Cost Psychology: Is Price Equivalent To Expectations?

Yes, absolutely! Not only is payment a form of exchange for goods or services, it is a determining factor for human beings to gauge how much we expect from the experience we’ve bought into. <div> Think about it, when you sit down to a meal at a two star restaurant, you expect two star food and two star prices, you also expect to trade your money for the food provided. The same is true when you sit down to a five star restaurant, however, not only do you expect five star food and five star prices, you also expect five star service, five star people, and a five star experience. Heck, we even dress the part of our expected experience… “Just a minute honey, I’ve got to change into something nicer for dinner,” we might shout from the top of the stairs. Restaurants even impose dress codes in certain cases to make it very clear that you’ve selected a top-notch experience. So, as you might imagine, when I was posed with the following question by a friend of mine last week, I referenced this same restaurant philosophy: “Why should <a href="http://www.tonyrobins.com/">Tony Robbins</a> expect anyone to pay $2000 or more to hear and see him speak in his limited engagements?  And to that point, why should his appearances be so limited? He creates an energy that can’t be duplicated by a fill-in. Why would he want to hold that back or charge a fee to be around it that only a handful of people can afford? I look at other professional speakers who are certainly not to the level of fame and fortune of Tony Robins, but they could charge a lot more than $200 a day if they should choose to.”  What does this question actually tell us? A lot, actually. It proves that we value motivation and inspiration so much so that these great speakers are able to charge $2000 for a one day seminar just so that we may feel alive, renewed, believed in, supported, awakened and inspired. We sure will pay a lot to feel better and feed that natural human craving and soulful tug to do more, have more, and be greater than we are in the present. There has got to be something else, but what? … I am reminded of a great conversation with a fellow coach who shared her process with me along with her services and fees. I asked why she restructured her fees to a higher pay scale and imposed a mandatory 3 months pre-paid commitment to her coaching clients. She said that in doing so, she now attracts people who are ready for coaching and who are serious about it. She also found herself attracting more of her target demographic. She reminded me that money is a trade in services and a trade in expectations as well. It is a form of commitment and follow through. And her findings were based on experience. She stated that starting out in her coaching business, she had lower rates and struggled with clients missing appointments, showing up late, and overall had clients who just didn’t seem as committed. She changed her fees (still honoring the lower fees for those who were committed from the get-go) and noticed that her clients came to the calls fully prepared, experienced greater success, higher follow through, and seemed generally more excited and proud of their accomplishments. When we pay $50 for a seminar as opposed to $2000, we not only prepare ourselves more aptly for the experience, but we seemingly program ourselves to obtain exactly what we are expecting from it. It is, after all, the best way to make it all worth it. Not one of us would attend a $2000 seminar and either not know what it was about or expect to get nothing from it, nor would we do so and leave saying, “That wasn’t for me. I got nothing from it and I hated it.” It would mess with our entire social and human psychology, would it not? Therefore, it seems that we financially rate levels of gratification, commitment, and importance based on how much we invest financially. And those who pay more, receive more, because they’ve come prepared and have arrived with a greater sense of expectation in positive results and will go to greater efforts to make that investment worth it. So the next time you attend an event remember that you’ll get what you invest and for those of you planning on delivering a class, seminar or specialized service, decide who your target audience is, how serious they are, and what it will take for them to commit to the level required to best receive what you are offering. And to everyone, believe in the goods and services you and others provide; they exist because we need them. There is plenty for us all to enjoy our lives. Plan for success, expect great things and live bold! To Exceeding Expectations, Lacy </div> 2009-07-05T23:38:46Z