan.

But then we have to measure the results and what you did clay as is what maybe one percent of the people that do. I think you may have. You will probably agree with me. A success in business. Success in life is not complicated. It’s just deliberate. You have to be intentional. And so what you did is before you even opened the doors, yeah, you said, I have to have this to get this, and so you, you quantified how many people, how many people that have to show up there on a monthly basis to get where you want to go to even determine whether you even want to open the door.

You’ve got to think backwards of everybody else. You don’t build a business and then try to carve out a profit for yourself at the end.

Yes. So many people start with their product or their service and that’s great. But, but you gotta have to know what the results are though.

Nope. Paul, you alluded to Bill Belichick, the head coach of the new guy. And I want you to know, do you know why God himself does not like Bill Bella? Check. Do you know why that is? I do not know this. Clay. Hang on. Let me take this down. I’ve got to write this because it’s because bill bellacheck wakes up God every morning. Uhm, you know, you don’t want a nagging person at wake. Remember as a kid, you know your parents wake you up. It’s like it’s time to get up and how you as a kid you hear like, come on, I’m trying to stay parents. Like it’s like nine in the morning. I mean checks waking up like at 3:00 AM every day and he’s going, Hey God, can you can you got creative universe? I have a lot of respect for you. Could you go ahead and wake up now?

Now man, nominee president and I’m going to the point. Let me sleep a little bit more believeable yeah. And Bill Belichick is inner big Sabbath guy either he doesn’t really take Sundays off. God’s trying to rest a little bit. That’s his day, you know, and Billy Bell check. I mean he’s not a religious leader and he doesn’t respect some of the supernatural rules of the universe. I mean, you shouldn’t wake up before God. That’s just a rule that I have, I think. I think I would agree with that. Okay. Bill Bellacheck, that’s a little fun fact for all the listeners out there. Yeah, but you know what? He gets up for a reese. He doesn’t just get up and what am I going to do today? Uh, where’s that coffee? Whereas that coffee pot, because I know what he has planned and, and the reasoning as his days plan just because he started with the end in the gas bill bell and enroll.

Fun factoid for about Bill Belichick. That’s kind of fun. There’s a guy named Berge Najarian. You can find the [email protected]. Berge, Ms Dot Darian and version is Jerian a ber Jay. He is the person who works for bill bellacheck. And you know what he does? He actually, this is what he does. He makes sure that no one can call bill bellacheck. Nobody can email bill bellacheck. Nobody can texts bill bellacheck that bill bellacheck does not know about social media and that he only does what’s on his schedule. So his entire job is to make sure that bill bellacheck has a day that only involves the discussion of football and family. There’s, if there is like a social media storm, he literally does not go on the Internet, so he literally doesn’t know. And so whenever you’ve watched an interview with bill bellacheck where they’re talking about some controversy, he’ll go, yeah, I really didn’t know that.

But uh, and then he just moves on because he doesn’t know. So the, I mean it’s, it’s, it’s about, it’s about saying no to certain things. And what does this, we talked about how to price your products and services. You’re going to have to say no to certain consumers. So I’m gonna read you a notable quotable from Paul Graham. And Paul Graham is an English computer scientists. Why don’t even care? I don’t even care because I don’t know a Paul Graham created via web. I don’t, I don’t can care about teddy to Paul Graham credit via web, which is now Internet online shopping. Oh, I care about that. Um, he sold it to Yahoo. Oh, okay. He created air BNB. Alright, fine. I can’t. He created reddit. Okay, I get it. He created dropbox. Fine, fine, fine. Okay. I care. So Paul Graham says, you know that you’ve found market price when buyers complain, but still pay love that you know, that you found market price when buyers complain.

But still pay enter in the subject of starbucks. Paul, you like starbucks? Oh Wow. I think like is a weak word when it comes to my drink. Then I get there. How much does starbucks cost per visit? Um, my drink is like almost six bucks and that’s significantly more than a beverage somewhere else and I’m, I’m sure certain buyers complain like that if we can, if we can stab bags. When you go to Mcdonald’s you get it for like a dollar and you get a little side of sarcasm with every beverage to. Right. You don’t get that bit it freaking starbucks. Right, right, right, right. Okay. So I like the sarcasm and the cheap, cheap coffee, you know. So. No. But seriously, if you want a nice beverage it’s going to cost a little more. Sean, you’re a business coach. Yes. Talk to me about how to accurately price your products and services and maybe questions that you’ve run into with your clients.

Okay. Um, so a big deal with several of my clients right now, we’re looking into doing this to create your one sheet so that in sales presentations they can show them versus the competition and so mystery shopping and actually send it in a spy if you have to or go into yourself and figuring out what the other competition is doing to help you figure out what your pricing should be. That’s a huge deal. That I think is a big game changer for a lot of clients.

I agree. You have to know what the competition charges and it’s not that you have to beat them on price, just, you just, you have to be aware of it. Let me an example for our business coaching program. A. Typically there’s, there’s really, uh, if, if you know anything about business coaching, if you’re into it, you’re going to find there’s three real players out there. Three real players. There’s traction by Gino Wickman, a fine program. Alright, you got e myth by Michael Gerber of fine program and then there’s us. The thrive time show traction is awesome. You just have to spend about $7,000 a month and you have to know that they don’t do any executable things for you. They don’t deliver anything they tell you what to do. Now you have to go out there and hire the other people as well. So it’s not a good thing for you unless you have a multimillion dollar business that’s already running.

And that’s. So again, traction is great, but not for everybody. E-Myth Michael Gerber’s a couple thousand, $3,000 a month, but it’s on a longterm contract. So you wanna you wanna know like how, how your company stacks up and Paul with Cpas, uh, what makes Paul make? What makes you different than the competition? There’s a lot of good competitors out there. What makes hood cpas different from your competition? How do you, how do you stack up? Yeah, well, I believe, and I think our experience approves it is we’re, like you say practical. We start with the end in mind and we can actually teach people how to be successful because I’m, you know, I, I think I’m relatively successful. I’m probably five times the size of the normal CPA firm that is, has the kind of partners that we have, but it’s not because we’re, we’re, you know, there’s magic.

It’s actually we, we look forward. We, the average accountant, uh, is, is more reactive by nature. They take historical data, put it on tax, return historical data, put it on a financial statement. My job, I think anybody can do that. I hire people that do that. My job is then to say, where do you want to go and how are we going to get there? Um, and, uh, we’re real proactive in guiding and steering people towards success. If you’re looking for a proactive accountant to schedule your free consultation today at hood Cpas, Dotcom, Cpas dot three, two, one, boom.