I feel the praise you guys don’t get enough is just how approachable and accessible the verbiage in these videos are. Sure you can learn this stuff in a textbook, but the academic language can leave people more confused than when they started off. Plus all the real life examples show how these concepts look in practice that just help further understanding. I can’t sing these videos praises enough and just wanted to put this into words :D

My favorite price is two cents!

This was a great video. My wife flips furniture on FB and every once in a while she’ll have an item that isn’t selling. When this first happened she thought she should lower the price. I told her that she needs to raise it. She raised the price by 40% and sold it in a couple of days. The reason for this is that when she had the item listed for $200 it looks arbitrary and is only attracting people wanting to spend $200. When she raised the price to $280 it looks more confident (because there are fewer 0s) and now it a $20 discount for those with a $300 budget.

I sold cans of soda, when I was in high school. They removed soda from the vending machines, so there was demand for it. A friend of mine sold soda too, but he would sell them out of his locker. I noticed that the cans he sold were warm. I learned from his mistake and refrigerated my cans, overnight. I started with two brands/flavors and expanded to a third. I don't remember the rate my friend charged, but I set my price at 50 cents. Once every few weeks, I would double my inventory and sell them at 3 for $1. These periodic promotions helped bring in new customers while showing appreciation for my current customers. My teenage years were all about side hustles, to take care of my financial needs, and help lighten the financial burden on my Mom. Love your series of videos. Wish these were around earlier. I've made many financial mistakes, over the years; Currently digging my way out of a few.

Anyone who does freelance needs to ask a simple question. “What would happen if I double my rate?” Think about it, you might say you would only get half the clients, BUT since the rate is double you are essentially coming out even for half the work as before. However this only works if you can provided quality necessary to justify the price to consumers

Another problem I see in the art communities is forgetting to count all their expenses (including time). So many people will add up just the material costs, forget costs such as petrol or labour (even if you're the only person working for yourself, you should be getting money out of the whole endeavour), then slap on a little extra as "profit". The end result is that they end up working for a couple of $/hr, or maybe even at a loss (if they're forgetting to take in to account costs such as petrol). This also then has the knock-on effect that people see artwork at silly low prices, and assume that anyone charging a realistic price is charging way too much.

When I started freelancing (I'm a web developer) , I took a look at the hourly rate of agencies in my domain and area and charged right in the middle. It was OK for a while, but it attracted clients with lower budget and brang in more problems because, those clients didn't have any idea how complex my work was and how much it was really worth; they wanted to have most complex app at the lowest price possible. When I rose my hourly rate 20% 2 years later, I ended up having more business with better paying clients that were aware of the complexity of my work! Best thing I've done so far!

You guys are the best financial advisors on KZfaq. Unbiased, entertained, and brilliant teachers :)

My dad gave me a watch box to sell. I posted a listing on Facebook, and someone offered for $200 cash. I looked around on eBay and found that the box could sell as high as $400 or even $500. I wanted to sell it fast, but I didn’t want to leave extra money on the table, so I started an auction on eBay, allowing for international sellers to bid as well. Someone in Thailand won the auction, and after shipping and fees I had a net profit of around $325, so I really love eBay auctions.

I remember vending at a weekend convention for the first time in my life, wondering about this exact same question. The answer I got from my dad was “set your prices so if you sell 70% of your stock, you’ve broken even.” Thankfully it worked, and I sold more than that, and made a healthy profit from my first venture into entrepreneurship ever. Of course it helps that at conventions, people enter this weird mental state of being far more open to impulse spending and a lot less price sensitive than they normally would be. I wouldn’t recommend doing this for a food truck

So another way corporations set prices is based on a thing called “price elasticity of demand”... a basic version of it would be Imagine I own a company called Fruit and sell a special smartphone called the Uphone, using a lot of data I determine that I could sell 1,000 Uphones if the price were say $1,000 (giving me $1,000,000 in revenue).... but if I sold them at $1,050 that I would sell 975 Uphones (giving me $1,023,750 in revenue, and a little bonus of lower expenses since I sold less.... so a higher profit) A corporation wants to maximize profit, and if they can generate a higher profit from selling fewer items at a higher price, they will.

You could also see the Example of Tata Nano. Most Economic Car in Indian Market but media publicized it as Cheapest car, Public only heard Unsafe & Unreliable from there onwards. (BTW the car is pretty solid built with a chassis that does NOT compromise safety at all) Also when People buy a car they are looking to show off. So they wont buy whats in their budget but rather go for something that impresses their colleagues/friends. Product Placement & Public Opinion are two key things to consider while setting the prices. Thanks Two Cents (Y)

Not just the video - even the COMMENTS are gold! Great stuff..

I own a small marketing agency and the low price = low quality price mentality is definitely true. When we raised our prices, we actually got more inquiries and a few new clients.

I’ve learned from Uber and started “surge pricing” for my bbq service during the month of May and June (graduation and wedding season) and up my rates by 33% and I still keep plenty busy. It gets me higher quality clients and I do about the same amount of work and make more.

Just yesterday, my friend and I was talking about this. This video came at a great time! Thanks guys. Almost like you read my mind.

Freshman and Sophomore year of college I had to take Econ 101 &102 so I can verify that everything they say is true. As much as everyone complains about high prices the truth is that people associate low cost with low quality.

I had to haggle my contract price for a graphic design and writing job. That's of course after the same client paying me the same rate for three previous contracts. You have to let them know you want that bump up, otherwise, you're always going to be that cheap person they always get. Not so good for your progressively aching and aging joints.

I really dislike the use of luxury goods as a mean to exemplify how higher prices can generate demand. It ignores the fact that luxury goods don't come alone - there is the whole shop experience, the packaging, the branding, prestige etc. I promise you that any bloke who rises prices to appeal to the luxurious market without working on the luxury that goes around it while not succeed. Great description of utility though - too many people ignore the non-physical aspect of it.

Teachers need to use these videos in class.

Remember to under-promise and over-deliver 🤔

When calculating price or profit margins using your costs as a basis, too many people forget customer acquisition cost when they plan out their business pricing strategy.

I see this all the time with businesses I work with. *ALMOST ALWAYS* the price is too low. If you think no one is buying because price is too high often it’s just that there isn’t enough money in marketing

*Unless* its a _certain_ Monitor Stand that costs $999

Confessions of a Pricing Man IS the gold standard book on pricing that every entrepreneur should read day one.

"placebos were more effective if patients receiving them believed they cost more" let that sink in for a moment

Amazing analysis, research, and details you've added in this video. Thank you and Congratulations!

I've been watching your videos for the past few days and all of them are brimming with brilliance and insight! Thank you for such knowledge that I've been searching for! Our small family business sells pool tables and it's been really difficult working out a ideal price because we want to provide great quality and still make it economic for everyone. But because of Covid acquiring materials and supplies have become a great challenge. Attaining USD for buying goods anywhere beyond Trinidad and Tobago have become a most difficult task and we definitely need to reconsider the cost for our products and services. Thanks to your videos I have been becoming enlightened and educated financially and I see it necessary to make the adjustments to our business as well. I hope things work out for me and I can repay your vast knowledge supporting you and your channel! Stay wonderful and Keep on being amazing and blessed!

As someone who majored in economics, I can tell you the information in this video is on point. Thanks!

My husband and I operate a seasonal produce business. Since our produce is of high quality, we market it with that in mind. We check out local stores with quality produce and base a lot of our prices on that research.

I started making hair accessories part time over the summer. I was stuck on what I should charge since customers started appearing before I decided to make a side hustle out of it. Originally I was just making a couple for my friend's maternity shoot. So I asked around and did research on what other similar products were sold for. Eventually I landed on a price similar to Amazons hair accessories.

I do it by calculating each raw items. For example a case of pepper is around 20 to 25lbs, I will roughly estimate how many pieces in a case and divide it to the actual cost of the product .From there I will have my initial estimate of how much price I can put on the item.

Clicked on this video thinking it was about how much I should charge my phone's battery. Ended up subscribing after seeing this quality content

This channel is like my favorite channel on youtube. Wish you guys made this sooner cuz it is so educational and so fun to watch. And everything about it is perfect from the voice to explanation to animation, music, I mean....one day this channel will get so big.

I'm a freelance project manager and over in the UK, where I used to live, we just never talk about money. Just in the last year I did talk to a really good friend about this (who also knows the quality of my work) and found that she gets paid 33% more than me and assumed I would get even more than she does.

you guys are awesome, I like the way you speak, and the topic is magnificent, worthy to watch, everytime I found valuable to watch Two Cents videos. Love from India Two cents

Don't forget the decoy effect when pricing bundles! That's really effective as well

I love how simply you present these concepts! This is such a valuable video for freelancers to watch!

Great video!!! Just what I needed to see. Want a part 2 of this with more details if possible

Mobile detailer here. When I started I offered $10 washes just to gain a client base. Then I started calling other detailers and asking their prices. I also asked other detailers in person at the supply stores. We kind of keep each other on check now.

5:52 nice! by this logic, he can actually try raising the price a bit, lose some sales, but have a much larger profit margin. good thinking!

The best example of poaching customers from yourself is Hoover vacuums in the UK, which once had a months-long promotion where you'd get FIRST-CLASS transatlantic airline tickets if you bought a vacuum. They sold so many vacuums (at LESS profit than normal) that once they ended the promo, they almost went bankrupt from everyone in the UK already being flooded with new vacuums.

WOW...... You guy's are the BEST explaining what it's like to become a entrepreneur in the REAL world. My father was one.... and briefy explained to me everything you just posted ( word FOR word ) about 30 year's ago when I was in JR. HIGH SCHOOL. It's a RISK to face..... because there are POSITIVES and NEGATIVES when you work for yourself. I work for a employer, I am just HAPPY without the STRESS..... and LIVE a happy life using my creativity mind to work outside the place of employment when necessary.

Another great informative video! Thanks! I've been thinking hard about pricing my products and this video cannot have come at a better time haha

Wow... in just 8 minutes you've explained (the most important parts, like pricing on profits) what I've read in many textbooks. Simply amazing.

So on a full time basis I do handyman services, and smart home installations. I do the first 2 hours for 99, then 40/hr after that. Most people have given me great feed back. Time for phase two!

Gosh, this is so incredibly helpful! Your videos are so informative and wonderful you would think this information was being kept secret from the general public! So many dots connect in my mind as I watch. Thank you so much!

Thank you so much for making this video! I am a new chefpreneur and I have done almost all those things you mentioned when it comes to determining a price. I sell West African Cuisine which has costly ingredients and very time consuming. I have a hard time still determining how much money per hour I am working to add into how much to charge. This helped me to confirm that I am actually doing it right even thought ppl may think my prices are a little high but my quality is great! I hope my demand increases over time. Thank you guys! 💛

Saving this video for when I’m ready to start my business.

Thank you so much!! I've been really concerned with about this topic for a long time.

Thank you so much for this! I was actually just about to start charging for freelance user research and had no idea where to start with price.

First off, great video as always. I had a small personal business where I resell some medical insurance cards (it used to be a thing in Saudi Arabia). Anyways, at the time, my profit margin ranged from 50 SAR on a 350 SAR transaction to 1,000 Sar on a 4,000 riyals transaction. It varied a lot. How much I would have to travel. How many cards, if the person on the other side might be a pain in the butt, was he rude, was he pretending to be poor and trying to hussle me. Usually my prices and services were above average in the industry and that is why for over a year I made enough money that 2 month of income from this part time business was enough to cover my expenses for the entire year! But I always always always made sure I charged at least 50% more fees to people who I knew were being slick or trying to con me. It was just my own thing. Others in the industry just always charged high because they had other ways of getting clients etc.

Love you guys, your advices and mutual chemistry is pure magic

This was the first video where I actually learned something new and very useful. Glad I've been a subscriber for the affirmation and now for the education!

You guys are professionals seriously I’m here thinking about how to lead my book shop business. thank you this was very helpful.

Wow, that video was really accessible and great! Well worth watching twice!

Great episode, when I started a website design freelancing I use to ask the client how much is the budget you place for this project and from there we start negotiate on the final price and deadline..

Well done! - a great introduction to the topic and lead into the process of pricing.

I just started mowing people's lawns and have no idea how much to charge. I just watched videos and looked at quotes from others. I also have two mobiles homes that I'm deconstructing for no charge. I'm going to scrap as much as I can and maybe even sell things like the carpet and 2x4s if they're still in good condition. I said free because I just wanted to get some customers ASAP to get started. I'll see how it goes and if I do well I will start charging, maybe $1000 for the average sized mobile home. I was home from college during the pandemic but now that it's starting to get under control I plan on going back in the fall. I got a few months left so I want to save some money but I didn't want to work for an employer in a short time and I just hate working for someone in general, so I just started hustling on the side. Once I go back to college the financial aid will cover everything.

This is a great video going over fairly interesting bits of economic theory! For people wanting to read look up "price signal" and "veblen goods" on the LV bag example at the beginning.

I have operated a hot dog cart for a few years. It's not my main breadwinner but it used to be. I totally understand the statement about consumers believing profit margins are high, especially in the mobile food world. I offer affordable food options and there were times where to get into events and sell these options, the person running the event tagged a $300 fee for food vendors. Needless to say, I didn't do those events since my margins are already low. I scoped out several other vendors before pricing out my food and it helped out a lot. The hard thing for me has always been landing on a price for catered events, but I learned the best way to do that is to determine the cost of goods then determine how much of my time I'm giving to the event, and determine the price based off the cost of my time plus the cost of goods.

I love this channel! I learning a lot through it this summer :)

Damn I feel like Google is listening to my calls. I was just talking about this subject with my friend over the phone.

I sell stuff I don't need on ebay and usually I just look at what everyone else is selling the same thing for, and then add shipping. Etsy however, has a huge variance in prices since it's handmade stuff

Buying and selling are two things you come across a lot in your day to day life! This video is helpful to realize some tricks big businesses use and how you can use them!

I have a commission based business for small/medium hand crafts. I have a list of averaged material costs and an hourly rate that I quote separately. If people want to save money that often choose less expensive materials, or even do their own price hunting and ship the material to me. I take a 15% down payment with a minimum of materials cost.

Great video again from the best KZfaq video host duo!

i do e-commerce and i sell at a higher price than most competitors that means even when i have smaller orders i ear the same as most competitors and i can do more customer service like refunds and replacements because i can afford it because of the higher margins, when friends asks how they should price their products i always tell choose the higher price its easier to lower price than to make them higher in the future

I'm starting to run into this issue now that I'm taking tailoring on the side of my regular stitching gig. I'm charging relatively low ($15 an hour) because I'm only 3 years into my professional career, and people think that's still too much to charge. Or they ask for private sewing lessons and $30 an hour seems high to them (it's definitely low compared to some of the private lessons I've gotten). How do I convince customers that my skill is valuable when fast fashion has systemically devalued it?

The supply and demand curves still apply. Some demand curves are very linear while others are steep curves. Some are elastic while others are inelastic. There are also separate curves for each product. There is not a curve that covers wine. There is a curve that covers one particular wine and only in one particular geographical and demographical area. Price can be a determining factor of what your product is. You can have 2 purses come off the same line and one gets a generic label and is priced at $20 in Walmart while the other gets a designer tag and priced at $200 in Macey's. You see this all the time in the automotive industry with Toyota and Lexus of Chevy and GMC. There are stories of GM dealers getting trucks in half badged Silverado and half Sierra. As a business owner you need to be aware of the supply and demand curves. Not necessarily exactly where they meet, partly because they never will actually meet thanks to dead weight loss from government, but primarily because they are in constant flux. However you do need to be aware of the general shape of at least the demand curve. re you in something like gas or insulin where the demand is very inelastic and people will buy no matter the price but people buy almost exclusively one price and location? Or are you in the bass boat business where demand is quite elastic where people are more likely to pass if its to expensive? Pricing is more complicated than jut matching supply and demand and if you are in it you really can't control it anyway. They are more for studying markets as a whole and in time they do tend to balance out. Starting that business is actually part of them balancing out. Some one say high prices or an underserved market and saw an opportunity to make a profit by increasing supply and bringing those curves closer together. Once your are in business there are a whole nother set of factors and forces that you must contend with. Starting and owning a successful business is hard. Don't be afraid to hire a business consultant. You cant be an expert at running your food trucks and the business environment. There's a reason chefs start a restaurant and before long almost never cook in them.

I've had a small lice removal business for 8 years and pricing has always been tricky. I went from hourly to flat-rate back to hourly and now to a flat-rate that varies, depending on hair length. I have wondered if my new flat-rate prices seem too low to some people and too high to others, but I think I'll start by taking out the $ signs. I'm not sure spelling out "one hundred twenty" dollars would put peoples minds at ease. ;)

When you fix a profit margin, you must consider how long it would be on your inventory. When I was buying and selling paintings, the minimum viable profit was 30% to 50%. The reason is you won’t sell all the time. Risk + time in the inventory = higher profit margin to be viable. You keep a painting for a year or more if the market is not good. You also need a margin for “making deal” with regular buyers. With a 5% margin, you will go under pretty quickly. The same is not true for stuff you can resale in a few days in volume with a stable market.

OMG, Two Cents releases a video on pricing right before I release my new game on Itch

US companies have only a 5% profit margin? Wow, power to the consumers.

First business I started I would do the cold calls as potential buyers to get an idea, and then went mid range. this worked for sure, but I thought there would be a better way. Turns out just hiring a really good salesman was all it took, with that hire the price stopped mattering as much as he was able to just talk customers through and get them to buy at almost any rate, cheap or expensive

Thank you for simplifying complex subjects 💙

This has always been so intuitive to me yet many startups I have worked with continue to believe they need to compete at the lowest price points even when their product or service is clearly superior. Or even be of the mindset they can offer the BEST service for the LOWEST price. Maybe this is why so many new businesses fail.

You two are awesome! Even when the topic doesn’t apply to me, it’s still very informative and entertaining. Keep up the great work!

My financial literacy class watches you guys and I love the videos!

As an additional point... Your example of Sarah who is bidding on a graphic design job as a freelance employee, it's even more important to quote high. No matter how low you start your bidding, your client will almost always try to negotiate you down to a lower rate. So if you started higher than you actually would be willing to take, you have more room to negotiate down, maybe giving yourself some more desirable concessions from the person hiring you while making them feel like they're getting a good deal by talking you down. So just another reason to charge more than you might initially think you should. I could provide others... but this is the most relevant reason.

I buy junk cars and sell the used parts as a hobby. For me when it comes to pricing I have two factors that I consider. The first factor is the price of comparable parts on ebay (I usually match the price of the cheapest one if it meets my second factor), the second factor is my time for how long it will take to remove the part without causing damage to it, or other parts around it. When I factor my time I like to pay myself $30/hr and for the more valuable items on each vehicle I like to try to make a profit beyond my hourly rate to pay back the initial cost of the vehicle. There are some parts that are just not worth my time to remove and sell, so in those cases when I have a customer who needs those parts, I usually explain to them that for the time it will take me to get to the part, they will be better off to buy it on ebay, and I will usually send them a link to the best deal I can find. Giving them the alternative option keeps my customers happy, and it saves me from wasting too much of my own time. This method has it's flaws but it serves me well, and leaves me with a decent return on my junk vehicles, as well as a decent hourly wage for my own labor.

I can tell this is going to be great advice based on the fact you guys work for a publicly funded entity that doesn’t compete in a capitalistic fashion. On top of that the advice is given by people in their 20’s who’ve likely had no actual experience in the field, and are just educating based on stuff they learned in a publicly funded college, that doesn’t teach students real world skills. WOW WHAT GREAT ADVICE GUys

I was wondering what to charge for handyman labor and this helped a LOT; thanks!

I never learned this in school!!! Pretty awesome!

Love these guys! Watch all their videos!

Scarlett Johansson and Ryan Gosling went into a Mom-and-Dadifiying machine and decided to teach us how to be good at money.

A+++ video as always, well done! Appreciated and thanks.

I used to buy 100 pack boxes of blow pops for something like 12 bucks and then sell them in middle school for 25 cent each. I don't remember exactly how many I would bring every day, but I'd always be sold out by the end of the day. Looking back I see I wasn't earning that much, but it sure felt like I was.

Love your practical clear content...subscribed

What I’ve come to know to be true is that often times, someone who scoffs at what they see as an exorbitant price tag was likely never going to be your customer to begin with, even if you tightened your margins because they don’t truly value the goods or service you offer. Not everyone is going to be your customer. Imagine your ideal customer and go to them. Don’t open a high end store in a low income neighborhood.

What if the sandwhich guy started to charge $9 or $10 for the sandwhich he used to sell at $8?

I wonder why I didn't find this channel sooner ! Love this channel absolutely !

This episode was great, I tried to come up with prices for my commissions and this more or less how I tried to make it.

This video is fantastic! There is so much great information here, thank you!

Excellent video. Thank you.

love what you guys do. best financial gurus on KZfaq :) Keep going guys!

No economist thinks that the supply-demand curves are straight. The elasticity of supply and demand determine the curvature of the graph. There are different graphs depending on the competitiveness of the market, and how unique the product or service is.

Another important factor is that as your business grows your business expenses will grow as well. Consumers expect consistent prices on products and its harder to raise prices than to lower prices. And it’s better to have a temporary sale and make the consumer think they’re saving money then to permanently lower the prices.

As a small business owner, I found this to be really informative!

Thank you for affirming that there's a lot more to pricing than "the going rate". We have to set a price that's worth our time AND effort AND earns a profit that brings us joy. It took me nearly two years to learn that, when I started my business (4 years ago).