This Psychological Hack Allows You to Charge Premium Prices For Your Products & Services

By the time you finish reading this post, you’ll learn a strategy that will INSTANTLY allow you to raise the prices of your products and/or services. Read below to find out exactly how you can do just that, starting today. [divider]

It was a sunny weekday in June of 2011 — I had just walked out of the office of one of the biggest roofers in Jacksonville, check in hand…

A check for a whopping $200 to manage the online marketing campaign of this roofing company.


Things have changed a lot since that day.

Fast forward a few years…

After a few years of owning my own marketing agency, I knew I wanted to take my business in a different direction — to a higher plateau.

No longer was I satisfied with $500/month clients.

Yes, the business was doing fairly well, but I had to make a decision:

Am I going to create a McDonald’s or am I going to create a Ruth Chris?

And the bigger question is once I choose which route to go, how do I get there?

After agonizing for weeks and months over the direction of my business, I discovered the “online” world of the marketing business.

Before I was solely focused on working with “offline” businesses on their marketing campaigns — lawyers, roofers, pest control companies, doctors, and various other niches.

But when I discovered the online world of things, my business went into a different direction.

I became REALLY good at paid traffic (mainly Facebook ads) and driving leads, sales, and conversions — whether it be for a traditional business, ecommerce, or an online brand.

Many of you know my story, but for those who don’t, becoming really good at those things allowed me to create my own online courses teaching others how to do the same things.

[A Breakthrough…]

What I didn’t know at the time, is that this whole business shift had created a new confidence of sorts — a ‘pep in my step’ if you will, that made me realize there was a ton of value in what I could bring to a business.

So I began charging premium prices for my services.

And people began paying the prices I asked for — imagine that…

If the client balked, that was okay — they weren’t an ideal fit to work with me anyway.

In fact, that same roofer I charged $200 years earlier, didn’t flinch when I quoted him $5000/month a few years later.

Now you may be thinking this ‘mindset shift’ is the psychological hack I referred to in the title of this post, but it’s not!

In fact, it’s quite the opposite.

And ironically, I didn’t know it until recently.

You see, one of the big mistakes many of us entrepreneurs and business owners make when we charge for our products and services, is trying to establish the potential budget of the client we are working with.

And for a long time, it seemed that whoever talked numbers first would lose the negotiation.

It may sound familiar — you meet with a new prospect and discuss your service, and then ask something like, “So did you have a budget in mind for this project?”

Seems logical, right?

Well in light of some old research I recently stumbled upon, it’s actually WRONG.

Even if you ask for a budget and the prospect gives you a number you are happy with, you may have still lost the negotiation. 

How is this possible?!?

I was reading the newspaper recently (yes, people still do that) and stumbled upon a reference to an article from the Harvard Business Review. The article and research was older, but it still got my attention enough for me to search it out.

In the piece, a writer for the Harvard Business Review posted an article about this exact phenomenon of backwards negotiation.

You see, research indicates that we as humans cannot resist the influence of price anchors, no matter how hard we try.

So in fact, the person who gives their price first in a negotiation, actually comes out on top the majority of the time!

And when I sit back and review many decisions I’ve made over the years, it all starts to make sense.

For example, the author in the article gives the example of buying a home.

If the price of the home is higher than we anticipated, we began to internally justify the price. We may begin to notice things, such as the house having a nice big backyard, nice countertops, or anything else we use to internally agree with the price we’ve just heard or seen.

On the flip side, if the price quoted was low, we would do just the opposite. We may began to internally justify the price by noticing how the roof needs repair, the backyard is big, but faces a pond that is murky, or that the countertops are new, but the cabinets are outdated.

In other words, we begin to think, “What is wrong with this house that makes the price so low?”

Now move that over to the business side of things, and it begins to make sense. 

Let’s say you are a web designer — if you quote $599 for a website, your prospect may instantly begin to have visions of a cookie cutter website, an outdated template, and a site that doesn’t work on mobile phones and tablets.

But if you quote $5999, suddenly your prospect envisions a state-of-the-art web presence, tons of cool widgets on his website, and a professional image for his company. We all do this!

Maybe you are deciding between two jackets and one is more expensive. Instantly you may think that it’s better quality, it’ll last longer, it won’t fade, etc.

I even have a real example of this happening to me recently!

I am a pretty healthy guy when it comes to working out and eating right, but recently I sought out a nutrition specialist to help with my eating plan.

I spoke with two people — one quoted $6000 and the other quoted $875.

Even before I understood this concept of price anchors, I began to envision what each option would be like.

For the $6000, I envisioned receiving a full suite of workout plans, hour by hour meals, healthy recipes, and more.

For the $875, I envisioned recycled information about counting calories, working out 30 minutes a day, etc.

Now the crazy thing is after speaking with references for both trainers/nutritionists, they both received awesome reviews. In fact, I would venture to say they both get amazing results for their clients.

But due to the prices they quoted me, I had completely different expectations for both of them.

In this case, the trainer charging $875 is vastly undervaluing their services, considering others pay $6000 for a similar service — assuming they both get great results.

It’s amazing that many times we believe we can’t charge a premium for our services, but nothing is stopping us. We don’t necessarily have to provide anything more than we already are, we just need to seek out clients that value RESULTS more than COSTS, and then charge confidently and accordingly.

And there’s more…

Not only does an anchor price cause us to internally justify and envision results, it also acts as a catalyst for the amount we can actually charge.

For example, if you quote $5000 for your services, and the prospect talks you down to $4200, he thinks he has won the negotiation and is getting a great deal.


But in reality, since you set the anchor, YOU are the winner of the negotiation.

If your client had told you his budget was $3500, you may have thought that sounded like a good deal and taken it.

Or maybe you told the client that you can’t do $3500, but you can do $4200.

Suddenly, the client feels like he got screwed. You charged $700 more than the anchor price he gave you.

But in the first scenario, the client thinks he got a great deal, because YOU threw out the anchor price — suddenly $4200 sounds like a good deal when you charged him $5000 to begin with.

If you don’t, you run the risk of falling victim to this phenomenon. Research shows that once that first price is thrown at, everything from that point forward is based on that price. The way we think about the product or service, the expectations we envision, and any future prices that enter the equation.

Again, for another quick example, imagine you go shopping and see a sweater for $30, but it’s 50% off. Suddenly you feel like a winner because you got a nice new sweater for $15.

You just fell prey to a price anchor!

You think you are getting a great deal because the retailer started off the negotiation at $30.

But if that same sweater was listed at $15 with no discount, you may think it’s a good deal, OR you may think to yourself — “I wonder why it’s so cheap…is the quality good, will it last long, will it shrink?”

Let’s look at two more real life examples:

Recently I was looking for a fleece to buy.

The image below shows the fleece I liked on one website I found it on.

Screen Shot 2015-01-29 at 1.09.34 PM

Notice the $60.00 crossed out and the $34.99 in red.

This website has set the anchor at $60.00, so $34.99 now looks like a bargain.

That was until I checked another website…

Screen Shot 2015-01-29 at 1.12.17 PM

Now this site has a bit of price anchoring as well, but the “regular” price listed here is $34.99.

If I came to this website first, I may see the $29.99 and not think it’s that great of a deal. It’s only $5.00 off the regular price, right?

So we can see how the first website actually makes the $34.99 price tag more appealing than the second website with the $29.99 price tag.

Obviously when looking at them side by side, you can see where the better deal is, but based on how each site uses a price anchor, the first site gives off a much better illusion of a “deal” then the second one.

And finally, one more example…

This one comes from the sales page of one of my favorite bloggers, Ramit Sethi, and his Zero to Launch course he just re-opened.

Screen Shot 2015-01-29 at 1.45.29 PM

Notice that Ramit offers three options for people who buy his course — all come with different features and benefits, and obviously the higher plan you pick, the more you get.

There are multiple things going on here, but I want to point out three:

1) First of all, Ramit charges a premium for his courses, and he’s not afraid to let you know. When you see these prices, your mind will shift one of two ways. Either you will think the price is ludicrous (in that case, you probably aren’t Ramit’s ideal customer) or you will think that this must be the most amazing, complete, results-oriented course you’ve ever seen.

Now again, there’s a lot of things we aren’t seeing here, like the sales page, emails that were used in the presell process, etc, but you get the point.

2) Look how underneath the cost for each option, Ramit breaks it down into a daily amount. You see this big amount, for example, ’12 monthly payments of $299,’ but then right underneath it, you see that it breaks out to $9.83 per day. Our mind sees this big number (the anchor) and then we see that it actually breaks out to less than $10/day, which really makes it seem more reasonable in the decision-making process. “That’s less than I spend on lunch every day.”

If Ramit had done the opposite, and listed the daily price first (as the anchor), your mind would see a reasonable number, $9.83/day and then suddenly shift to a large number, $299 for 12 months. This would lead you to focus on the $299 instead of the $9.83.

3) Finally, Ramit has three options. Now if you start to the left, the 12 monthly payments of $199 may seem like a lot. But as you move your way to the right, suddenly that option seems like a bargain. In some cases, I’ve seen sales pages with three options put the least expensive option on the left, the most expensive option in the middle, and the middle price to the right. In theory, this trains the mind to see cheap, expensive, reasonable, with most purchases coming from the “reasonable” option.

Regardless, the options really get the mind working. You may think the $199 option is too expensive, but then think it’s a bargain after seeing the $899 option. Or, you may start with the $199 as your anchor, and then when you see the $899, suddenly your mind begins to wonder about how amazing the $899 option must be if it’s $700 more per month.

This just shows you there are multiple ways to use price anchors, based on what outcome, or more appropriately, what emotions you want the customer to feel in the buying process.

In closing…

If you provide good value in your product or service, then charge confidently for it and without regret.

You will attract better clients, run a more lifestyle friendly business, and live a higher quality life.

Not too long ago, when I started charging higher prices for my services, I just thought I could do that because I had sold thousands of copies of my online courses and had more confidence.

Maybe that was part of it, but the other part was the anchor effect.

By charging higher prices, potential clients began to envision what the outcome of working with me would be like. They sensed they would get results, whereas when I charged $200, they probably expected a budget service with minimal results.

And to go along with that, if I quoted $25,000 for a yearly service, but the client was able to negotiate me down to $16,000, suddenly the client was relieved and felt like they were getting a good deal. And I was happy to be paid a premium amount for my services.

Again, if you get good results for your clients and provide a high level of service, then you can charge accordingly!