Don’t Be Cheap | 118

MORI 118 | Don't Be Cheap


Are you too cheap?

And I don’t mean whether you penny pinch too much. Are you being paid what your services or product is truly worth in others’ eyes? Or are you the “cheap” option?

Last week, I showed one client how to earn an extra $200,000+ each year WITHOUT increasing sales in his business! Learn from Cash Flow Expert, Chris Miles, how to tell if you’re too cheap or not!

Tune in now!

Chris Miles Bio

Chris Miles, the “Cash Flow Expert,” is a leading authority on how to quickly free up and create cash flow for thousands of his clients, entrepreneurs, and others internationally! He’s an author, speaker, and radio host that has been featured in US News, CNN Money, Bankrate, Entrepreneur on Fire, and has spoken to thousands getting them fast financial results.

Listen to the podcast here


Don’t Be Cheap

I have a great episode planned for you. They’ll be very beneficial. One of my clients was hoping to free up $10,000, $20,000, or more of cashflow in a year and found out in one appointment that this will easily probably increase his income by about $200,000 per year, so it’s huge. I want to talk about this because it’s important. I’m going to title this, “Don’t be cheap,” to put it simply. I’m not talking about like if you’re living on rice, beans, and all that stuff. Although that does apply, I don’t want you to be cheap that way either. I want you to enjoy life and have a full life and invest in that.

This is referring to you, especially if you’re in business, and it even applies to you if you’re an employee because if you’re an employee, you’re still paid for value like everybody else. You hear me say all the time, “Dollars follow value.” The more you create value for other people, solve problems, serve them, and be able to add value to their lives, the more you can justify and receive payment when it comes to money.

When I was talking to this guy, we were talking about some different things and trying to help him with his cashflow situation because it was pretty tight. As I started to dig into the business a little bit and look at the different services and packages that he offered in his business, I realized something. I said, “You’re a lot less expensive than I expected.” He said, “Yes.” He had two different businesses in two different locations. One was the down sell for the nicer business. It was like, “You want the cheap option, go to this other place. It’s in the other town.”

The more you create value for others and solve problems, the more you can justify your price. Click To Tweet

I was surprised because I thought, “This is interesting.” I said, “We need to talk about your pricing.” I’m going to share this with you, too, because there were two marketing studies that were done that talked about this. I’m sure there’s probably more than this. I told him, “This is not good.” He was cheap. My advice to him was, “It’s time for you not to be cheap anymore.”

I asked him, “How do they compare to everybody else value-wise?” He said, “Even that my cheaper location, it’s in a weird location.” That’s the downfall. “Compared to other places like mine, I’m probably still the cheapest.” I asked him about his other location and he said, “I’ve got this stuff. I offer this and this.” He had so much unique stuff. He was the highest end in his entire area.

When I asked him, “How do you compare?” He said, “I’m a little bit cheaper than the average.” I said, “I found our biggest money leak.” I told him, “Here are the studies. One, when people are given options, they look at prices and they’re price comparing, people don’t necessarily go for the cheapest option. In fact, what they found is that more often than not, they don’t go to the cheapest option because people imply that price and value are somehow correlated.”

MORI 118 | Don't Be Cheap
Don’t Be Cheap: If something is expensive, it’s got to be good.


I asked him, “Do you have a blender?” He said, “I do.” I said, “Great. What kind of blender do you have?” He said, “I’ve got the Vitamix.” I said, “Vitamix, that’s a pretty expensive blender, isn’t it? He’s like, “I paid like $400 for it.” “That’s even more expensive than a Blendtec that you could get at Costco for $300 and more expensive than a blender you could buy at Walmart for $20, $40, or $50, even my decent one there. Why did you go with the Vitamix?”

He said, “The feedback on it was great. They had a lifetime warranty and had all kinds of stuff. We expected it to last longer.” I said, “You expect it to last longer. Why?” He said, “It seemed to be higher quality.” “How did you know?” “From what was said about it. I saw a demonstration. Plus, we figured if it’s that expensive, it’s got to be good.” I said, “Bingo right there. If it’s expensive, you assume that it had to be good.”

I told him, “Look at computers. There are Apple computers versus normal personal computers, and things like that, and use Windows of that nature. Mac computers are sometimes double the price, but when it comes to technology, they’re not double the technology and value. People, in that case, buy a brand or the name.” Granted, I have an Apple computer and I love it and it never had a virus on it to this date, but still, I’ve been very satisfied with it. I know it’s not the most advanced computer out there. I didn’t buy it for that reason. I bought it because I wanted something that I could use. It was simple. It allowed me to do what I do best in my business, and that was it.”

When people look at your pricing, they compare you to everybody else. If you're the cheapest option, figure out what they could assume about you. Click To Tweet

I said, “The same thing with your blender. You bought probably the most expensive blender you could get, at least the one I know of. You got it and have you been satisfied?” “We’ve had it for years.”
“Great. When people look at your pricing and compare you to everybody else and say you come into the cheapest option. What do you think they’re implying or assuming about you?” He’s like, “I see where you’re going. My prices need to be higher.” I said, “They need to be.”

It’s interesting because he said, “It’s funny because I started with higher prices. I assumed coming right out of college or out of school that when I opened up my first business that this was high value and I put higher prices, but then after a certain period of time, I got worried because I was one of the higher price people or even at least around the middle of the pack, so I dropped my prices.” I said, Yes, that’s where scarcity comes in.”

Scarcity stops you from doing things that are smart sometimes. This is counterintuitive because what I told him is, “The studies have shown that the cheapest products are bought the least. They’ve chosen the least. The ones that are chosen the most are the top two, either the category where you’re in the middle of the pack or the most expensive.” Everybody will grab the most expensive, but you tend to get less complainers at the most expensive level because they want and are looking for value, not price shopping.

MORI 118 | Don't Be Cheap
Don’t Be Cheap: Your value should be reflected in your price.


I told him, “Worst case scenario, you should at least be the middle of the pack with everybody else, and then show that you’ve got some good value because you’ve got obvious things. Your location is premium. It’s better than any other location in the area. You offer all these perks that other places don’t offer.” That’s amazing. That should be even higher priced than the average to represent the value. People would expect it. If you come in lower than what they expect, they don’t have a problem with it.

I’ll give you an example. One of the packages he has is almost $10,000. It’s $9,500. The funny thing is that when he first started that business, he started with a $14,000 option. It was about $5,000 higher and people took it. After a while, he thought in his mind, I’m probably too high-priced and he went down in price by $5,000. I looked at his other location. I said, “Even your premium package, which is the second highest package in your other location, that’s $3,800.”

I said, “Here’s the next study. There are psychological price barriers. If something was selling on the shelf for $3 and all of a sudden, the price went up to $5 the next day across the board. It’s $5 no matter where you find it, would that deter you from buying it?” “Yes.” “In your mind, is there much of a difference between $3 and $5?” “No.” “Exactly. That’s a price barrier.” There are psychological points.

Scarcity stops you from doing things that are smart. Click To Tweet

I want to go into all of them because there are a lot of them. I do this with a lot of my clients where I talk to them about all these different barriers. Sometimes people are priced at a point where they could charge more and people won’t bat an eye. I’ve seen this in a lot of chiropractors I’ve worked with, where sometimes they’ll say, “My per patient visit is $35 per visit.” I’ll say, “That’s horrible because at the minimum, it should be $40 if not $50. There’s one at $25 and then there’s one at 50. Test this out. Go up from $35 to $40 and see what happens.”

They would go up and that $5, nobody knows. There are a few people that said, “I wonder when you’re going to raise your prices. I didn’t want to say anything.” Nobody wants you to raise your prices on them. If you’re going to stay cheap and not value yourself that much, they’ll keep paying and won’t say a thing, but that won’t stop them from paying you.

In fact, every time, I’ve had dozens of people say, “Chris, what if I lose clients? What if I lose patients?” Patients, if you’re a chiropractor or a dentist. Some of them were afraid of losing patients. I said, “No. You probably won’t. If you do, you’ll probably lose the complainer.” Even though the complainers would say, “You raise your prices. Here’s my card.” That’s the thing. I’m not saying you should jack up all your prices and be super expensive where people can’t afford you. I am saying that your value should be reflected in your price.

MORI 118 | Don't Be Cheap
Don’t Be Cheap: You don’t want to be cheap if you offer good value. If you’re just average, like everybody else, then charge what everybody else charges, but don’t be cheaper.


I told him, “With your price, that $35.95 could easily be $49.95 because there’s a price barrier at $5,000.” The one below it’s $2,500 and there’s no one at $5,000. I said, “Think in your mind, if you were paying for somebody else’s services, that’s worth the value or the service and you saw it for $3,800 or another one for $5,000. Would you see the much difference in price in your mind?” “No, not really.” “Even go here with what you did, $37.95 compared to $49.95, is there that much difference?” “No.” “That’s why, so try it.”

He then did and I said, “That’s going up $1,200 if you do that pricing. How many of those packages did you sell last year?” He said, “I had sold about 80.” I said, “Here’s what happened. You lost. 80 times $1,200 is $96,000 from that one package alone. He’s got a total of eight packages. I said, “That one package alone, that’s one of your more popular packages. You lost $96,000.” He said, “Wow.” I said, “Yes. From now, you need to raise these prices for all of them across the board, especially that one location that was cheap.”

I was like, “Maybe you keep like the lowest package right around there. Maybe raise up a little bit, but not a ton, and everything else we need to raise up. He’s like, “Yes. I need to raise up my nice location too.” I said, “Yes, those are pretty low as well. Let’s get those back up to where you were charging initially. Get them back up there. If you do this, this alone will probably increase your revenue in your business by at least $200,000. If one package out of those eight increases it by $96,000, you’re probably looking at $200,000 to $300,000 conservatively per year.”

The reason he came to me and hired me was because he was in a tight cashflow situation. He made good money but still wasn’t able to be that profitable. He was looking to have more money so that he could bring more money home. Looking at that, we’re like, “Yes, we could do some awesome things.” That’s the point is that you don’t want to be cheap if you offer good value.

If you’re average like everybody else, then charge what everybody else charges. Don’t be the cheapest. Psychologically people will think that, but two, also make sure you’re at the right price point for the product. Don’t leave money on the table like he was doing. He was leaving $1,200 on the table every time, which cost him $96,000 over the last year. Imagine what that could be year after year.

The point is that we want you to make sure you’re getting the value that you have. If you’re one of the best people in your field or the top elite of what you do and offer great value or more value than other people do, then make sure your price is above the average, if not the highest price person. That’s scary and it requires a lot of faith. That’s why abundance is important. You got to have that abundance mindset and be able to accept it.

The key here is that psychologically you have to believe that you’re worth more than that. You might accept less and that’s great, but you got to believe that in your mind that people will value it more than what they’re paying you. If you can’t justify it, then don’t. I could charge higher prices than I do right now. My prices are low and I’ve been advised to increase them again. I’m not going to do that quite yet. There will be a day that will happen. For now, I’ve found a nice sweet spot, and that’s where I’m at.

I’m more expensive than some coaches, but I’m cheaper than a lot of them. I’m okay with that. The great thing is I guarantee that people, if they’re a right fit for my clients and we screen them through, they’ll make their money back within a year because that’s what my whole goal, in six months to a year, we can help them make that money back. I help them find at least the same amount in that year, if not double. I feel confident about that. That’s why I don’t feel like I have to be desperate and beg people to work with me.

Will there be a day when I might be one of the highest price people out there? Probably, but for now, that’s where I’m at. I’m still at a great price point and that’s how it works. People have complained less and have gotten more results as they’ve paid me more too. They’ve been happier. They sent me more referrals and it’s crazy. People are happier than you being the cheap person. My advice to you is don’t be cheap. Everybody go and make a great prosperous week and we’ll talk to you later.