Pricing with your heart

By Scott Sanders on Feb 11, 2018 10:12 am

Derek Sivers, founder of CDBaby and Hostbaby, was a musician before he started those successful companies. He has been writing amazing articles on his blog for years.  Last week, he wrote about the way he set prices for one of his gigs.

One time a college far away in Ohio, about a 12-hour drive, asked what I would charge to do a two-hour show.

I said, “$1500”.

She said, “Oh, that’s a bit too much. What would you charge to do just a one-hour show?”

I said, “$2000”.

Photo by Zachrie Friesen on Unsplash

Sivers wanted to demonstrate what he valued: “What you’re paying me for is to get there! Once I’m there, playing music is the fun part! If you tell me I have to get back in the van after only an hour, and drive home, then I’m going to charge you more than if you let me play for a couple hours first.”

I tend to advocate for fact-based and data-driven pricing strategy — see past posts on kickstarting pricing discussions with visualizations and how listening to customers can inform your prices.

But it’s important to think about the intangibles, too, like Sivers did.  Ignoring the dollars and cents, do you want to reward certain behavior?  Or discourage other behavior?  Your pricing structure can make that case much more forcefully than any sales presentation.  I love how Sivers thinks about this.