Premium Pricing Power: Why Discounting Is Killing Your Business

0:00 The topics and opinions expressed in the following show are solely those of the hosts and their guests and not those of W FOURCY Radio. It's employees are affiliates. We make no recommendations or endorsements for radio show programs, services, or products mentioned on air or on our web. No liability explicit or implies shall be extended to W four CY Radio or it's employees are affiliates. Any questions or comments should be directed to those show hosts. Thank you for choosing W FOURCY Radio. Welcome to Powerful Business Strategies, where you will find out that everything you have ever learned about growing your business is wrong. Finally, a show where you'll learn the right way to grow your business by learning business and financial strategies that your competition isn't doing. And now here's your host.

0:47 Resident of NeXTSTEP CFO Michael Barbarita and joining Michael for today's show as an executive moderator is chooky obia. Yes, this is chook in. I believe that gratitude is undefeated and growth is about the next step, and it is an honor for me to moderate today's discussion with my good friend Michael. Michael, how are you great, Chokey, how are you? I'm doing well. Yeah. It's the holiday season, so I am in a gift giving mode. How about that, Michael. That's pretty good. That's pretty good. Those are good moods to be in. Okay. So, as Jokey said, my name is Michael Barbery, the president of Next Step CFO, and next Step CFO is a fractional CFO and strategic implementation firm, and our vision is to ensure overwhelmed business owners achieve the time, freedom, and consistent profits to build a legacy and the life they desire. Our mission is dedicated to guiding small business owners to leveraging their time, exploding their profits, and building a meaningful legacy. The show Powerful Business Strategies in our book of the same name, is a step towards accomplishing that vision and mission.

1:58 So with that, I. Would like to hand it back to my co author and moderator for the show, checky Obia. Michael. Look, I'm really excited about today's episode, Premium Pricing Power, Why discounting is killing your business? And before we get into the insights, Michael that you've prepared, just I want to note to the audience quick disclaimer note Michael and I are both affiliated with a number of different organizations. I currently serve as the managing director of business Development for Vetterprice, a global business focused law firm. In addition to that, it's truly an honor to collaborate with Michael to moderate business roundtables coast to coast and document those insights for our book, Powerful Business Strategies. And please note that the views expressed on this show are personal views based on our successful experiences and my mission as a fearless moderator to ask the right questions to help you the listener, learn the best strategies that the competition isn't doing.

2:55 With that, back over to Michael. Thank you chokey. So I like to start with little inspirational comment as well as a business tip that I think would be very valuable, especially for those business owners who don't have a big advertising budget. But what struck me this morning is when I was driving and passing all these businesses opening up for the day, I was thinking that behind every open sign, you know, every every establishment that was open, it's someone who decided to bet on themselves, someone who looked at the safe path and said not for me. I'm going to create something. And these aren't just businesses, their dreams made real. That restaurant you know, someone stayed up late perfecting recipes while their friends were out there having fun. That auto shop someone had, you know, someone learned every car system inside and out while others were watching TV. That small tech company where someone codd through the night while their kids were sleeping. Every successful business started with a single, brave decision to stop following somebody else's rules and stop writing your own, to trade security for possibility, to build something that matters. And here's what's some here's what's amazing when when times get tough, when others quit, you just work harder, you think smarter, you dig deeper, because that's what business owners do.

4:22 We don't just chase success, We create it. Yes, So before I get into the topic of our show today, I do want to share what I consider to be a very valuable business tip, especially for those solopreneurs who don't have big ad budgets, or any small business who is struggling and needs to pick up their sales a little bit. And this is this is definitely one of those tips that your competition isn't doing. So let's just Suppose you're an electrician who just got this glowing review from a customer named Sally Jones about her new generator installation. So instead of letting that review just sit on Google or Yelp, turn it into neighborhood gold.

5:06 And here's how. So you send personalized letters to twenty homes around Sally's address, so twenty homes around her neighboring address, and you sit in that letter, you say, your neighbor, Sally Jones had this to say about her generator installation, and you include her review, and you also include at the end your market and your position of market dominance at the end of the letter, or your unique selling proposition. And why does this work so well? Well, people trust their neighbors recommendations more than advertisers, more than regular ads, you know.

5:47 And it's targeted to the exact neighborhood demographic you want to be in because you just serviced the customer in that neighborhood. And the cost is minimal, it's just printing and postage. The timing is when when one homeowner gets a generator, others seem to follow kind of a keeping up with the Joneses syndrome, and so this is a theory. You know. I've seen small business owners really get something out of just one positive review and turn it into multiple new customers in the same neighborhood, creating a ripple effect of referrals. And we've been checking and I have been interviewing business owners for our upcoming book called a Powerful Business Strategies.

6:33 I should say, not our upcoming book, but our next edition of our book. Yes, and they you know that, And if you'd like to share, and a lot of the strategies that we have don't require big budgets, So if you'd like to share your insights about how this approach might work in your industry among other business strategies that your competition isn't doing, you know, we should talk. And so you go to NeXTSTEP CFO dot net forward slash contact. That's next STEPCFO dot net forward slash contact. Fill out the contact form and in the message box type book interview and we will schedule it. And that's just something a tip I thought I would share this morning.

7:16 There's also something new. That I'd like to share as well, chokey And so if any listeners out there have a business problem that they'd like us to answer or a business question or a strategy that you'd like to ask about, please email us at ask at NEXTSTEPCFO dot net. That's ask ask at NEXTSTEPCFO dot net. And it doesn't matter what the business problem is or the question, we will answer it for you. There are a couple of things though, that we do ask Number one, please state whether it is something we can answer on the air or if it is confidential, And of course if it's confidential, we won't put it on the air.

8:00 We would call you with it. And number two, so that we can't call you. Please provide your phone number because business problems can be complex and we might need more clarity or context behind your email. And that email address again is ask at NEXTSTEPCFO dot net. It's great. So today we're going to talk about something that's killing your profits and destroying your business, and that's discounting, discounting your prices. You know, just last week I was working with a client who runs a successful service business. He looked at me and said, Michael, I have to lower my prices again because my competitors are dropping theirs now.

8:43 And he also added that he's working harder than that. We're making less money And does that sound familiar? Well, everything you've ever learned about pricing is wrong, and I can prove it to you today's show. And did you know that companies that compete on price three times more likely to fail than those that maintain premium pricing? Yet wow? Yeah, yeah, most businesses think still think lowering prices is the answer to competition and is a great strategy. And what's interesting. About that is that most profitable companies in any industry are usually the ones with the highest prices, not the lowest.

9:23 So over the next forty minutes, I'm going to show you exactly how to shift from competing on price to commanding premium rates. And I'll show you how one business raise their prices by seventy five percent and actually increase their customer base and even better, their customers thank them for the price increase. And I'm going to reveal what I call the premium price formula, a systematic way to raise your prices while actually making your customers happier with your service. And the best part is, once you understand this formula, you will never ever have to compete on price again. So grab that pen paper, because I'm about to share strategies that will completely change how you think about pricing in your business. And if you're driving, don't worry about it. You can catch this episode again on a podcast on a podcast at Powerful business Strategies dot com.

10:17 So if you're just joining us, we're talking about how to command premium prices in your business, and I promise to show you exactly how to do it. So let me tell you about Alex. Alex runs a successful HVAC company, and like most contractors, he was trapped in that price war game, constantly matching or beating competitors, pricing, offering discounts, running specials, and he was busy, but god, he was barely profitable. So he implemented a system called value first pricing system. And the first thing he did, which was incredibly smart, which with everybody should do, is he analyzed why his customers chose HVAC companies, and he found that eighty five percent were worried about system reliability, seventy five percent were concerned about energy costs, ninety percent feared making wrong decisions, and seventy percent wanted peace of mind.

11:16 And instead of competing on. Price, he created three tiers and that's the key here, you've got to create these tiers of service, tiers of offerings, tiers of products. So what Alex did is he created what he called an Essential Care tier, and this was a basic service. It's two seasonal tune ups. It included a twenty one point inspection of all the systems, filter changes, basic cleaning, and you know, we had the standard response time to emergencies, regular inspections. Basic warranty had phone support. But then he had an upgrade. That upgrade was Total up what he called a Total P Detection tier, which included Priority Service, which was the same day response, Energy Monitoring.

12:08 Extended warranty, which is a two year coverage. On all repairs and parts, where his standard service was just one year. He had a twenty four to seven emergency coverage and a guaranteed four hour response time with no overtime charges. And then he did these seasonal tune ups, which was a quarterly comprehensive system optimization inspection. And then he also in this tier, he also said that there was fixed pricing for two years and of course no surprise fees. And then he had this upgrade called Premium Peace of Mind tier, which was instant response two hours guaranteed versus four system monitoring, which is real time performance tracking of all of all their systems, a lifetime warranty pleat coverage on all repairs and maintenance. This was instead of the two and four year guarantees, I'm sorry, the two and one year guarantees, and then energy guarantees if the bill increased. Listen to this one. He had an energy guarantee and his premium service here where if the bill increased, they would pay the difference.

13:20 So if that if the amount of amps or whatever. They use in that business increased per amp, they would pay the difference. I was shocked to see that. And then free repairs, all repair costs included in the membership and annual upgrades. And then Sandra who had this cleaning service, she created these comprehensive experienced tiers. And I'm going to try to cover as many businesses as i can with the time that we have, because a lot of people don't think that these strategies can work in their particular business, and I'm telling you they can. So Sandra who had that cleaning service, she created this comprehensive, these comprehensive experienced tiers where she had a basic cleaning, where it was a standard cleaning, a thorough dusting of all surfaces, edge vacuuming of all floors, complete bathroom sanitation. And then from a scheduling standpoint, in that basic tier, she had consistent weekly or bi weekly time slots with the same team.

14:28 It was kind of the regular scheduling that she always has done. And then basic products, which included professional grade cleaning solutions, a quality checklist, and a twenty five point inspection after each clean. Then she had an upgrade to a healthy Home tier, and it included deep sanitation where a hospital grade disinfection of all services including doorknobs, light switches, and high touch areas. She had air. Purification which included what's called a heap of filtering, cleaning, vent sanitation, and air quality testing which nobody does in the cleaning business. Allagen control which was specialized treatment for dust mites and pollens, and health reporting a monthly detailed report on the air quality improvements, bacteria reduction and alligen levels.

15:22 And then she came up with this total transformation tier, so everything in the whole healthy home tier plus custom storage solutions, seasonal cluttering services I'm sorry, decluttering services, space optimization, a cleaning education which included family workshops on maintenance, stain removals, green cleaning techniques. And then she had this lifetime a lifestyle consulting which created personalized systems for maintaining cleanliness between visits, including family chort shots, which I was interesting. And what's fascinating is that in both businesses, customers actually thanked them for offering these premium options because they just weren't selling services anymore. They were selling solutions to real problems. And so let me explain exactly why this teared pricing approach works so powerfully for both businesses. For Alex's HVAC company, the teared system worked for three critical reasons. It shifted the entire conversation away from price comparisons and when customers were set. When competitors were saying will beat any price, Alex was saying, choose your level of protection. This immediately elevated his company above the price focused competition. Second, it aligned perfectly perfectly without customers actually think about hvac because

16:52 he asked at the beginning. You see, nobody wakes up wanting to spend money on their HVAC system, but what they want is reliability and peace of mind. And so by creating these packages that directly addressed these emotional needs, Alex made price secondary to value. And then third, and this is really fascinating, the tiered system actually made sales easier because when customers could see all three options side by side, they could make their own value decisions. And instead of Alex's team trying to convince customers to spend more, customers were convincing themselves by choosing higher tiers. And for Sandra's cleaning service, the success came from three different factors. First, she completely changed the category that she was competing in, So instead of competing with every cleaning service in town on price per hour, she created a new category called home health and organization. This meant customers stopped comparing her prices to competitors because nobody, nobody else was offering these comprehensive packages. And then second, she tapped into deeper customer motivations.

18:04 People don't just want to clean house. They want a healthy home, and they want to feel organized, and they want to feel like they're taking care of their family. So her tears addressed these emotional needs that went way, way, way way beyond basic. Third, she built an internal upsell opportunity where customers who started with basic clean got to see the results the neighbors were getting with higher tiers, and this created design to upgrade without any sales pressure. So the key insight from both examples is that when you structure your pricing tiers correctly, you're not just offering different price points, you're offering different levels of transformation for your customers. And because of the customers, is such an important topic, Trikey.

18:57 Was there any questions in the chat? Yes, absolutely so, Michael, Look you've struck a chord with this topic. To be honest, let's start with this question. So some business owners might be worried that creating premium tiers will drive away their existing customers. How would you recommend handling that transition with current clients. Yeah, that's a super dupid question, chooky. Actually, what we found is that existing customers off have become your biggest advocates for the new pricing tears. But the key is and how you roll it out, and let me share exactly how you do this. So, first you want to grandfather your existing clients at their current pricing for a set period, maybe ninety or one hundred and twenty days. But here's the crucial part. You show them the new tiers and explain that while they can stay at their current level, they now have options for even better results and more value. And let me give you an example. So a business owner in the trades was worried about the same thing. So he went to his existing clients and said, because you've been with us, you get first access to these new service tiers. Plus you can keep your current pricing for the next ninety days while you decide which tier works best for you.

20:16 And what's fascinating is that about sixty percent of its clients I'm sorry it's existing clients actually chose to upgrade to a higher tier voluntarily because they saw the additional value they could get. And they wanted it. And they weren't price shopping anymore. They were value shopping. So the key is to present the tiers not as a price increase, but as an expansion of options. You're not taking anything away, you're giving them more choices. And remember, people love to buy, they just hate to be sold. And when you do it in this way, you're letting them choose to upgrade rather than forcing them to pay more.

21:02 So yeah, So before I continue with this discussion, we're going to take a ninety second break. Hey there, business owners, let me ask you something. Are you tied of blending in with your competitors, frustrated with slow growth and slim margins. Well, I've gotten news for you. Everything you've ever learned about growing your business is wrong. But don't worry. I'm here to let you in on a secret weapon, your position of market dominance. It's what sets you apart, makes you irreplaceable, and has customers lining up at your door. My name is Michael Barbarrita from Next Step CFO. I know what you're thinking. Sounds great, Michael, But how do I find my position of market dominance? Well, that's exactly why we've created our game changing implementation program called Next Step to Market Dominance. In just ninety days, we'll guide you step by step to a position of market dominance by uncovering your unique strengths that competitors can't touch. By crafting a message that resonates deeply with your ideal customer, by building a strategy that turns you into the go to expert in your field. Now this is in theory. These are battle tested strategies that have helped businesses like you as double, triple and quadruple their revenue. Don't let another quarter go by struggling to standout. It's time to dominate your market period.

22:23 Go to NEXTSTEPCFO dot net forward slash contact. Fill out the form and in. The message section put the word dominate or call us at seven eight one three two six three A two two. That's next STEPCFO dot net forward slash contact or call us at seven eight one three two six three A two two. Well, welcome back. We're discussing how to set up pricing tiers for optimum pricing and stop competing with your competition at that race to the bottom by lowering prices. So let me share another example of the premium price formula in action. So Mary, who owns a personal training studio. Like most fitness businesses, she was competing on price, offering intro specials, matching competitors rates, discounting packages.

23:19 Her average client value was about two. Hundred dollars a month and she was working about seventy hours a week and she was breaking even. So here's what she did when she implemented the premium price formula that we that we talked about in the open. So step one was problem identification. Once again, she surveyed her clients. That's important. It's an important step here because she found that eighty percent of her customer base cared more about results than price. Ninety percent wanted accountability between sessions because they didn't have the will the willpower. Eighty five yeah, of course, right, eighty five percent struggled with nutrition, and then seventy five percent needed help with recovery. And so the second thing was so she did value stacking instead of just selling training sessions. She created complete what she called transformation packages. She had custom nutrition planning, recovery protocols, daily accountability, addressing all these problems that the customer said they have, progress tracking and success coaching. And then step three is that he implemented before and after photos, measurement tracking, performance metrics, success stories, and client testimonials. And then she

24:51 raised prices seventy five percent, but she backed it with the results guarantee that if they did all the work that they would get the results, progress milestone, success metrics, transformation timeline. And a satisfaction promise. And what happened is her client base actually grew by forty percent within ninety days, and her clients started thanking her for raising their prices because they were getting better results than ever before, and that's all they cared about was getting the results. And one client said, you know, I'm paying more but getting ten times the value. Another said, this is the first time I feel like I'm investing in success, not just buying training sessions. And the premium pricing formula works because it shifts the entire conversation from cost to value. And when you could show people exactly how you'll how you'll transform, change, modify, adjust, improve their situation, price becomes all totally secondary to the results. So now let me show you how this premium pricing strategy works.

26:03 In let's say the professional services industry. SO an accounting firm that transformed their business by creating what they call success level services. Instead of charging hourly rates like every other accounting firm, they created three distinct service tiers. One is the essential business support, which was monthly bookkeeping, which included bank reconciliations, income and expense tracking, basic financial statements. Secondly, under continuing under Essential business support was quarterly tax planning, which estimated tax calculations and basic deduction review. Then also under this initial basic business support was annual tax preparation, payroll, they did payroll for the company and also compliance monitoring where they would notify the client with deadlines and they filing requirements. And then they had this business growth Accelerator which was advanced bookkeeping with depop mental tracking, class tracking, and project costing, which is a lot which is what a lot of trades want. But also under this growth accelerator, second tier was monthly monthly tax strategies, so proactive tax planning and advanced deduction analysis and then complete payroll annal management including multiple states benefits administration and HI compliance. And

27:35 then they had this other tier called Wealth Builder Elite, and this was tax wealth building strategies that was incorporated under this tier advanced tax strategies and wealth transfer planning. There was a monthly advisory board that had tax consultations where they have a couple of tax practitioners on a little board answering questions for the client. Complete HR solutions with an employee handbook, and policy development and training. Success systems which included business valuation and succession, succession exit planning and succession strategies, and their average client value increased from five hundred dollars to twenty five hundred per month, and clients started referring more and more business because they were getting real results, not to clients and getting their taxes filed.

28:31 You know, they got real results. So and then let me show you this example from an insurance from the insurance industry where an insurance agency created what they called protection levels where they had basic coverage TARE, which was a standard policy review. They had claims assistance so if there was a claim they could call the agency directly instead of calling the company, and then the agency would call the company if necessary, annual shopping which was basic carrier comparison, policy documentation which was digital storage of the policies with basic explanations, and then regular renewal.

29:12 Updates. And then they had what they called a complete protection tier which was quarterly coverage review which was a risk assessment, gap analysis, and coverage optimization, Priority Claims which was a twenty four to seven claim support. They had also offered negotiation. Assistance with the claims which was interesting, continuous rate monitoring, some risk management tools for loss prevention and safety training, and then personal a personal risk advisor which is a dedicated insurance agent, and you had his direct phone number, his cell phone number, or his or her cell phone number.

29:56 And then the third tier was security package that they called it a security package and it was monthly strategy sessions with comprehensive risk planning, claims prevention system with risk monitoring and emergency response plan, Premium audit defense which was classification reviews and modern analysis for workers, comp executive risk management which included personal reliability protection and wealth preservation. And then lifetime coverage guarantees which include rate lock options and coverage commitments. And their average premium per client actually doubled because they were adding this value. They were charging extra for these tears. It was outside their regular premium and client retention was ninety five percent because they were providing real value just beyond the insurance policies. And so let me explain why this tiered approach transformed both of these traditionally priced sensitive industries. For the accounting firm, the tiered system worked for three powerful reasons. First, it transformed accounting from a necessary expense into a business investment. Instead of selling compliance services, they were selling business growth and wealth building.

31:20 And this completely changed how clients viewed the cost. And then second, it eliminated the dreaded hourly rate comparison. When clients can compare hourly rates with the competition, you know, they naturally chose the lowest rate. But how do you compare a wealth builder elite program to a standard accounting service. You can't, and that's the point. Third, it's created predictable revenue while increasing value. So clients love knowing exactly what they'd pay each month, and the firm could staff appropriately because they knew exactly what each tier. Required for support. And for the. Insurance agency, the success came from three different factors. It shifted the conversation from insurance prices to risk protection. Instead of competing on premium costs, you were selling peace of mind and protection, and this made the agency's fees secondary to the value that they were getting. Second, it turned a once a year transaction into an ongoing relationship, and by providing monthly and quarterly services, they stayed relevant to clients year round, not just that renewal time.

32:27 And third, it. Actually reduced claims because they were preventing problems instead of just insuring against them, and this made their premium packages even more profitable because they were reducing their own risk while protecting clients. So wondering if there are any comments or questions Chooky on the two examples I gave. Yeah, certainly, Yeah, quite a bit of comments here and questions. So, Michael, here's what I'll do. I'll sort of synthesize some of the comments into a question for you. So you showed a number of examples where businesses not only raised their prices, Michael, but they saw an increase in customer and client satisfaction.

33:11 Can you explain why customers actually thanked these businesses for charging more? Right, Well, that's a fascinating observation and actually, yeah, and it actually reveals something powerful about human psychology and value perceptions. So let me break it down why that happens. So first, when you charge premium prices, you can actually invest in delivering a better experience. Think about what happened with Alex's HVAC company. When he raised prices and created tiers. He could afford to hire better technicians, invest in better diagnostic equipment and better training. And as customers weren't just paying more, they were getting more because of that extra support that he could because he had.

34:01 Better technicians, better diagnostics and better training. And second, higher prices actually changed customer behavior. When people invest more, they pay more attention and engage more deeply with what you're offering. So if you look at at Sandra's cleaning service, when clients moved to her premium tier, they started following her maintenance recommendations more carefully, They implemented her organization systems, and they participated in her educational workshops. They became active participants in their own success. But here's the thing that Nope, I'm sorry, tricky, what were we say? No, let's just say that that's a good point. I like the sort of reverse psychology impact there. Yeah, and what no one considers is that premium prices change how customers value themselves. You see, when that personal trainer, I think it was Mary, raised her prices and created comprehensi of packages, her clients started taking their fitness goals a lot more seriously, and they weren't just buying training sessions anymore. They were investing in their transformation, in their change, in their improvement.

35:13 And one client told her, for the first time, I feel like I'm making a real commitment to myself. So think about it. You know, have you ever bought something cheap and not valued it, then bought something premium and taken much better care of it? And that's that's exactly what. Happens when you position your business correctly at premium prices. Customers thank you because you're helping them commit to their own success at a higher level. So before we continue this discussion, we're going to take a ninety second break. Hey, their business owners, let me ask you something. Are you tied of blending in with your competitors? Frustrated with slow growth and slim margins? Well, I've gotten news for you.

35:58 Everything you've ever learned about growing your business is wrong. But don't worry. I'm here to let you in on a secret weapon, your position of market dominance. It's what sets you apart. Makes you irreplaceable, and has customers lining up at your door. My name is Michael Babarrita from Next Step CFO. I know what you're thinking. Sounds great, Michael, But how do I find my position of market dominance? Well that's exactly why we've created our game changing implementation program called Next Step to Market Dominance. In just ninety days, we'll guide you step by step to a position of market dominance by uncovering your unique strengths that competitors can't touch. By crafting a message that resonates deeply with your ideal customer, by building a strategy that turns you into the go to expert in your field. Now this is in theory.

36:49 These are battle tests and strategies that have helped businesses like you as double, triple and quadruple their revenue. Don't let another quarter go by struggling to standout. It's time to dominate your market period. Go to NEXTSTEPCFO dot net, forward slash contact. Fill out the form and in the message section put the word dominate or call us at seven eight one three two six three A two two. That's next STEPCFO dot net forward slash contact or call us at seven eight one three two six three A two two. Well, welcome back to powerful business strategies. And let's look at how this premium pricing approach transform service based businesses. So an it company created what they call business technology tiers, and they had essential support which was a basic help desk nine to five phone and email support system monitoring. This is at basic service essentially some data backup and some reports that.

37:52 They would share. Then they had this step up. Called Business Accelerator, and what that was is it was a priority support. Whether you would get twenty four to seven help desk and a one hour response guaranteed. You'd get proactive monitoring which was real time performance tracking and predictive maintenance. You'd get an advanced backup which was hourly stab shots and automated disaster recovery. There was enhanced security with advanced threat protection of virus threat protection. There was employee training that went along with that, and some strategic IT planning which was quarterly technology technology reviews, equipment and software upgrade planning.

38:35 And then they had this third tier which was instant response. You know, they called it a technology management and this was instant response where they would respond infantly to a support call. They would have complete system optimization where AI powered monitoring and automatic scaling. They also had this thing business Continuity where instant failover so zero downtime was guaranteed. Which is just amazing. And then enterprise Security was a twenty four to seven threat monitoring and an incident response team along with virtual CIO services which included monthly strategy sessions, innovation planning, and preventative cyber threat maintenance, and they increased their monthly their monthly contract from one thousand to thirty five hundred, and clients started referring them more because well, they were preventing problems, they weren't just fixing them. And so then there's this example with from the legal industry and a law firm created these business protection levels that included basic legal coverage, basic legal coverage tier, a business legal shield tier, and an executive legal protection tier, and their clients averaged. The

40:09 increased their sale per customer from twenty five hundred a month to eighty five hundred a month because their satisfaction scores hit record highs because they were preventing legal problems instead of just solving them. And the transformation in these professional services service businesses reveals three three critical insights about premium pricing For the IT company. The tiered system succeeded because it changed it from a cost center to a strategic investment instead of people. Instead of being the people who fixed the computer problems, they became technology growth partners. Second, it aligned it aligned pricing with client pain points. Every business knows technology problems cost them money, and they know that they could choose their level of protection based on their risk tolerance. And then third, it made premium prices feel like a bargain, so when clients could see the cost of downtime and security breaches, the premium tier actually looked like the fiscally responsible choice. And for the law firm, the critical success factors were the fact that first it transformed legal services into a dreaded expense into strategic sorry from a dreaded expense into strategic protection, so instead of calling when there was a problem, clients were preventing legal issues before they happened. And second, it created predictable revenue for complex services. Instead of clients worrying about unpredictable hourly revenue,

41:44 they got a comprehensive service for a fixed monthly fee. And the third it. Allowed the firm to be proactive rather than reactive. By working with clients regularly, they could well they could spot potential issues early, leading to better outcomes and happier clients. And the key lessons from these examples is that premium pricing works when you shift from selling services to selling outcomes, and people will pay premium prices when they can see clearly see premium value So, chrikey, I didn't know if there were any questions that have come up. There are there are, you know, picking up on that last point about seeing premium value. Let's stay on that for a second.

42:25 So a couple of questions from the audience business owners coast to coast that are listening. So, Michael, in your value tier system, you mentioned that premium clients often refer more premium clients. So John's a premium client, gets good service. Here refers to Sally, who's also a premium client. Now, why do you think this happens and how can business owners leverage this effect? Well, that's one of the most powerful aspects of premium pricing, chocky. Let me explain exactly why that happens and how to leverage it. So, if you think about it, when you pay premiums and get exceptional results, that's the first thing you want to do.

43:06 I'm sorry. The first thing you want to do is you want to tell people about it. And it's like finding a great restaurant. You know, you don't keep it to yourself. You tell your friends. Here's the thing. Yeah, you know you not only tell the friends who you think will. You usually only tell the friends you think will appreciate that level of quality. And so let me give you a quick example. Remember that accounting firm we talked about earlier, So when they moved to their tiered when when clients moved to their tiered system, their premium clients, the ones in the wealth building elite level started referring other business owners who are also growth minded, because successful people tend to network with other successful people, and these these referrals came in pre sold on the value, not the price.

43:55 And when someone gets referred by a premium client, they're not asked sking how much it costs. Instead, they're asking how soon we can start because they already trust that the value is there because someone they respect vouched for it and. So you know. And so how you leverage this is, first, you make sure your premium tier delivers extraordinary value that clients just can't. Help talking about talking about. And second, just make it easier for them to refer by giving them specific language about what makes your premium service you neque, which, by the way, is a position of market dominance not to mention that. And third, business critical create sharable moments in your service delivery that clients naturally want.

44:40 To tell others about. So you've got to remember that premium clients don't just have bigger budgets, they have better networks, and when you serve them well, you're not just getting one client, You're getting access to the entire circle of influence. Trucky, I think it's time for compliments and then I have some closing comments. Yes, very energized about this segment of the show Business Complements segment. We'll start with Amy Singleton. She is the owner of Height Digital Norman. They're based in Oklahoma and Michael get this. After spending a small fortune on digital marketers and web design for their own business with candidly lackluster results, Amy and her husband Joseph decided to make things happen for themselves and really for other business owners.

45:31 Now they are able through their business, Height Digital Norman, to provide digital marketing with real results. You can find out more about Amy. Joseph and the team at Heightsdigital dot Com forward Slash Norman. The next business owner for us to spotlights and today's segment is Lucas Mashoda and Milton Mashoda. It's interesting with Curbs Studio. Now they are based in Massachusetts, and Michael, you know Lucas and Milton. Quite well, and it's just remarkable. Right. They are an award winning father and son leadership team dedicated to excellence in landscape design and build. And when we think of Curbs Studio, we think of a manifestation, Michael, of the American dream on multiple levels right now. The first level the American dream to start a family business, which is how you started the show today, Michael. The second level, the American dream to have a dream backyard where you could host friends and family. And then the American dream to get the best possible service to take your home experience to the next level. And this is really what Crab Studio is about.

46:48 Right. They are a dream team for design and build concepts and you can learn more at curbsinc dot net. Now, Michael, correct me, how do you say that last name? Because I love the shadow shadow brilliant. Yeah, So I'll let Lucas and Milton know they've got to give us an a plus uh on that the next uh the next business owner of Spotlight. And by the way, folks, these compliments, these business owners are not compensating us for these compliments. These are compliments that Michael and. I research, and we really pour our heart and our gratitude into Alex Lamas with Sexy Trees based in California.

47:34 That's the next business owner that we want to spotlight, and Michael, get this. They are a certified provider of really impactful tree care, plant care and past remover services. And here's a client testimonial, a real authenticated client testimonial. Here's what they said. We have three bids on a tree project, and our team were the most knowledgeable and they noted several things that the other service providers did not mention, including an infestation in part of our tree which had to be dealt with. So again, kudos to Alex Lamison's team. You can find out more about them at sexytrees dot com.

48:21 And then the last business owner's spotlight in today's segment is Brooke Jenkins with Jenkins for Health and Brooke and her husband Brian were born and raised in Oregon and they've been married for over two decades. She is committed as a health and wellness coach and here's her inspirational headline. Michael, I am very passionate about helping others set achieve and sustain their health goals. So, folks, as you prepare. For a new year, and we're in that time period where new as resolutions and plans are being made, you could find out more about Brooke and team at Jenkins forhealth dot com.

49:03 So Michael, with that, I'll toss it back over to you. Thank you, Chikey. So let me quickly give you the steps for creating your own premium pricing tiers. And I call this the value tier system. And step one is service level definition, where you create three distinct service levels. You create an essential level tier which covers basic needs and expectations, and an enhanced level tier which solves common pain points, and then a premium level which provides complete peace of mind. And then step two value communication for each level, so clearly define the problems that are solved, the benefits that are provided, the guarantees that are offered, the support that's included, and any additional value like unique.

49:48 Features that separate each tier. And so. With that we do have to sign off. We do around out of time. So to get a copy of the book Powerful Business Strategy, simply go to our website www dot NEXTSTEPCFO dot net. It's totally complementary. It's our contribution to the business world and until next Monday at noon Eastern time for Chicky Obio. My name is Michael Barberita, and remember, don't keep doing what your competition is doing. You have been listening to powerful business strategies finding out that everything you ever learned about growing your business is wrong. Tune in next week and every week at noon Eastern time on W four CY Radio with your host Michael Barbarita of Next Step CFO and moderator Chugy Obio.