Raise Your Prices Without Losing Clients! with Janene Liston

Episode Summary

You can find Janene Liston at:
Website: https://thepricinglady.com/

Janene Liston Podcast Interview

[00:00:00] Kris Ward: Hey, everyone. Welcome to another episode of Win The Hour, Win The Day, and I am your host, Kris Ward. And today in the house we have Janene Liston, and she is The Pricing Lady. And I think this is a spectacular conversation, ’cause we really don’t talk about this enough.

Where we get our pricing from, do we pull it from the sky? Where is it anchored to? When does it go up? W- there’s so many questions. So first off, let’s welcome Janene back to the show. This is a second appearance. We don’t do that a lot. But welcome to the show, Janene. 

[00:00:29] Janene Liston: Hi, Kris. I’m super excited to be here again.

[00:00:32] Kris Ward: Me too. Okay. So pricing, where do we start with that? W- you know, yeah just that’s it. That’s it. That’s the question. Where do we start? 

[00:00:41] Janene Liston: So I always tell people, so pricing is rooted in a deep understanding of the customer. And a lot of times when people are struggling with different aspects of pricing they’ll, come up with a question like, “How do I know what’s a fair price?”

Or, “How do I know what to charge?” And my first question is almost always, [00:01:00] “Who are your target customers?” Because a lot of the answers can be found in that 

[00:01:07] Kris Ward: Okay, so we do that, but when… I think, I don’t know, I think we get lost on that because it’s okay, who’s my target customer? Also, I can take, I can argue against myself.

I don’t even need you here. One is- … maybe my target customer is struggling with this problem. Oh, for me. In one case, many of my clients, because they’re, they’ve been in their business like 10 years they’re working way too many hours for where they are at this point in their journey, and a result of them trying to do it all on their own and just out-muscle the clock is that they have a rollercoaster of income, feast and famine- feast and famine. And they think, “Oh my gosh, I thought I had this figured out,” and then they go through another valley ’cause they get busy with the business, and then they’re tied up in the deliverables and no time to work on the business, just in it. And so the, three, four, five great months are followed [00:02:00] by three really bad months, right?

Feast and famine. So now then, am I pricing towards their valleys and the fact that, oh, they can’t afford that right now? Am I pricing towards my competitors? Am I pricing towards my experience and what I think I’m worth and the return on your investment? You’re gonna make this money back because you’re leaving so much money on the table being caught up in the busy busyness of being busy. You can get lost there. 

[00:02:26] Janene Liston: Yes. That’s absolutely true, you can. So while it’s rooted in understanding the customer, because that’s going to tell you basically which direction you’re gonna head. If your customers are bargain seekers- … then any price range that you come across or define, you’re gonna be towards the bottom of that range.

But if your customers are looking for good value or they’re looking for a premium offer- … then that’s gonna shift you in another direction the challenge here is that most people have never been taught how to set prices. And so they struggle with it a lot. They waste a lot of time- Yeah … worrying about it, guessing at it, worrying about it some more, sending it out, worrying about s- more.

And part of that is because they’re worried about the number- 

[00:03:18] Kris Ward: Yeah … 

[00:03:18] Janene Liston: but not about the decisions behind the number. And it’s actually the decisions that behi- that you make in your business behind that number that give you that foundation that you can stand behind. So let me give you a really quick example.

[00:03:33] Kris Ward: Okay. 

[00:03:34] Janene Liston: What most service-based businesses do is they say, “We do this really cool service. Everybody else is charging this. I knew I’ll charge a little bit more, or a little bit less,” sorry. And then they go out into the world, they throw that price out there, and someone says how’d you come up with that price?”

And their only argumentation is that’s what everybody else [00:04:00] charges.” 

So that’s what I call a one-legged pricing strategy. It’s very hard to defend. It’s difficult to feel that it’s based on something solid. On top of that, you don’t know, are the people who are charging that price that you compare to, are they, are businesses successful?

Are they targeting the same type of customers? Is their offer the same as yours? So if you make all these assumptions and assume that they’re true, and then base your price on that, again, you have a very wobbly pricing strategy. 

[00:04:32] Kris Ward: That’s a really good point, those things you brought up on the fact that, oh, my competitors are doing this.

But there’s so much… It’s almost like looking at a body of water and saying, “Oh, here’s water.” And in that pond, what ecosystem or life is underneath that water? Versus here’s the ocean. What is underneath that, right? And y- we m- I think we make this mistake a lot is comparing ourselves to our competitors, and we see something at surface level.

Or we do this with social media, too. “Oh, this one’s-” … “doing really well on Facebook. I thought Facebook [00:05:00] was dead. Let me hop over there.” No, it’s the funnels, the infrastructure. There’s just so much beneath the surface. So I think that’s… Y- you’re right, I think we don’t give these things enough of a thought.

And I think it ties back to, as well, when you say what are they looking for? Are they bargain seekers? I remember a number of years ago… I’m in Canada, so we don’t have JCPenney here. But in the States- … I think it’s JCPenney, and they’re known for their coupons and a bargain. And then they came out with this whole campaign, and I think Ellen DeGeneres was behind it, and was like, “Oh, we’re not gonna give coupons anymore.

We’re just giving low prices. It’s all done.” But it’s just never the same. It, it- … failed miserably. It failed within weeks because- … they just didn’t belie- you took away the coupons, right? So now it’s oh… In their mind, it doesn’t matter how low the prices were, it went up. ‘Cause that’s- you’re not at JCPenney to buy a luxury item for Christmas, when your spouse got a raise. That’s just not the… I don’t know much about it, but I know that, right? Yeah. So I th- I think y- you tapped into a [00:06:00] couple really important things there. 

[00:06:02] Janene Liston: Yeah. You have to understand them, and if the thrill of the savings- 

[00:06:07] Kris Ward: Yeah

[00:06:07] Janene Liston: is what’s driving their buying behavior, and you take that away, like in this case that you just talked about- Yeah … then of course you’re taking away something that’s important to them. Yeah. Another thing that I see very commonly… So most people, what we know of pricing, or maybe I shouldn’t say we.

I’ve graduated beyond that. Doesn’t mean the habits aren’t still there from time to time. But i- is what we know for pricing is- based on being a consumer. 

[00:06:37] Kris Ward: Right. 

[00:06:38] Janene Liston: So we are exposed to these tactics and strategies, promotions and discounts upon layers of discounts, right? And we see that happening, and we’re exposed to it every day.

And in the retail industry, that’s very standard. But then people take those tactics and strategies because they’re what they know from being a consumer, and they apply them [00:07:00] to their service-based business. 

[00:07:02] Kris Ward: Yeah. 

[00:07:02] Janene Liston: And it doesn’t really work. 

[00:07:04] Kris Ward: That’s a really good point. Yeah. It doesn’t work. That’s a really good point, ’cause I know, and it’s true, they did this study, and I know I believe in this as well, is, oh my gosh, I’d rather do a lot of things.

I will leave a product, whatever, online in a cart because you want me to pay for shipping. It’s like- … no. And yet, I’m g- I’m gonna get in the car and pay for gas, certainly as we speak right now, I’m paying for gas with gas prices. So that doesn’t make sense. And those, and not that there is a a shipping fee with service, but, but just the, where the model of that came from is product-based, and the service-based is completely different.

It’s different. And so you’re right. We have, most of us, the most exposure of being consumers- … and little things that may rub us the wrong way, or we celebrate as a consumer and what we like, but that does not transfer to a service-based business. 

[00:07:53] Janene Liston: Absolutely. I, here’s a, here’s another great example, and I just came out on my own podcast [00:08:00] recently.

But I talked about this, the free session, right? So a lot of coaches out there will give an introductory free session. I always get asked questions, should we be doing that? And one of the examples that I always give here is if a plumber comes to your house to do the work, do they fix the toilet for free first- 

[00:08:21] Kris Ward: Right

[00:08:21] Janene Liston: before they go and fix your sink to prove that they can do it? 

[00:08:25] Kris Ward: And that’s 

[00:08:25] Janene Liston: essentially what you’re doing with a free session. Or a lawyer, they don’t do the first case for free

[00:08:31] Kris Ward: so- Yeah … 

[00:08:32] Janene Liston: so that they can prove themselves, and then you pay them for the second case. Now, coaching developed this habit, I, I believe, for two reasons.

One, in its early stages, people really didn’t, customers didn’t really understand what coaching was. 

[00:08:46] Kris Ward: Right. 

[00:08:46] Janene Liston: So it was a way to demonstrate that I think we’re way beyond that in most cases. It’s not necessary anymore. And two, it’s their comfort zone. They don’t have to sell if they just give a free session and coach for free, [00:09:00] right?

So it puts them in their comfort zone. But that has an impact later on their pricing, for sure. 

[00:09:07] Kris Ward: I think that came from, and I don’t know, but I think it’s almost like the concept is when you’re in the food court at the mall or you’re at Costco and they give you a little sample of something- Free trial

and you go, “Oh, yeah, the food sa- oh my gosh, this is quite yummy. Okay, I’ll buy a bag,” right? And so we’re following that methodology, but I also, I have never succumbed to giving a free session just because I think it’s not realistic for you to measure the progress also is not going to be even in the first hour.

It would be like asking a fitness trainer “I wanna lose a bunch of weight. Show me what one of your free sessions look like.” First of all, you’re gonna exercise, so now you’re like, “Oh, so I, I have to do something?” It… Giving somebody 15 minutes or 30 minutes of what should be potentially a three to six-month relationship is, I don’t know. It’s like speed dating.

[00:09:54] Janene Liston: Yeah. It, the question that I, as I see it is it the right thing to be doing at that [00:10:00] moment in time? Yeah. And that moment in time before they really understand what their problem is and how you can help- Yeah … but with them giving them a free session doesn’t help either one of you, quite frankly.

[00:10:13] Kris Ward: That is true. They’re not ready. They don’t hear you. They don’t have enough knowledge to assess your skillset ’cause they haven’t learned anything from you yet ’cause you, whatever. Okay.

All right. That’s a really good point. So give us some other things that… These are things that what I would be fearful of having your job, is we don’t even…

I always say you don’t know what you don’t know, but I think worse than you don’t know what you don’t know is when you think you know something, right? So these are all things that I think we assume without examination. These are broad assumptions as we eat up our own, whatever our habits are.

Especially the way the world’s changing. I’m starting to feel like, when I’m on Amazon, I live in a country, in the country remote area, so I’m on Amazon like it’s a freaking video game because that’s just where I have to get most of my stuff. Oh look, I’m on the next level, [00:11:00] right?

So you get a lot of buyer experience. And I think it’s really easy to get lost in that and confuse that as information for your own business. 

[00:11:12] Janene Liston: Yeah. I absolutely agree, and this is why I go… i’ll go back to what I said towards the beginning, is that people think it’s the number that gives them the confidence in- 

Their pricing, and that, So people come to me and I always joke because I feel like when they come to me, they say, “Janene, I sell this in this industry. What should I charge?” I have a Rolodex in my head- 

[00:11:34] Kris Ward: Okay … 

[00:11:35] Janene Liston: of prices and I can just, plop one out and hand it to ’em, and they’ll be on their way.

[00:11:39] Kris Ward: Go to A for accountant. Yes. Hold on. Yeah. Yeah. Okay. 

[00:11:42] Janene Liston: Exactly. I’m really dating myself here with the- Yeah … Rolodex rele- r- Yeah … example. 

[00:11:46] Kris Ward: Reference. Yeah. 

[00:11:47] Janene Liston: But the point is I can give, I could potentially give someone a number. The problem is that’s not going to make them feel more confident about it.

It’s actually doing the analysis, making the decisions, choosing do I do this or that and why, understanding that this price- Plus this volume is what gets me to my goals. Or this is the spread in the marketplace. My customers are looking for, upper middle range ’cause they’re willing to pay for the value I deliver, so I’m gonna position myself there, is that thought process behind the price that actually makes the price hold.

[00:12:32] Kris Ward: That’s really interesting to me, ’cause also sometimes I’ll say if, somebody’s asking me something broad like that, I’ll say, it’s like asking how much groceries cost.” There’s so many variables in that. What are the groceries for? How many people? What store are you buying them from?

There’s just so much. And I also would argue too, there’s things out there that if you asked me, I would… I… How many failed businesses would be out there if I was in the room? I’d be saying to the Starbucks people, “Are you kidding me? You can charge that much for coffee?” I remember, the first time [00:13:00] I went into a Starbucks, ’cause I don’t drink coffee.

I just don’t like the taste of it. It’s not a health thing. I just don’t like it. And I remember the first time I went into Starbucks and I was standing behind someone that they actually used a Visa for four or five coffees ’cause it was significant enough. And I was like, “Oh my,” “What are we doing here,” right?

And I would be thinking when there’s so many competitors for coffee shops, and coffee shops are notorious for being low-ticket items, right? So I would’ve been sitting in that room going, “This is not a plan.” So then there’s the other thing where- … there’s these premium products that you go, Or when Apple first came to light, and it’s like, how are they, “Oh, we’re gonna charge three, four times more than the basic computer everyone else has.”

You know- … you would think that’s not a plan. So I guess to your point is it’s not just the number, it’s everything that goes behind that. 

[00:13:51] Janene Liston: It’s everything that goes behind it, and understanding that from your customer’s perspective. Yeah. Also understanding it from what the needs of your [00:14:00] business are.

Yeah. People often ask me, “Janene, what is a fair price? I just wanna find a fair price.” And a friar, fair price to me has three components to it, and one is it’s a price that reflects the value. 

[00:14:15] Kris Ward: Yeah. 

[00:14:15] Janene Liston: Enough people are willing to pay for it, and it brings you a reasonable profit. 

[00:14:22] Kris Ward: Now to that, I have to jump in.

[00:14:25] Janene Liston: Okay. 

[00:14:25] Kris Ward: With the nature of what we do- … and you know this, so many people don’t even use their calendar for their own work. They will say, “Oh my gosh, I’ve got appointments. Okay, I got… I’m gonna meet with Kris this afternoon. It’s on the calendar.” And then they don’t even map their own work. And that’s…

I’m not a productivity specialist, that’s just one very teeny element of what we do, setting- … a basic setup. But 90% of people use their calendar wrong. And to that, you might be stumbling into the day thinking you’ve got eight hours, you might only have four.

What happens is people don’t put their own work on the calendar.

So what that means is you don’t know how long it takes you to serve [00:15:00] that client. You may be counting your coaching call, but you’re not- … counting the fallout and the work- … that comes from those calls. And that’s another thing, is people most of the time don’t have real accountability to what that client costs them to produce.

They don’t know. 

[00:15:16] Janene Liston: And that’s a, So that’s a great point. It’s also one of the things that trip service-based businesses up, because instead- … of thinking of value, they think of- … effort. And what you just spoke about is effort- 

[00:15:31] Kris Ward: Okay … 

[00:15:31] Janene Liston: not necessarily value. And effort, in my- And Janene’s point 

[00:15:37] Kris Ward: Professional expertise don’t soften it 

[00:15:40] Janene Liston: In my world- Yeah

is a measure of efficiency and effectiveness. 

[00:15:44] Kris Ward: Yeah. 

[00:15:44] Janene Liston: It’s not the metric of value. 

[00:15:49] Kris Ward: Yeah. Okay, that’s a really good point, because my other thing- … would be whenever possible, most of the time, unless you’re dealing with daily s- support staff that are doing admin stuff, my [00:16:00] argument is most things should be charged by the project, right?

‘Cause it’s you as the expert that should come in and say, “I did this all the time. This is what it’s going to look like,” right? So if you’re hiring somebody, again, let’s say it’s labor-intensive like a painter here’s the room. Don’t tell me you’re gonna charge me by hour.” Say I do this room all the time.

This is what it’s gonna cost,” right? And because otherwise you’re paying somebody who’s inexperienced more, ’cause it’s going to take longer, right? So there is that. So I think I think it’s… this is a really interesting conversation that honestly could go on for hours because- … we don’t…

You’re right. We never talk about this enough, and as you say one thing it triggers another and I think, “Wow, here’s all these things we’re triggering,” and none of us talk about it. We just go, “All right, look at the ceiling. This is what we’re gonna try,” and then we see if we can get it, and then every once in a while somebody puts up on LinkedIn, “Oh, if you’re, whatever, you should double your prices because y- you’re underselling your worth and whatever,” all these things- that are just philosophies but based on, not any research [00:17:00] or practicality that you’re providing. 

[00:17:01] Janene Liston: Absolutely. I talk about it- 

[00:17:04] Kris Ward: Yeah … 

[00:17:04] Janene Liston: all the time, as

[00:17:05] Kris Ward: yeah. 

[00:17:06] Janene Liston: But yeah and part of it is just having the awareness around these things. And then part of it is having that process, because if we go back to how can you work more effectively… what I tell people is that, so you had said of course you pay more for somebody who’s less experienced. But if you look at it from the flip side, as you gain more experience in your business, if you’re charging based on time only- 

[00:17:30] Kris Ward: Yeah.

… 

[00:17:31] Janene Liston: Then you would, your customers would pay less to get- Yeah … better results faster. 

[00:17:36] Kris Ward: 100%, yeah. 

[00:17:37] Janene Liston: So it’s about putting it in the right perspective for yourself so that it shifts your thinking. Now, I know a lot of people when it comes to going to packages and things like that, they get very nervous because they think, “Oh, but what if it takes me more time?”

And that’s why I say it’s a measure of your efficiency and how you set yourself up to work. It can be a measure of customer acquisition cost and things like that. But it’s not necessarily the metric of value that you present to the customer. 

[00:18:08] Kris Ward: That is a very powerful distinction. Okay. What are some other things that we’re just not even knowing enough to poke into?

‘Cause these are really, I don’t know, they’re very thought-provoking points you’re bringing up. 

[00:18:21] Janene Liston: Good question. So I, one of the, one of the other things that is maybe interesting to talk about when you get into longer term, especially service-based businesses I have stories from other areas like products and software as well, but we’ll focus on services for now is people are afraid to change and adjust their prices.

[00:18:42] Kris Ward: Okay. 

[00:18:42] Janene Liston: They don’t wanna rock the boat. They don’t know how to do it. They get three, five, eight, 10, I’ve even seen 20-plus years 

[00:18:51] Kris Ward: Wow … 

[00:18:51] Janene Liston: into having the same prices. And then, the problem is that pricing problems don’t go away if you just let them be. [00:19:00] They get more painful and bigger.

And they tend to, they have a knock-on effect because you know the problem is there.

You’re afraid to address it. You don’t know how, so you leave it, and then you’re beating yourself up for doing that down the line. I had a client come to me a couple years ago and she said, “Janene, I just need really good arguments.” And I said, “Why? Why would you wanna argue with your customers?”

Now, she wanted to be able to defend her prices. Yeah. And I said, “Actually, what you need is you need to be in a position to lead that conversation from value.” Yeah. So if we go in and we do the work, and you understand the value behind what you’re doing, and you understand where you should be s- positioned versus competitors, you understand what they’re willing to pay, if you understand these things, then you can lead the conversation from a different place, and there’s no need to be arguing with your customers.

You don’t have to defend. You can lead from [00:20:00] value. 

[00:20:01] Kris Ward: And then you’re not defensive. It’s just a bad situation. You’re coming in on the back foot with, the wrong energy when you’re defending. And to that point also, I would say that, excuse me, when you are doing it and you’re like, “Oh, I should’ve been changing these prices,” you’re still human and you’re coming from a position of being resentful.

Yeah. What, did they ask me another question? Do you know that I’m cheaper than every…” And now you’re having all these arguments with people who are not in the room, but that, I think they smell that off you. I think it has a negative impact, for sure. 

[00:20:31] Janene Liston: Yeah. Of course it does.

And there’s also this element of boundaries in pricing. Yeah. So especially in service-based business, you don’t set those boundaries clearly, and this was a problem in her case as well. Not only were, was she severely underpriced- Because she hadn’t kept up with things. But there were two other dimensions.

One, complexity, because she had always raised prices for new customers, which meant [00:21:00] she had about 20, 25 customers at the time, and after eight years of not r- changing her prices at all, all of her customers had different prices. 

[00:21:09] Kris Ward: Yeah. 

[00:21:10] Janene Liston: Even different legal entities within the same company- … had different prices, which, you see the ricks- risks- Yeah

and the complexity there. Yeah. And then the ways of working had gotten fuzzy over the years. So for example, they were given a daily rate, but they were working, because she didn’t set the boundaries, they were working on an hourly basis and canceling- … meetings last minute and shifting things here and there, and not being respectful of her and her time.

But it’s not up to them to manage that, it’s actually up to her to set those boundaries and be clear about them. And she hadn’t- 

[00:21:47] Kris Ward: Otherwise, they’re like- … done that … “Oh yeah, this is cool. She doesn’t- Come on. Yeah, we can reschedule. She doesn’t mind.” That’s a really good point, and I think, what you’re saying too is really, it sounds like what she was doing, which so many people do, [00:22:00] is just as you need more, you hope to get more, and you push the envelope- envelope a little bit with the next client and say, “Okay, great, fantastic.

I got a little bit more from them” and you’re trying- … to raise your prices, but you’re doing it a hopeful and one-off kind of situation. 

[00:22:14] Janene Liston: Hoping, yeah. Yeah. Hoping that it works, but she was able to go into the conversat- she had a w- her biggest client, who was almost half of the business- 

… 

[00:22:23] Janene Liston: Had by far the lowest prices and shouldn’t have.

She knew it. They knew it. I know they knew it. 

[00:22:30] Kris Ward: Yeah. 

[00:22:31] Janene Liston: Yeah. We worked our way through it, and she was actually able to increase the price with them by 40%, and they accepted it, which is amazing. 

[00:22:39] Kris Ward: Yeah. 

[00:22:39] Janene Liston: Yeah? And it was- Imagine. Oh. She was terrified, I can tell you, but she actually, she did the work behind it.

She made those decisions and understood why it was important and why it was the right thing for her business, and then was able to lead that conversation with the client in the right way. 

[00:22:57] Kris Ward: I think this is such an important conversation to have because we [00:23:00] always- … lean forward and push our way through the door and talk about sales.

But then, you could find probably in any given room different sales professionals. They’re all there teaching you sales, and I’m not disregarding that. That has- … its place and its purpose. It’s all good there. But to that point, a big part of sales is what you’re selling, and that’s the price.

And although you’re out preaching it, it is not something that comes up in our conversation day to day or week to week, right? So I think it is really important to highlight that, ’cause clearly sales are really wrapped around how much can… am I willing or interested or can afford to pay, or what the…

so many aspects, as you say, go into the pricing, and w- we never talk about that. We just talk about the sale. Get the sale. What are we s- what are we selling and for how much is a big component. 

[00:23:46] Janene Liston: That’s why when I… Another thing I talk about a lot in pricing is that the price is only relevant in the context of the value.

And if the customer doesn’t understand the value in the same way you do, then you’re gonna have very different [00:24:00] expectations … on what that price should be, right? And that’s often why willingness to pay is so different than what people expect when… or set their prices at. They haven’t laid that groundwork.

[00:24:13] Kris Ward: I… It reminds me of a movie where there was, I forget what it’s called, but there was like three big whales that were captured, s- stuck, and people from all around the globe were coming. It was based on a true story, and they’re all coming around the globe to see if these whales get out. And it was up somewhere, muck tuck nowhere in North Pole.

And so the first day the news c- people arrived there, a kid had cardboard, and he was selling it for 10 bucks. And they’re like, “I’m not buying a piece of cardboard for 10 bucks.” ‘Cause if you put it on the ice and you stood on it, it wasn’t as cold. And then the same person, the next week, after being there a week, he said, “It’s now 25 bucks.”

And she’s “All right,” here’s 30,” right? ‘Cause she couldn’t… She didn’t know what value that piece of cardboard had standing on ice for six hours, right? Of course. So it all goes that way, too. Okay. 

[00:24:58] Janene Liston: Yeah. 

[00:24:59] Kris Ward: Janene, where can people find more of your brilliance? 

[00:25:02] Janene Liston: They can find me at The Pricing Lady.

[00:25:04] Kris Ward: Okay. Thepricinglady.com. 

[00:25:07] Janene Liston: That’s right. 

[00:25:07] Kris Ward: Oh, my gosh. Make sure you share this episode with a business buddy. There’s lots of stuff here that we don’t hear about nearly enough, but for sure I would say most, not at all half the time, unless you’re following The Pricing Lady, and I do encourage you to do that.

So pass it on to a business buddy, and we will see you in the next episode. Thank you again, Janene. 

[00:25:25] Janene Liston: Thank you, Kris. It was a pleasure.