Pricing Mindset
The Pricing Feedback Loop
When you increase your price, you have more profits left over to reinvest into better machines, better staff, a better facility, a better service.
A better service allows you to justify HIGHER prices in the future.
This is the Virtuous Price Cycle.
On the flip side… if you DECREASE prices, you have fewer profits to reinvest and your service slowly degrades, making it harder to charge high prices in the future.
This is the Viscous Price Cycle.
Price Affects Everything
The diagram below is borrowed from the book $100M Offers by Alex Hormozi. It illustrates exactly what happens to your business when you increase or decrease price.
Price ALONE Makes Things More Valuable
A study at Caltech took a $90 bottle of wine and divided it into two samples: one labeled at $90/bottle and the other at $10/bottle.
They found that people conclusively preferred the $90 bottle even though it was the same wine. MRI scans also showed the reward area of their brain lit up when consuming the $90 bottle. Not so much for the $10 bottle.
You can check out Business Insider’s take on this experiment on Youtube here.
In summary: leaving all other variables the same, price alone makes your service more valuable. This is especially important when the results of your service depends on the level of commitment of the buyer. This will be discussed next.
You Have A Moral Obligation To Charge High Prices
Although a lot of the results of aesthetics is dependent on the provider and the procedures being performed, a lot of it depends on the patient as well.
- Commitment to homecare
- Not missing important appointments
- Staying hydrated and out of the sun
- Making positive lifestyle changes
If you have rock-bottom prices, the level of commitment to these activities will go down and your clients will not get as good of results as if you charged high prices.
PLUS, if you see aesthetic treatments as a catalyst for positive change in other areas of life, charging high prices will only further influence this change.
Also placebo effect is a real and studies phenomenon in medicine that is gaining even more traction. If you charge high prices, this affects the belief that the treatment will work. The placebo shows that belief alone is enough to cause physical changes in the body. Don’t discount this.
Lastly, if you do not charge high prices, your service will eventually degrade to the point where you will not be able to serve your clients at the highest level. Those who need you the most will be let down when you have to close your doors due to not making enough money.
The Mirror Effect
The Mirror Effect states that one’s outer reality is a reflection of their inner reality.
In other words, what people put out in the world they tend to receive.
So don’t be cheap! People will be cheap to you.
>> If you heavily judge others, you may be heavily judging yourself
>> If you nickel and dime people, you may find people always asking you for “deals”
>> If you constantly need to “think about it”, people will do the same to you
>> If you don’t believe in your value, others won’t either
Knowing this to be true, you must become the client you wish to attract.
- Be decisive in making decisions. Make it your goal never to have to “think about it” again. Make it a clear “YES” or “NO”. Having things in limbo creates unneeded stress
- Pay your vendors on time, every time. Make yourself their best client.
- Tip very well and be generous.
- Stop thinking of luxury things as too expensive
Understand Your True Value
As a provider it’s easy to forget the true value you provide to your clients. Review all the benefits below and then revisit whenever needed.
Monetary Benefits
- Delay or completely avoid the need for expensive plastic surgery
- Eliminate spending of money on different skin care products or solutions that don’t work
- Avoid spending money to fix a less experienced provider’s botched work
- If in sales, close more deals due to increased confidence
- Decide to work harder on career or start a new one due to increased motivation | Time Benefits
- Time saved scouring the internet researching what treatments and products to use
- Time saved waiting for lesser solutions to work
- Time saved caking on makeup every morning
- Time saved waiting for plastic surgery to heal
- Spend all this saved time having fun with your kids, working on a passion project, spending more productive hours as work, etc.. | Social Benefits
- Changes your identity. Investing in your appearance proves you’re someone who takes care of themselves. Permeates into all areas of life
- Will be more social due to increased confidence and feeling of self-worth
- Friends will notice, but never know. “Wow you’re glowing, what did you do?” |
Pricing Strategy
People get the best results in aesthetics by committing to a long-term plan.
Long term plans are best sold through packages or memberships.
Therefore, your pricing strategy should encourage people to sign up for packages or memberships, NOT one-off treatments.
The best way to do this is to maximize individual treatment prices.
This accomplishes three things:
- It establishes premium positioning.
- It discourages people from buying “one-offs”.
- It gives you room to discount packages and memberships.
If your prices are low to begin with, there will be no room to incentive package sales because the margins will become too low.
Starting with high prices will allow you to give incentives for membership & package sales while staying profitable.
It's a win-win.
You make more money by selling full packages and memberships.
Your patients get better results and are happy because they get a deal on a premium service.