How do you know if you’re charging the right price? For a premium service, the answer has as much to do with consumer psychology as it does with math. Price is one of the first signals customers use to judge quality. When it’s set too low, they stop believing you are what you say you are.

In this episode, Rick Mayo and Matt Helland use the Van Westendorp Pricing Model to look at that problem from an owner’s point of view. The framework maps how customers react to a price, from too cheap to be credible to too expensive to consider. Rick applies it to Alloy’s own pricing research on small group personal training. The sweet spot turns out to be narrow, and a business can easily slip out of it by underpricing.

The effects go well beyond a single sale. A low price tends to attract customers who show up less often and leave sooner. It can also change how your own team sees the service, and that affects how they deliver it. This is why higher prices don’t always mean fewer sales. If your sales team never hears no, the price is often too low. And when owners start discounting after a few rejections, they can hurt both their profitability and the brand they’re trying to build.

Confidence in your value has to start with the owner and carry down to the team. When you hold standard on your pricing, customers take the service more seriously, and they tend to show up more, get better results, and stay longer.

Key Takeaways:

00:00 Intro

03:09 The Westendorp Framework

04:00 Point of Marginal Cheapness

05:42 Indifference Price Point

06:24 Optimal Price Point

07:09 Point of Marginal Expensiveness

07:52 Alloy’s National Pricing Research

09:46 Class vs. Personal Training Customers

11:09 What Low Prices Tell Your Team

13:37 The Narrow Sweet Spot

15:24 Borrowing the Brand’s Conviction

18:00 Zero No’s Means You’re Too Cheap

18:53 Protecting Brand Equity

21:01 Charge More, Get Better Retention

22:04 Run the Matrix for Your Business

Additional Resources:

- Alloy Personal Training

- Learn About The Alloy Franchise Opportunity

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