How to Charge Higher Prices

When You Sell A Service And Not A Physical Product

Two questions came in on the channel this week that turned out to be the same question. “Can you charge luxury prices as a service provider without a physical product?”.

The answer is yes, though probably not in the way you might expect.

If somebody buys a handbag, they can pick it up, look at the stitching, feel the weight of it, and walk away believing they've judged something.

Nobody can do that with advice, and they can't do it afterwards either. Six months on, the deal has closed and the strategy worked, and the client still has no way of knowing whether that was you being exceptional or whether anyone competent would have got them there.

Economists call this a credence good. Law, consulting, coaching, therapy, wealth management, all of it.

Clients don't do well with uncertainty. They resolve it by finding something they can observe and letting that stand in for the thing they can't judge.

And of course, the loudest thing on offer is nearly always the price. Which means your fee isn't simply what you charge. For a client with no other way of evaluating you, it may be the strongest evidence about you they'll ever see.

Which changes the problem entirely. You don't need to justify the number because the number is already doing a lot of the work for you.

What you need instead is for everything around it to support it rather than undermine it. Most proposals I see tend to do the opposite.

That’s what I discuss in this week’s newsletter.


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