PreneurCast is a business podcast. Each week, author and marketer Pete Williams and digital media producer Dom Goucher discuss entrepreneurship, business, internet marketing and productivity.
This week, Pete interviews Peter Shallard, “The Shrink for Entrepreneurs,” and gets his thoughts on the psychology behind the problems a lot of people have with pricing. They also discuss procrastination and the role that coaching can play in overcoming it.
Pete interviews Peter regarding the psychology behind pricing strategy
Transcript:
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Episode 064:
Interview with Peter Shallard
Dom Goucher: Hi, and welcome to this week’s PreneurCast. Usually, PreneurCast is with me, Dom Goucher, and him, Pete Williams. But this week, Pete and I have both been really busy, so Pete took the time to interview Peter Shallard. Peter’s also known as “The Shrink for Entrepreneurs,” and his main business is in helping entrepreneurs with the more psychological aspects of being in business and succeeding.
Now, this week Pete’s talking to Peter about these topics; specifically and relevant to PreneurCast Preneur Community and the things that we talk about on the show, Pete talks to Peter about pricing and the psychology behind pricing, which is something that we’ve talked about quite a lot on this show as part of the 7 Levers. He also brings up topics like coaching and just taking action, so sit back and listen to Pete and Peter.
[Pete’s interview with Peter Shallard starts]
Pete Williams: Hey, Peter. How are you today, mate?
Peter Shallard: I’m good.
Pete: Down in the Atlantic City, living the good life?
Peter: Yeah, that’s right. Slipped away to the beach for a couple of days but I’m doing work, keeping it real.
Pete: Very cool, man. Very, very cool. So, The Shrink for Entrepreneurs, I love that phrase. So, before we get into the whole conversation about pricing, which I’m really excited to have with you, The Shrink for Entrepreneurs, do you want to talk about the brand a little bit, for a couple of seconds?
Peter: Um, yeah. I started out—my first business was a psychotherapy practice, that’s where my background is. The Shrink for Entrepreneurs was kind of like the ultimate brand evolution from that. I actually started accidentally working with people who ran businesses, had a brief foray into corporate consulting, and then actually sorted my own shit out and learned how to market and do all of that, kind of mastered my own business, and yeah, built The Shrink for Entrepreneurs brand.
Started blogging as my primary customer acquisition strategy and have sort of never looked back. It’s great, I get to work with business owners all around the world who are all kicking ass at various different levels, just help them out with where psychology and their businesses bottom line intersect. That’s where we focus.
Pete: Which is really cool. That niche of being in the shrink and working on entrepreneurs’ mindsets is just such a great little niche to be in, which obviously is a positioning thing that we talk about quite a bit on the show here. But the thing I’d love to talk to you about is the mindset behind pricing. As I said in the intro for the show today (as part of the 7 Levers that we talk about quite a bit) pricing is a big sticking point for a lot of people in terms of raising their prices as a way to increase profits.
So many people are reluctant to do that and resistant to do that, and end up having that race to the bottom of, the cheapest is better, and that just affects everything you do in your business. If you don’t have decent revenues or decent profit margins, you can’t invest in quality products, quality customer service, and retention strategies and all the other things we talk about. From your perspective, why do you think prices are such a big deal for entrepreneurs and business owners?
Peter: Well, yeah, it’s interesting—it’s for all of the reasons that you just mentioned. What I observe with my workers, the other sort of piece of the puzzle—it’s the reason that pricing is such a topic that makes most business owners so uncomfortable as well. It really bothers people to discuss. It’s like the stuff that small business owners’ nightmares are made of, the idea of sitting down with a bunch of your peers or your competitors even, and talking about like, “Well, what do you charge?”
Pete: Yeah.
Peter: And it’s because pricing, I think, has the most direct psychological correlation with your sense of self-worth as an entrepreneur; and the smaller the business is, the more that that connection and that correlation is there. So for those people who define themselves as solopreneurs or maybe just work with the occasional freelancer, they have this massive psychological connection with their price.
It’s kind of like putting a number, putting a price on what you are worth or your kind of creative output is worth. It really taps into all of these parts of our mind that can create all kinds of emotional responses, you know? Fear and anxiety, there’s a whole bunch of ways that different entrepreneurs can react to pricing, and it’s a source of a lot of anxiety for a lot of people.
Pete: I also think, too, that a lot of people have that belief and opinion that everyone wants to only spend the minimal amount of money. And I think—from people I speak to, and you have probably a science behind this—and even if I’m actually completely right or wrong, is that when you’re starting out, you do have limited resources yourself.
You start thinking that everyone in the world has the same limited resources as you, and you can’t necessarily afford the best (which is obviously what most people try and produce and sell); that sort of thing, “Well, everyone’s like me!” I think that happens not just pricing, actually, but in a lot of things in business or in life that people start to think that everyone is like them. And when you get into a particular interest or hobby or niche, that it seems to encompass you and your life, and that then you think everyone is into this thing.
You know, when I started racing in Ironman triathlons, I started thinking that everyone I knew and everyone I saw was somehow involved in triathlon, which is completely not the case, it’s still a very small sport. But if that’s what your mindset is, you start to think that everyone’s got the same mindset. Is that a fair kind of assessment as well?
Peter: Yeah, the psychological description for that is kind of this catchphrase that explains it really elegantly, and it’s just ‘perception is projection.’ And what that means is we have a tendency, kind of a cognitive bias; we have this habit of projecting on to the world around us the stuff that’s going on within us…
Pete: Cognitive bias… I love it when you talk dirty.
Peter: Yeah, that one gets everyone going. Yeah, so, no, we do have this bias, this kind of tendency to talk whatever it is that is the focus of our attention and project it onto the world around us. It’s not so much that that is showing up, like statistically significantly, that there is more triathlon stuff in your world or whatever; it’s more that we have a limited capacity to focus as human beings.
We can only kind of look and listen to a couple of things at a time. And when something’s really eating you up from the inside, like some idea, something that you’re working on, what happens is that you basically just sort information and don’t pay attention to the other stuff so much. Like if I was to go to the same party as you and meet 25 people, and the one person who introduced himself was like, “Oh, yeah, I did a triathlon last month,” when I asked him what he was up to.
I’ll just be like, “Oh, yeah, whatever.” I’d probably get really excited about whoever started talking about psychology or internet marketing or whatever; whereas, you’d go away from that party and be like, “Oh, I can’t believe I met another athlete!”
Pete: Exactly.
Peter: So, there’s that difference; same party, but two totally different experiences of it because you and I have different projections for the world around us. Bringing it back to pricing, the issue that we have is that—yeah, as you said, when a lot of entrepreneurs start out in business, they’re not in the place where they’ve got the AmEx black card.
Pete: Exactly.
Peter: They don’t have access to huge amount of resources. For that reason, it’s very, very difficult for a lot of small-business owners starting out to understand that not only customers exist who do have that kind of spending power, but also customers exist who are happy to have that kind of spending power who don’t even sweat about it.
Who will put down $25,000 for a piece of jewelry that they don’t even need and think nothing of it. It’s really hard to get into that mindset when you’re looking at paying for your first set of business cards and thinking, “Should I order 250 and kind of play it safe, or go for the 500 and really splurge?”
Pete: So true. It’s so absolutely true the way people start out. That’s a perfect example, I think I experienced that myself when I very first started out; I don’t have business cards any more but at the time I was like, “Oh, you have to get business cards.”
And you’re exactly right. I guess the question from there is, then what can people start doing? How can they start breaking away that pattern and actually start thinking and feeling confident to price their products what they’re actually worth? What is that step that someone can go through to get towards that?
Peter: Right, so that’s what I wanted to talk about today. There’s a whole bunch of them, so we’ll just kind of dive in, in no particular order, and start talking about some of the strategies. I think that one of the really important ones is to start doing a lot of market research. This sounds like a weird piece of advice from someone who’s focused more on psychology.
But I actually believe that if you put, feed statistics into your brain, it can really do a lot to correct your perception of reality. If you live in a particular neighborhood where you’re exposed to a certain demographic and you grew up, perhaps in a certain financial or economic type of environment, it’s very easy to allow that projection to really continue and to believe that that’s all there really is to the world.
The bigger picture issue with that is that if you do kind of grow up in that space and surround yourself with people in that space, and you know that same kind of financial space as you, it also does a little bit to rob your ambition. It’s like if you try and succeed in life relative to the people that you went to high school with, what will happen is that one day you’ll probably end up with a slightly nicer car than the other guy, you know what I mean?
Pete: Yep.
Peter: That competitive focus is a very weird dynamic, which is why I always encourage my clients, when they are playing with new business ideas to really cast the net wide with market research and look at, what are people spending on products in this vertical, in this space? If you’re thinking that you want to start a company that sells sports gear or whatever, like what are people spending in the ultra-luxury end of the market?
What are people spending in the budget ends, and what are people spending in both of those areas, like all around the world? Do you know what I mean? Rather than just the area that you’re at, because you’ll start to find out some really, really fascinating statistics, and part of that is really just having your mind blown up those statistics.
I think it’s a really, really powerful and important thing to experience to connect with financial data, hard facts, that force you to open up your mind and allow into your perception this idea that there are people out there who are operating in the luxury, like high-end, and are really comfortable with it. And I’ve got to say at this point in this talk that I have a tendency, I’ve got a bias of my own to really encourage people to try and get into that space.
I believe that the most—and there are certainly statistics to support this—that the most under-utilized and under-marketed-to group is the ultra-affluent in the world, that these are the people crying out for new products and services that really meet their needs and meet their demands, the people who have the most disposable income and who are always looking for the next best thing, something new to try.
It’s a really smart move as an entrepreneur to try and position your services or your product to appeal to that demographic. But you can build an extremely profitable, highly rich business without having to really scale up and become Walmart, right? If you’re only making a couple of cents margin on every product that you sell, you really have to be selling to half the world to be making it worthwhile.
Pete: Sorry to cut you off there, but that’s a very good point that I think is worth touching on. So many people confuse revenue with profit. I speak to a lot of people about this sort of stuff and they’re saying, “Well, look, I need to make some money now,” or they start thinking that as long as there’s money coming in the door, my business is being successful. But if that business or that revenue isn’t generating a profit for you or is only making a couple of cents a transaction, it isn’t even worth you doing that.
You’re just being busy for the sake of being busy; you’re not actually making any money. A lot of people, I think, when you first talk to them about increasing their prices or going for that luxury end of the market, they start to think, “Well, hang on, I won’t be able to make a sale for two months. They’re harder people to sell to and it takes a longer buying cycle,” or whatever excuse they come up with. Some of them may be justified.
But at the end of the day, if you’re keeping busy for three months and not actually making any money; there’s revenue coming in the door but it just goes straight back out because you’re selling stuff at one-cent margins like Walmart, what’s the point of even doing that? You’re just being busy for busy’s sake. You’re better off positioning yourself properly from Day One into that luxury market.
Peter: Right. I always like to use the car dealership example. I love cars. I love cars that go really fast. It’s a great industry in terms of there’s a large spread from budget through to luxury, so it’s a good example. I think as an entrepreneur, like if I was given the choice, like I have to start a car dealership, I would much rather sell five Ferraris in a year, or one, and walk away with a significant profit. I don’t know what kind of markup people make on a Ferrari, but you can guarantee that it’s probably the equivalent of the baseline salary in most first-world countries.
Pete: Absolutely.
Peter: I’d much rather do that than have to sell a Toyota every week just to be able to pay the rent. That’s the real exciting thing about being in the luxury space that a lot of entrepreneurs don’t realize. If you can overcome the fear and the psychological obstacles and the strategic and tactical obstacles, which are just business challenges, and we’re going to talk about.
If you can do that, like what lies on the other side is this phenomenal opportunity to build really highly profitable businesses doing really fun stuff as well. It also has to be said, like, who do you think has the more fun? The person who designs the body work for the new Toyota Camry or the latest V12 Monster that Ferrari put out?
Pete: So, how do you get over that psychological thing? Because a lot of people, as you said and pointed out, they’re not willing to take that jump or go that area for various reasons, and a lot of them, when you break it down into just stories people are telling themselves. What’s the process there?
Peter: Yeah, so the first one, just to circle back from, being exposed to statistics is a really fun thing to do. I think that’s the first step to opening up the mental doors of perception so that you can really start to see what this market is. Some of the things I found out in my kind of journey, one minor statistic is that there’s 16,000 people in the US alone who have a net worth of $100 million or more, which is pretty phenomenal.
I can’t tell you quite exactly where that comes from, I don’t have my notes in front of me. But there’s a lot of stuff that Forbes put out. Forbes do a lot of research about high net worth, ultra-affluent individuals; and one of the best sources for it is the private aviation industry. People who fly Lear jets around the world are obviously super, super wealthy.
There’s thousands of these flights every year, all around the world. These flights are not kind of occasional, once a month things. In total, there’s thousands and thousands of flights everywhere in the world. Forbes put out some stats just about the US alone, about private jet usage, and it’s just phenomenal. And when you think about all those people who are paying for that kind of travel, think about the mindset of that kind of customer.
And this is what I’m talking about, about having your mind blown by the statistics. These are people who are going to pay a markup of about 25 times to fly private instead of business class because it isn’t convenient enough for them or isn’t luxury enough for them. What that really says to an entrepreneur is whatever your product or services that you’re selling to the mainstream public, you could probably be creating something 25 times more luxurious or high-end and selling it for about that price.
That’s the beginning of kind of dealing with the mindset. I don’t tell people, “Surround yourself with wealthy people,” necessarily, because that’s not always possible, and I don’t like to tell people, “Well, go and buy a Ferrari so you can know what it’s like to be in the same [unintelligible] for a sponsorship deal to start telling people and spend a lot of money on luxury stuff that they don’t need. I’m just kidding about that, by the way.
Yeah, something to think about, surrounding yourself with a bit of that; and if you can’t do that, exposing yourself to some of the statistics that are about that, which are really just a Google search away. Just start looking at, “Well, where are people spending money in this space?” Finding out that the ultra-affluent demographics that Forbes put out.
They publish every year kind of a summary of where they’re spending their money. There’s this whole segment of society that spends over $100,000 a year on liquor for various reasons, parties and stuff. All this is published. One of the great resources for that is a book by Dan Kennedy. I just realized I’ve been searching around on my computer to find some of these stats, he quotes a bunch of them on his book No B.S. Marketing to the Affluent, which is something that I think every entrepreneur should read, whether or not you love or hate Dan Kennedy’s approach.
Pete: Yeah, the No B.S. guides. All his No B.S. guides are great, aren’t they?
Peter: Right, yeah. A few of the quotes, he’s really done a lot of research. He makes this case for entrepreneurs to get into that space and he blows your mind with some of these statistics about just how much money some of these really, really wealthy people have to spend on this stuff.
It’s important to look at that top 1% of the market and then also to know you don’t necessarily have to go all that way. You don’t have to sell things to the people who buy limited edition Ferraris, you can target the Lexus demographic or the Mercedes demographic; there’s a lot of space in the top-end of the market. The real point is there isn’t all that much space in the low-end of the market.
Pete: Well, because they end up being that race to the bottom, so yeah. The one thing that a lot of people that I speak to have this issue with, it’s like, “Okay. Look, I’m a retail bike, I’m a plumber. I’m just a Joe Blow selling good-quality services and products to average Joe Blows.” To make that jump and transition the existing business just from that ‘average,’ for want of a better term, price point business to luxury thing is quite a big jump.
But even just increasing your prices by 10%, without any additional cost of service or cost of delivery; that 10% extra is just going to go straight to your bottom line and you hit pocket. For a lot of people, that’s a huge difference to the actual profitability of a business because that’s not going to affect any cost, that 10%. As I said, it’s just pure profit. But they have this reluctance to even jack their prices up 10% because the price elasticity in their market, in their client base, is just so tight.
But I think that’s more of a psychological issue than an actual marketing statistical truth in that the price elasticity (Dan Kennedy talks about it quite a bit), 10% shouldn’t actually affect your business too much if your marketing and your communication material (which you should already have at a very good level) is effective.
Peter: Right. Right, precisely. There’s definitely space to trial a really tiny increase and probably nothing will happen. So long as you’re not marketing yourself as a best-price in town, ‘if you find something better, we’ll beat it’ kind of service; so long as you’re not in that game, then no one’s really going to notice. There’s also so many ways to justify the price increase; not only in your mind, but in the minds of even the most cynical customers.
It’s really important to understand the mindset of the slightly more wealthy client or customer right through to the ultra-affluent customer. You can start looking at, well, what do these people value? One of the easiest things and the first step to take, particularly for the businesses that you just mentioned as examples, I think you said like a bike shop, it’s customer service.
If you take one book on customer service strategy and you read it and you implement like five different tactics that it gives you in your plumbing company or your bike shop, you’re going to have a really powerful reason to increase price and have your customers not even care because you’ve created this far better experience for them.
When you look at the type of plumbers of the affluent homes and offices, it’s plumbers who offer that superior customer service experience. That brings me to one really important point and something that I think entrepreneurs really need to get, is that very, very affluent people who spend money on high-end products and services value time more than money in a significantly bigger way. Their time is worth more to them than the average person.
And your product and services to support that, people save time, then you’re going to be the go-to choice. From a bigger perspective, it’s a great thing for most entrepreneurs to get. Because they think that as business owners, we should really be valuing our time and paying really close attention to where we’re spending our time in our business. So if you can get it, you’ll be able to think just like these customers. It’s kind of one of those things that you really need to own and have at every level.
Pete: Yep. What about a product-based business? If you’re a service-based scenario, a plumber is a perfect example; what about product-based business? Something that I talk about quite a bit is that, even if you are a retail store selling bicycle parts or you’re a furniture store, whatever it might be, there’s still obviously a customer-service component of the product.
At the end of the day, if you don’t offer any sort of customer service or differentiate yourself like that and all you do is just move commodities, then it is potentially harder to increase your prices. If you’re selling a commodity, the same service and outcome you’re going to get by buying from your furniture store compared to the one two doors down the road is exactly the same, you’re going to walk out of the store with the same commodity.
What you have to do is end up wrapping around whatever product you do sell if you’re in that space—some sort of service—and end up turning your business into more than just a commodity distributor. What’s your thoughts around that?
Peter: Right. This is where I want to share some slightly more advanced strategies. They are simple, but really, really powerful that I have seen a lot of my clients utilized to great effect. One of the best ones, whenever there’s a founding entrepreneur who is a bit at a personality in the business and there’s an opportunity for an individual to do this, I always tell people, become an artist.
Build some artistry into your business and kind of get famous for that. Every independent furniture store – since you’re using that as an example in the world – should be building a blog about interior decorating and trying to create a presence on the Internet as the go-to authority on interior decoration, and posting and talking at length about how to create phenomenal spaces with great materials and what to do.
Basically, becoming the hot authority, the big name in that space. What’s going to happen then is that people are going to come into the store, so they can come by from the people who have a great idea at this and it’s going to become not about buying the commodity of a new couch It’s about buying a couch that was recommended by the people who are known as these amazing sort of artists in that space.
Pete: I think that’s a great way of putting it. Because I kind of often turn that market leadership, but changing that language a bit to artistry, it does give it a different kind of connotation, which is very cool.
Peter: Well, the reason I like to talk about artistry is that when we talk about fine art – it’s a really interesting market to look at, the fine art world. From a business point of view, it’s something that is all style and no substance. I don’t want to sound super cynical, but when there’s people who can splash paint on a canvas, $150,000 for it, and then somebody else does the exact same thing but no one will pay $25 for it.
What is going on? The answer is that it’s all marketing. But if you can position yourself as the authority in this space where every idea that you have is intrinsically valuable and recognized as this expression of art, then you can splash paint on canvas and charge a lot of money for it.
And I think that’s very hard to sell paint on a canvas. It’s very, very difficult, not too many people succeed at it. But if you’ve got something tangible like selling couches and beds and chairs and stuff, then you’ve got a really great shot. So, bringing some artistry into the business and really embodying the psychology of an artist is really fantastic.
That’s the one area of human endeavor where there’s really no limit to the amount of money that you can ask for. It reminds me of the Four Seasons and Donald Trump – since we’re talking about furniture – have both launched a range of beds.
Pete: Oh, wow.
Peter: Obviously, they know nothing about beds. [I don’t think they can] advise me on lumbar support or anything like that, right?
Pete: Exactly.
Peter: [They] made these beds and everyone buys them because they are kind of leaders in that space. There’s that personality behind it. You kind of get to say, “Hey, well this is like a Donald Trump bed, so I must be really cool.” That’s something [about] really fine art.
If you have a Jackson Pollock [painting] hanging in your house, you can say, and you know who painted this?” And everyone goes, “No.” And then you get to tell them. There’s that narrative behind it as well.
Pete: It’s the story. It all comes back to the story.
Peter: Right, exactly. Imagine if Lance Armstrong created bike shops, since we’re using that as an example. There’s probably a cycle but he rides that you can go out and buy that probably costs an awful lot of money. I don’t know, you probably know more about the specifics.
Pete: Yeah, there is. Absolutely. He actually does have a bike shop in Austin, Texas, funnily enough, called Mellow Johnny’s and it’s huge. People all around the world ordering the cycling gear so they can appear like they’ve actually been to the store and bought some stuff from Lance Armstrong.
But you had two points there, and I’m not quite sure if you had something else to say. But I also want to take this to the online marketing as well at some point and have a conversation there too, if we can during the show.
Peter: Yeah, like applying this to online marketing?
Pete: Yeah.
Peter: Well, let’s sort of dive in. I think the whole artistry thing, you can absolutely do that online. The digital world is actually the most powerful medium for developing that type of brand, for building up that type of authority, as you say, leadership. Really becoming this person in that space. What that type of stuff allows us to do is to basically create commentary around that.
If you have a bike shop, then you’d want to build a blog that talks about the races that you’re doing and have videos of what you’ve been up to on the equipment that you put together on the weekends and things like that. Creating this kind of narrative around it so that people are really going to know what you’re talking about. And when they’re going to come in, they’re going to ask for things they saw on that website.
That is how the artistry component works in. The online strategy is the pricing strategy that I like to work with my clients on, which is simply become a pundit. If you can be a pundit, like an industry leader, like a voice in the media in your space, it’s not quite the same as being an artist where, I think I would define artistry by people who are paying you to think in ways they can’t even imagine.
If you hire someone to create a sculpture for you, you’re basically saying, “Do this because I can’t. I don’t even know how to create a sculpture, so please make one for me.” Being a pundit is slightly different. That’s when you’re in a position like Robert Scoble who gets pulled into Rackspace, the technology business, because he’s the type of guy who has opinions about everything in the tech world.
His was one of the first real blogs to ever exist. And so when he aligns himself with a major brand, everyone’s going to look at that brand and think, “Well, if he’s into it, then we must be.” It’s kind of the power of testimonial. So if you’re somebody on the internet, specifically who has a lot to say on everything. There’s a great iOS developer who writes iPhone and iPad applications.
His name is Garrett Murray. He’s just this kind of random guy who started blogging a very, very long time ago about everything in his life, right down to pictures of his cats, literally. He was taking photos of his cats. He has, I imagine, thousands and thousands of blog subscribers at this point. When he launched his iOS development shop, he rapidly attracted clients like Conde Nast and a couple of really, really big corporations, and got to work on these phenomenal projects.
He’s just a single guy, like a freelance. I think he has one guy who is his business partner. They’ve gotten to that point by basically being this authority in the media. He doesn’t even talk about iOS development that much. He’ll blog about the latest app or widget, or his thoughts on whatever. So he’s really acting like a journalist in some sense, being a pundit and just having an opinion about absolutely everything that happens in the world.
And that’s another example of leadership and it’s another reason that people are going to pay you higher prices than you would normally command. They’re going to trust you as an expert. If you are a voice in the competitive cycling industry, you might not be the best cyclist yourself.
But if you are someone who provides commentary on what is going on in that scene and in those races and you also happen to have a bike store, then you are going to be able to charge money for creating custom, high-end racing cycles for people.
Pete: I couldn’t agree more. One way that I can summarize what you’re talking about is high prices are fundamentally a by-product of good positioning and good marketing. They’re not a thing by themselves, they are actually a by-product. A lot of people, from what I see, anyway, they think of pricing as a separate foundation of a business or the profit of a business. But really, it’s actually just a by-product of good positioning and good marketing.
Peter: Precisely. And it’s truer, more than ever now with the internet. Because what the internet, and I guess global business, really allows us to do is to price in such a way that we don’t have to appeal to the people who are in our local geographic area. I’m in New Zealand, you’re from Australia. We both grew up in essentially the bottom of the world, right?
Pete: Yep.
Peter: There’s certainly a little town in New Zealand where if I went and opened up a luxury, high-end custom cycle store, where we were charging, I think people spend $10,000 on…
Pete: Easily.
Peter: So if I went into that in some tiny little town in the mountains in New Zealand, before the internet, I would have gone out of business instantly. No one in that town could’ve afforded the bike because that’s just not what that area is all about. But the internet really gives entrepreneurs no more excuses when it comes to pricing. There’s another good story, actually.
The Best Made Axe company, I think they’re now just called Best Made because they make a bunch of stuff; but they make axes that were custom, thousand-time folded steel in samurai techniques. These were like hand-forged axes for chopping wood with polished hardwood handles. I sound like a crazy person talking about this now.
But out of three billion people on the internet, there was enough crazy people who were into chopping wood and axes that this became a million-dollar business. They sold like the best axe in the world and it was priced accordingly, like several hundred dollars for an axe. They only needed to sell a handful of them to make a bunch of money.
You only need to connect with a tiny handful of people in the world, when you have this global audience who are willing to pay that kind of a price for what you are doing when you’ve got the Internet. There really is no excuse now. There’s no reason why you can’t find the five people who are so into flying kites that they’re willing to buy a $5,000 kite next month and sell one to them.
Pete: Yeah, and there’s definitely going to be a market. There would have been 15 people in the last 90 days who have bought $5,000 kites. Have to be.
Peter: Oh, yeah, absolutely. I was just making random industries…
Pete: Can we start that website before the podcast goes live, do you think?
Peter: Yeah, right, exactly. Let’s get into the kite business; it’s where the profit is.
Pete: That’s it.
Peter: The thing is that it is a truly global world now. You have the ability to sell things to people who live in some of the wealthiest neighborhoods in the world who, 20 years ago, 10 years ago you would never have been able to sell things to. It’s a really exciting opportunity for entrepreneurs. But to be able to do that, we have to overcome our psychological conditioning that says no one’s going to buy this.
Pete: Well, what about this: if someone actually just heard that statement and the first reaction is, “That means more competition”?
Peter: Yeah, that’s interesting. Theoretically, one day, the market could be totally oversaturated. But we’re really far away from that. The other thing that the internet has done is it has allowed people who have really, really weird interests – like people who spend $5,000 on kites – it has allowed these people to connect for the first time and for the industries that support those interests to really explode and flourish.
I think at this stage, there’s actually far more growth in terms of the amount of opportunity out there than there are people starting competing businesses in these spaces. The other thing is the reason that we’re having this conversation is that so many entrepreneurs don’t get this, so many entrepreneurs build businesses that they try to sell the cheapest product they can to people who are shopping on price.
But there’s actually a lot of space for people to get into areas where you are selling in the ultra-premium space, and there isn’t anyone competing because no one else has got the courage to do it. The other really major tactical issue is that if you are doing something in the ultra-luxury space, it’s far, far easier to create differentiation in terms of what you’re doing than when you’re trying to sell something really, really cheap.
Like if you have a physical product, if you are selling a widget; say you’re selling soccer balls, that’s your business. You sell soccer balls and you want to create the world’s cheapest soccer ball that you can sell for 50 cents or whatever. That’s going to mean that you’re going to strip away features, you’re going to get rid of packaging, you’re going to reduce it to the simplest possible thing, right?
Pete: Yep.
Peter: A luxury soccer ball will come with a book and a DVD about how to use it and really beautiful packaging. You’re probably going to buy a subscription to a fresh soccer ball every month so that you never have grass stains on your soccer ball ever again.
Pete: That’s important.
Peter: When you watch them play the World Cup or whatever, every time they kick one off the sideline, they get a totally fresh one back. But there are so many different opportunities to be completely different from your competition with all of those. That’s the thing certainly about being an artist. That if you’re creating the most beautiful soccer balls, you’re going to be painting them or designing them in a way that is completely different.
Fear of competition is actually way more dangerous when you’re – you should be much more afraid of competition when you’re at the very bottom and the market. Nine times out of 10, if you’re really trying to compete in the cheap space, Walmart or whatever local version of that wherever you are living in the world, is probably just going to come and steamroll you into nonexistence pretty soon.
Pete: Yup, exactly right. There’s lower barriers to entry at the bottom, that’s what it comes down to. So you want to try and, as you grow, even if you’re there right now and it’s where you are, you need to start moving out of that. Move up that scale to get away from those sorts of competitors and get into a position where there is more barriers to entry, which is going to get you a bit more security on a number of levels.
Peter: Well, that’s exactly the thing. One of the reasons that no one is making, let’s think of another stupid example here. Golf, soccer balls, kites – that wouldn’t work at all. The barrier to entry is significant. For a small business to start up doing that, they’re going to have to spend a lot of money on product development. And that’s true of a lot of really luxury businesses.
And that’s why you can’t do this overnight. But if you can slowly start working into that space, increasing your prices, developing more and more luxury, high-end products, you actually leave competitors behind in terms of your research and development because people couldn’t just come overnight and copy what you’re doing.
Pete: Absolutely.
Peter: Companies that make really luxury watches, there’s this kind of trend at the moment to be making watches out of zirconium and all these new elements and blends of metals and things like that. Some little business can’t just come along and compete with those guys overnight.
Because whatever they’ve spent to get to the point where they’re selling watches for $100,000 a pop, you can be sure that it’s not the same as setting up your first WordPress blog and getting going selling something, an eBook on the internet.
The more established you get into a luxury space, the more protection you have because you’re playing the game at those higher levels. So I think it’s a much safer place to be in terms of competition.
Pete: Absolutely. So, moving on, before we wrap the show up, I want to talk about coaching for a moment as well. Part of being successful in anything is obviously the coaching side of stuff. That soccer example, the best soccer players in the world have the coaches. And a lot of people have that good habit, particularly people listening to this show.
Because we produce a podcast every week to gaining that habit of consuming the correct information, which is a fantastic start. But what’s your take on being committed and continually taking action on a regular basis? What’s your take on that as a psychologist?
Peter: Yeah, it’s something that I’m really passionate about. I have very recently declared war on procrastination of all kinds. It’s a really, really important issue. When we’re talking about any of these journeys in business whether it’s pushing yourself into the luxury space or whatever you are trying to achieve, it’s so important that you do consume the correct information.
Immerse your mind in the right type of information that’s going to be fueling you at both the conscious and unconscious levels. That’s my best piece of advice on this and in this talk today, basically going to statistics and just start pouring it into your brain. I think that things like this podcast, obviously really, really help.
But there’s something really magical that happens, and this is what I built my whole career around, when entrepreneurs make a commitment to spend some time getting a perspective that’s completely outside of themselves. Kind of being able to have a mirror held up so they can really take a look at what they’re doing and where they’re going with their career. So I built my business, The Shrink for Entrepreneurs brand, around providing that type of service.
That’s what I do, I hold space for people and it’s actually a luxury service. It’s premium price for entrepreneurs who have been playing the game for a little while and are enjoying some success and want to create wealth, freedom, and massive impact, and take things to the next level. I work with clients to hold that space for them and hold up that mirror, and have them really get that perspective on where they’re going and any blind spots and obstacles that are going to prevent them getting there.
But every entrepreneur needs that type of input. And when it comes to my war on procrastination, that’s my latest project and my real passion I’ve been working on for the last six months, has been this brilliant program that basically helps entrepreneurs conquer procrastination—kind of kill it dead, once and for all. The project is Commit Action. It’s at CommitAction.com. And it’s exactly that: it pulls the trigger on procrastination.
It’s an accountability program for entrepreneurs that whatever your focus is in business, it’s going to have you accelerate in that direction and start smashing things off of your to-do list by basically holding you accountable each week to achieving massive pieces of action and moving forward. This isn’t some info product. It’s actually powered by human service where one of our Commit Action coaches is going to be calling you up every single week to make sure that you are achieving really big stuff.
That’s just a part of it. We also track, measure and provide a software service where you can analyze and look at how much action you’ve achieved, and have that kind of profile available to you and the public so that you can see what you’re doing. It’s a program being built from the ground up, utilizing psychological principles that are tried and true to make that sure entrepreneurs are always operating at peak efficiency in terms of motivation and just ability to smash stuff off that to-do list.
Pete: And this is something that I want to mention as well, is that you and I have been working together for a while now. I have been using your services as a consultant/coach/psych, whatever sort of the term correctly used is. The thing that I have kind of always believed in and spoken about regularly on the show here is that people should have a coach of some level.
And what I have come to, I guess, realize or believe now is that traditionally, I’ve always spoken about people needing a business consultant or a business coach to help them achieve their goals. I think that’s absolutely still true. But for a lot of people, it’s not needing someone to give them education; it’s someone to keep them accountable. That’s what I think. Personally, I’ve got a lot of value out of working with you.
It hasn’t necessarily been about you teaching me business or marketing strategies directly; obviously, we’ve had some good discussion around that and you’ve been a mirror for some thoughts and some conversation. But it has been more around making me think beyond the business and making me accountable as opposed to sort of being a marketing or business coach.
That’s what I found really enjoyable about working with someone who’s not that traditional business coach. I think everyone needs that no matter where you are, needs that carrot-and-stick stuff thrown at them. If you look at sports stars, there are two reasons the team has a coach; one is to teach them skills and things like that.
But the second thing is to keep the team and the players accountable for their actions on and off the field. And particularly, that’s more so when you get to the professional level. When you look at the people who are earning millions of dollars a year being an athlete; their skills are there. They know the actual mechanics of their job, be it marketing or kicking a football or playing basketball.
But the coach is there from a psychological and accountability perspective, and that’s where I’ve found huge value working with you. I think a lot of people, with the internet the way it is and podcasts like this, the education is there. People know enough. They’ve bought enough products. They’ve bought enough information courses.
They’ve read enough books. They’ve watched enough YouTube videos. The education to implement this stuff they need to grow their business, increase their prices, and convert more sales is there. They don’t need the education. But the reason that’s holding them back is not the education, it’s the action and commitment.
Without that clear distinction, so many people keep chasing more education because they think that’s it. Whereas, what I’ve discovered over the last few months anyway, by talking to people and experiencing it myself is that it’s not about the education; it’s about the implementation and finding the right coach to make you implement. It’s far more beneficial than having a coach who gives you more education.
Peter: Precisely. And the work that I do one-on-one with my clients is really about holding up the mirror and finding all of the really interesting stuff as a result of doing that –how to commit action to achieve exactly what you’re talking about, for entrepreneurs who know – and this is the way that we describe it at Commit Action – it’s for entrepreneurs who know exactly what they should be doing.
There’s no uncertainty around that. They have a list as long as their leg of exactly what they should be doing from a tactical point of view, and Commit Action is the thing that makes them do it. People who get started in business and they read a lot and they learn a lot, which is great; I never want to discourage someone from doing that. But I think we all hit a point where we know enough at least to get started taking action.
But as you say, a lot of people’s inclination is to just keep scrambling around looking for more and more information. So that’s really who Commit Action is for. I’m so excited about this. This project means so much to me because I think if we really rid entrepreneurs of procrastination, of this insidious form of procrastination, they’re going to be able to do some really, really huge things.
There are so many people out there who started out in business and deep down know exactly what they need to be doing, what they should be doing in their business; they just need something that’s going to make them do it. They’ll commit it into action on a weekly basis, just incrementally growing and taking more and more action.
You certainly know this; that once you start doing that, once you start achieving that real-world action, you start getting a whole new source of learning that’s way beyond podcasts and books and videos, and anything you can imagine. You start learning from the school of life, you get real-world feedback from the results that your actions are creating in your business and in the world, and that information is just priceless.
Pete: Yeah, absolutely. We’re close on time, we try and keep each one of these episodes under an hour. You and I talk regularly, and we could probably talk a whole lot more at some stage. We might even try and get you back on the show at some point.
But beyond commitaction.com, which is the new service I highly recommend and recommend everyone to at least check out and have a look at; you’ve mentioned you’ve got the blog, which is where you really built The Shrink for Entrepreneurs brand. The website there is just your domain name PeterShallard.com, isn’t it?
Peter: Yeah, Peter Shallard, that’s PeterShallard.com. Or you can just Google search ‘shrink for entrepreneurs,’ and I’m number one through sort of 50.
Pete: That’s the beautiful thing about creating your brand, creating your niche.
Peter: That’s the place that I really built my career as it is today. Commit Action is a brand spanking new project, been up and running for a couple of weeks. Tested it, brought on a bunch of users who are absolutely loving it. But PeterShallard.com is where my blog is.
There’s a whole bunch of resources from free eBooks to a back catalogue of blog posts going back years. There’s all kinds of really great stuff about business psychology, where our thinking intersects with our businesses’ bottom line. Yeah, that’s my home on the internet for sure.
Pete: Thank you so much for your time. Thanks for working with me too, mate. It’s clearly been beneficial for me and our businesses. So, I’ll leave you there. I’ll let you get back to the beautiful summer sunshine of Atlantic City and Jersey Shore. We’ll talk to you again on the show at some stage.
Peter: Yeah, so I’m going to go and have a drink, I think. Thanks so much for having me. It’s been lots of fun.
Pete: Cheers, man.
Peter: Bye.
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Links:
Books:
No B.S. Marketing to the Affluent – Dan Kennedy
Online:
http://www.petershallard.com/ – Peter’s main web site
http://www.commitaction.com/ – Peter’s new project to overcome procrastination
http://www.7levers.com – The 7 Levers of Business Home Study Course is now live. Sign up today and get 2 months free access to our Preneur Platinum private members’ area.
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