Your Dream Studio: Building a Price List That Sells with Jeff & Lori Poole
Turning Your Price List Into a Sales System
For the past several months in The Business Corner, we’ve been building your price list from the ground up. We started with cost-based pricing as a foundation (October), and then looked at alternative pricing methods for products (November) and digital files (December). Last month, we built the important first half of your price list: the à la carte menu. Remember that the function of the à la carte menu is to be a bare-bones product offering that is both paltry and expensive. This serves two purposes: If a client insists on shopping from the à la carte menu, you will charge enough that your session will be profitable. But more importantly, it will drive the majority of clients to shop from your sales system, helping you achieve your target sales averages. The next step is to create your sales system with your full product offering.
What Is a Sales System?
For successful sales, you have to create a system that makes getting to your target sale easy and fun. This month, we focus on the role of your price list in making your target sale the easiest way for the client to buy from you. Your sales system is more than a price list; it involves your entire client experience from inquiry through product delivery. For simplicity’s sake, we will define your sales system as a collection of services and products that are designed to help you reach your target session average. It is not just a list of every product you offer, but a systematic approach of presenting different items and offers that your clients can’t resist.
Jeff and I often use the example of Bath & Body Works. Let’s say you enter the store to purchase an $8 bottle of lotion. You see a sign that says “Buy 2, Get 1 Free.” Since that seems like a good deal, you grab two more bottles, putting your subtotal at $16. As you wander the store, you see another sign for a free gift with purchase over $20. So you opt for another bottle. Your subtotal is now $24. While you wait in line to check out, you stand next to a carefully placed display of impulse-buy items (hand sanitizer, travel-size bottles of your favorite soap). By the time you complete your purchase, your intended $8 lotion has become a $30 purchase of several items. Yet you leave the store excited by the great “deals” you’ve scored. You are happy with your purchase, and the store is happy with its sale.
That scenario is a very carefully thought-out sales system using the sales psychology tactics of bundling, incentives and more. We should be using similar business tactics in creating our own sales systems to encourage clients to buy more, all the while celebrating the great deals they’ve scored. It’s win-win.
Price List Strategies: À la Carte vs. Bundling
As we discussed last month, your à la carte price list is the foundation of your sales system. This menu is meant to seem paltry and expensive in comparison—but in comparison to what? Your price list should include two methods for the client to buy: à la carte being one, and the other employing some kind of bundling technique such as packages, create-your-own collection (or CYOC) or a combination of a base product plus product credit (which we’ve dubbed Base Product Plus, or BP+ for short). While packages, CYOC and BP+ have some subtle differences, the core principles are the same: The client is required to purchase multiple products; the combination of these products leads the client to your target sale amount; and the client is rewarded for their bulk purchase with a discount, compared to your à la carte menu. Let’s explore these bundling systems in more depth.
The most familiar option is packages. These are combinations of products prearranged by you to maximize the sale of profitable products. From a client standpoint, the benefit of a package is simplicity: Fewer decisions have to be made to complete the purchase. The drawback is inflexibility because clients may not be able to choose the exact combination of products they want.
This has led many photographers to use a CYOC system. Instead of prearranged combinations, clients may choose from curated lists of products or product categories. For example, the client chooses one album option, one wall portrait option and one digital product option. When the client has chosen the requisite number of options, they are rewarded with a discount. Clients enjoy the added flexibility, but may be overwhelmed by the number of choices or complicated rules.
A third option, BP+, starts the client purchase with one or two base products, then allows the client to purchase more with a product credit. The credit inflates the price of the bundle, effectively creating a minimum purchase while allowing the client maximum flexibility in choosing additional products. Clients may ultimately purchase fewer products with this system, opting to use their credit to upgrade their base product rather than purchase additional products.
An effective sales system employs one of the above three options—packages, BP+ or CYOC—and then contrasts that one option against the à la carte menu. All three options have pros and cons, and there is no right option. The question to ask yourself is, which will you feel most comfortable selling to your clients? Which makes the most sense to you? A huge factor in successful sales is your own comfort level and belief in what you are selling. For the rest of the article, we will refer to your chosen option as a bundle.
What to Include in Your Bundle
Now that you understand the purpose of a bundling system, the next step is to figure out which products to include. This can feel overwhelming, but it’s really quite simple. When mentoring photographers, I always ask them this question: As a photographer and an artist, which products do you most want your clients to have? The most common options include a wall portrait for clients to enjoy every day, an album to showcase their favorite images, gift prints to share with family and digital files for sharing online. The options you choose should form the basis of your bundling system.
The Psychology of Sales
Whichever your chosen bundling method and whichever products you choose, there are several psychological factors you’ll want to consider to build an effective sales system.
Pull-through is a form of incentivizing most commonly used with packages or BP+. When building your bundles, don’t simply make each bundle larger than the previous. Instead of relying solely on scale, place highly desired items only in the top bundles. If your clients covet digital files, do not place any digital files in your lower bundles at all. In order to access the option for files, clients would be required to purchase a larger bundle, thus incentivizing larger purchases. As a further use of pull-through, you may also consider keeping these highly desired items off your à la carte menu, thereby requiring a bundle purchase.
Real-life example: A “family four-pack” of amusement park tickets is not only discounted relative to à la carte ticket sales, but includes additional perks and coupons to sweeten the deal.
Encourage upsells by offering multiple variations in either quality or size. You might offer multiple sizes of wall portraits, portrait sessions of varying lengths or albums in economy and deluxe versions. Clients will instinctively choose the middle, hoping to avoid the risk of too little or too big. In fact, one method of increasing your sales average is to simply add a new size at the top end of the scale, effectively moving the middle choice up a rung. We used to offer two wedding album sizes: 10×8 and 12×9. Clients would avoid the 12×9, saying they didn’t need the biggest option. So we added an even larger option (14×11), and instantly started selling more 12x9s. This year, we’ve added a 16×12 to see if it encourages more 14×11 purchases.
Real-life example: Car companies offer economy and deluxe models of the same car.
Gift With Purchase
A gift with purchase is a free or discounted add-on with very little cost of goods, but which is highly desirable/valuable to the client. This item is gifted to the client when a high-end product is purchased or minimum sale is reached. You might offer a free mobile phone app of purchased images with any bundle. This incentivizes the bundle over the à la carte and incentivizes purchasing more prints so that more images will be placed in the app. The gift does not always have to be free. You can also “gift” a discount when a milestone is reached. You might offer x% off of a proof box when the client purchases both an album and digital files.
Real-life example: Fragrance companies offer a free or discounted cosmetics bundle with the purchase of a perfume.
Tiered Discounts & Rewards
As a variation on the gift-with-purchase incentive, you can incentivize spending milestones. The client receives a discount or gift when a total purchase amount is reached, and an even better discount or gift when a higher total purchase amount is reached.
Real-life example: Customers often purchase additional items to reach the $50 milestone required to earn Kohl’s Cash.
Encourage clients to purchase more than one of each item by offering discounts on additional items. Offer discounts on album clones. Sell wall portrait groupings as an alternative to single portraits. Offer gift prints in sets.
Real-life example: Rack Room Shoes sells shoes at buy one, get one 50% off. The second pair is nearly impossible to resist.
Pulling It Together
So far, you’ve chosen the products that you believe in as an artist, which will be the pillars of your bundle system. You’ve chosen the specific system (packages, CYOC, BP+) that makes the most sense to you and that you feel comfortable selling. Within your bundling system, you’ve now employed psychological tactics and incentives to encourage higher sales—all with the goal of guiding your client to your target sale amount. When done correctly, your chosen bundle system will be much more enticing than your à la carte menu.
Remember that last month when you built your à la carte menu, you kept the products limited and you marked them up so your bundles would be cheaper by comparison. Your clients will purchase more, they’ll be excited by the “deals” they’ve scored and they’ll hug you on the way out the door.
Don’t miss this month’s bonus video, where we perform a makeover of a real photographer’s price list. By simplifying her price list with the methods discussed in this article, this photographer went from an $800 average sale to a $2,600 average sale—without raising her prices.