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The Magic Cafe Forum Index » » Tricky business » » Repeat Client Raised Price Question (4 Likes) Printer Friendly Version

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55Hudson
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Lou and Mary,

There was a concept I studied in business school 25 years ago (reunion in May!) called Economic Value to Customer. You can do a quick internet search, but basically it is understanding what your customer’s alternatives are and how important the offering you have is to them.

Think about a corporate sales meeting. The national sales team of 70 will be in town for three nights. You are hired for strolling magic and an after dinner show one evening. What’s a reasonable price?

Obviously can’t give a concrete answer, but think about it this way. Assume flights are $500 each and hotel rooms are $200 per night. That’s $1100 per person and excluded meals - $77000 for the event, before you even get to professional program or entertainment. This is a $100,000 investment on the part of the company. If your price for the evening is $1000, then you are just a rounding error in their budget. (Not suggesting $1000 is an appropriate price, just putting that number in perspective)

Pretty simplistic, and certainly guys like Lou, Donny and Mindoro who have been doing this for years understand in much greater detail, but that’s the basic business theory.

Hope that helps.

Hudson

PS. Suspect most coaches/consultants recommend doubling price is because that’s a mistake that almost every magician looking for business advice is making.
Mindpro
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Quote:
On Feb 14, 2019, Mary Mowder wrote:
I get that you are saying we need to assess our value but beyond that I'm not getting what you are saying we should do.

What are the areas one would assess and how would you place a value on them?

Like for instance I entertain and get good reviews, I've won a few contests and my friends say I'm good. How does that translate into value?

I'm not trolling here, I honestly haven't a clue. Those of us in this position feel like we are marks for the afore mentioned marketing systems that just say double your prices.

Any advice on how to know which directions on assessing our value are on the up and up?

-Mary Mowder


I do not think you are trolling at all, but just trying to gain a better understanding of the issue. Among other things, value comes down to how others (customers) see and perceive your significance and worth. It is not about how you see your value but how your value is seen, felt and experienced by your prospects and customers. It is their reception of the value you project that matters. It is all about them and from their perspective.

My first bit of advice is stop thinking in terms of your show or performance. There is a place for that but that comes later or even last. First think in the terms of benefits and expectations. What is different, special or unique about you, your business and what you offer?

As an exercise, start by thinking of and making a list of 20 things that are unique or special to you OR things that are of significance and importance to the customer (from their perspective, not yours) even if it is not unique as others may offer it as well, but these are things that would be seen important or of value to your customer. This will not likely happen in one sitting, so take a week to two to continue to think about it in your mind. Then look at your list and see how many are unique to you? If the answer is none or only a few, this is an area that you should give some attention. What could or can you do that is special or unique to your customers that could be seen as value?

You should also remember that there are two types of value - Physical/Tangible Value and Emotional/Psychological value.

As you go deeper into the understanding of value you will discover there are other types of value as well such as implied value, invisible value, assumed value, imagined value, and more. I have so many stories that I could tell about these, some are hilarious. But that is for only after there is a basic or foundational understanding of value established first.

Getting nice reviews, winning a few contests and having friends say you are good is of little value to the paying customer. These are not enough to create true value. Anyone can have these (or similar). I receive promo all the time from performers proudly boasting and using the line "Voted #1 by my customers!" So what? What does that mean? And in reality there was no voting, no formal poll - it is just uneducated performer boasting looking for something to say because they either don’t have anything of value to really boast about or they don’t know how to create value.

Then on top of al of this there is Perceived Value. Several here have performed at the White House Easter Egg Roll. They use this as one of the 20 things on their list that is special or unique to them. While it is not unique or exclusive to them, it is something few can claim. And while we may all know it only really means they offered and submitted to do a free show outside of the White House for the staged event for media purposes, to their customers it seems impressive and creates the mentality of if they were good enough to perform at the White House for the President and First Lady’s event, they must be good. Not necessarily true but that is the perception.

Same for getting and using press and media coverage with articles in newspapers and magazines on you and your business, clips of you on television programs or news programs. I cover all of this and so much more and of course how to use and monetize this in my Press & Media For Entertainers book. This creates perception and that perception has perceived value, and in many cases actual value (if done correctly)

Let me give you another example of value and perceived value working together. Many of us grew up in the 60's and 70's when many television stations had local programming. Many markets had a local clown, kids show, cartoon show, etc. Many used performers including magicians on these show. Many were hosted by kids performers. Every kid in town watched these locally produced shows and they had a huge fanbase. Most were hosted by local kids entertainers and performers. Their show created value for them. Now lets say the host of one of these shows was a magician. Now lets understand in reality he was really only an average magician at best. You know you are better, more skilled and experienced. You also know a dozen others in your area (say a 30 mile radius) that are clearly better and more talented than the t.v. host. Yet, you were only getting $250 per booking, while he was getting $1,000 or more per booking. It is not because he is better, he’s not. It is because of the value and perceived value he has because of his positioning and the benefits of the media and mass exposure.

Same for these guys and gals in America's Got Talent. They aren’t always the best, but they use their appearances to create value to the customer (again, if done right).

These are just a few examples of value, the different types of value, and how to create and use value. It doesn’t have to be television, media or the White House, I just used these as examples. As we regularly see here many here in Tricky Business often buy into this by seeing the White House, media clips or articles and such as a big deal and impressive even within our community.

This all must be created and designed. If you just sit back and think your value will establish itself you will be wrong (not you Mary, but in general.)

Like I have discussed in the press and media threads here, we must take control and create this ourselves. There are many ways to create value. Start thinking in terms of value and thinking and operating from the customer's perspective. They are uninformed, minimally informed, or often misinformed. Understand that. Use this as an opportunity to educate them while positioning yourself and creating and establishing value.
Mindpro
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Just curious if anyone has progressed in creating their value as a performer and a business? There have been some good things offered here so I just wanted to see if anyone followed the exercise or had any questions?

Several have commented the "just ask the customer for your value" is not creating actual value which I would agree. Plus "customer" needs clarification - in stating this to you mean the event planner that booked you, are they the customer you are referring to, or the audience who receives your show? Two different targets with two different set of levels and expectations. More times than not the audience is not paying for you or purchasing a ticket (unless you do theater shows, or 2/4 wall models, so value to them may be different than to those your business is targeting as customers.

All of this plays into your pricing, how and when to raise it and the price you may be able to get within your markets.
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