Pricing power
How much you can raise your price before customers leave — a measure of how replaceable you are.
Pricing power is how far you can move your price up before demand falls enough to hurt. It is not confidence and it is not nerve; it is a measurable property of your position in a market, and it comes from being hard to replace.
Three things build it, none of them fast: a specific audience you serve better than a generalist can, evidence that you produce a result, and demand you did not have to buy. Three things destroy it: competing on turnaround time, accepting work outside your stated focus, and discounting to close. The last is the quiet one — every discount teaches the market what your real price is, and the market remembers longer than you do.
The test is cheap. Raise the price on the next proposal, not on the existing book. If it closes, the old price was information about your fear, not about the market.
Worked: at $2,000 a project you close 8 of 10 proposals — $16,000. At $3,000 you close 5 of 10 — $15,000 for three fewer deliveries, which is roughly 60 hours back. If you close 6, you earn more and work less. Pricing power is what decides whether that sentence is true for you, and it is built before the proposal, not during it.
Also known as
- price elasticity
- value-based pricing
Relevant for
- Creators
- Every discount you offer to close a launch teaches your audience to wait for the next one — you are training the buying behaviour you will complain about later.
- Business owners
- Turnaround time is the one thing a larger competitor can always beat you on; specificity is the one they cannot, and it is what your price rests on.