Mark Stiving is a serial entrepreneur and a pricing expert. In this video he tells the story of being mistaken for a lost lamb by a shepherdess in Las Vegas after being screwed by a cab driver. He uses her business model to illustrate three important pricing principles:
- Know Your Value
- Segment Your Market
- Offer a Portfolio of Products
To get the full impact you should hear him tell it:
Pricing Principles for Entrepreneurs
Transcript for Mark’s story about a trip to Las Vegas:
A brief little story.
Last October, I had the opportunity to go to Vegas. I love going to Vegas, especially when you get to go to the professional pricing society.
Now when I landed in Vegas, I got a taxi cab. The taxi cab driver said to me, “Do you want to go the back roads or the freeway? It’s probably the same distance either way.” So I said, “You choose.” And we took the back roads.
We get back on Koval Street. Koval Street runs parallel to the strip. We’re a couple miles from my hotel, and the traffic stopped, and I’m sitting in the back seat watching the taxi the meter tick up 20 cents at a time. Finally, I said to the cab driver, why are we stopped? Well, there’s road construction up ahead.
Shouldn’t he have known there was road construction up ahead. So when I finally realized this, I said, “Okay, pull over. I’m getting out.” I paid him my 20 bucks. I got out, and I’m walking two miles to my hotel. I get up to the next corner, and there’s this beautiful woman there. Nice sweater, tight jeans, long hair, really nice lady. We start walking towards the strip, and we’re chatting. I told her about my taxicab ride, and she told me about her, the fact that her girlfriend had left her up the strip a little ways, and she had to walk down to where she had to meet her friends. We’d walked for a few minutes, and I said, “So what do you do?” She stopped, looked at me and said, “Anything you want.”
I swear to God, the next words out of my mouth were,”I’m a pricing expert. Can I ask you some questions?”
She said, “Yes.”
I said, “So what do you charge?”
She goes, “$500.”
I asked, “Do you ever take less?”
She says, “No, I don’t. If someone really, really needs to pay less, I’ve got some names of some other places they can go and get services.”
So that’s pricing lesson number one, know your value.
So I asked her, “Do you ever charge more?”
She goes, “Absolutely. If some guy walks up in a nice suit, fancy watch good shoes, I’m starting at $800 pricing.”
Lesson number two: segment your market.
So then we’re walking along the strip, and she takes a phone call, and she’s obviously talking to someone that she had provided services for before, and she said, “Would you like me to get one of my friends and come over?”
When she finally hung up, I said, “So how much is it if you and a friend provide services?”
She said, “That starts at $2,000.”
That is pricing lesson number three: have a product portfolio.
So we get to my hotel and I said, “Look, I’m really reluctant to ask this question, but I got to ask, and if you don’t want to answer it, I’m okay. How much did you make last year?”
She answered, “I worked almost every day, and I made a little over a million dollars.”
So you may not approve of what she does for a living, but if you want to be a millionaire, may I suggest you learn these three pricing lessons:
- know your value,
- segment your market,
- and build a product portfolio.
I checked into the hotel. She waited for me, and after I was checked in, she said, “So Mark, do you want me to come up to your room?”
And I said, “No, I really can’t do that. I’m sorry.”
And I get in the elevator, and I’m riding up the elevator, and I’m thinking to myself, I just turned down this gorgeous, articulate woman, but I just had the best 45 minutes of my life. I guess it really is true. I love pricing you.
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