Many entrepreneurs find pricing decisions for their products and services really challenging. You’ll often hear such people asking each other, “What should I charge?”

I’ve read a number of books about pricing with complex ideas on how to do it correctly. Most involved some form of testing and optimization. They all shared the same underlying assumption though: that the optimal prices are those which extract the most long-term profit. Since that’s extremely difficult to predict, testing is essential.

Testing of that nature can be dreadfully boring though, and you still won’t know if your tests are accurate. Since economies fluctuate anyway, a test done one month could yield different results than if you run it a month later.

I dislike that approach mainly because I find the framing too limiting. It’s a very objective model, and I have a long history of getting better results when I use subjective framing. If my reality is some kind of simulation, it seems unlikely that my simulation is programmed to train me to care about pricing optimizing by doing split tests. That seems like a rather useless skill to develop, akin to improving my telephone sanitizing skills (which admittedly aren’t very polished). I have no desire to sculpt my character into a split testing mogul.

Pricing as Communication

A model I like much better is to think of pricing as a form of communication. The pricing is part of the offer and inseparable from it. The price isn’t something to be tacked on later.

Pricing can communicate whether you’re trying to provide something cheaply or luxuriously, for instance. If I tell you that I bought a car for $8000, that would communicate something different than if I say I bought one for $80,000, even if I told you nothing else about the car.

In this sense pricing also serves as a filter. Your price will affect the types of customers and clients you attract. For instance, I could price Conscious Growth Club at $10K per year instead of $2K a year, and the group would still work, but we’d have different types of members and fewer of them. Otherwise the program’s structure and design could be entirely the same. The price would communicate what types of members we’re looking for. Similarly I know someone who charges $80K per year for his coaching program and $5K for his seminars. Are they objectively any better than our $2K coaching program and $500 workshops? Nope, but the pricing difference will attract different people.

So when I think about pricing from this perspective, I think about the kinds of people I’d like to attract and work with. If I want to offer a coaching program for the kinds of people who like $10K programs, I’ll price it at $10K. I’m personally one of those people, currently enrolled in a friend’s $12K coaching program for the year.

Pricing From the Customer’s Perspective

Another frame I like is to think about what price is best for the customer to pay. This is a good model if you know your customer base really well, and you know how different prices will make them feel.

You could price something low to communicate that it’s easy and accessible if that’s what you think is best for the customer.

Or you could price something higher if you want to communicate that a product or service is a bigger investment or a bigger value. People often appreciate higher priced products more. Pricing too low can reduce a person’s appreciation.

I use this on myself too. I know that if I join a coaching program that costs $10K per year, I’ll appreciate it more and gain more value from it than if I pay $1K per year. When making purchasing decisions, I think about pricing and features in terms of what will help me appreciate a purchase.

Pricing can be a bit funny that way. It’s hard to admit that sometimes it’s better to pay more because you’ll appreciate the ownership experience more. If you pay too little, you may communicate to yourself that you don’t value the purchase as much. Trying to get something for less isn’t always wise.

Setting prices based on what’s likely to be best for my core customer base has been super helpful. I could continue to maintain a healthy business just with this pricing model alone. It seems to work very well in practice, as I get more compliments than complaints about my pricing. People pay enough that they value and appreciate the investment, but it’s still low enough that they can extract lots of value from their purchase to make it very worthwhile. This generates a lot of repeat business too. Most of the sign-ups for our new Stature course are from repeat customers.

The best price for the customer to pay is the price that helps them extract the most value, satisfaction, and appreciation from their purchase. One key factor for the courses I offer is that people need to do the lessons to extract the value. When someone completes the course, I know from experience that they’re very likely to get really good value from it and feel that the deal was more than fair, generous even. But they also have to invest time and energy to extract the full value. If they pay too little, there’s less buy-in and less motivation to do the work and finish the lessons, even if it will benefit them immensely. Paying too little sends a message to their minds that maybe they shouldn’t value this investment as much.

On the other hand, if the price is too high, then people feel stressed out and worried. Or they talk themselves out of making that kind of commitment. Some people, however, will feel even more excited when they commit to a price that’s a stretch for them. I’ve experienced this myself when I’ve stepped up to pay for high-end coaching programs. It can be exciting and fun to spend enough money such that it feels edgy and risky, and so far I’ve always gotten more than my money’s worth when I’ve stretched myself to pay more. That’s mainly because when I take a bigger financial risk, I’m very committed to doing my part to extract the value; otherwise I’d feel really stupid for paying that much for something and not leveraging the heck out of it.

Another factor could be that I join a group with other people who’ve stretched themselves to join as well, and such groups are just awesome to participate in because people really put in the effort to make it work, which benefits everyone in the group. We’re all committed, so we all pitch it and make it work for each other. When everyone has to stretch a bit to get in, it’s even better inside. Higher pricing can serve as a good filter for attracting ambitious, growth-oriented people – not perfectly but pretty well.

One reason I price Conscious Growth Club at $2K is that for much of my audience, that pricing feels pretty edgy already while $10K would feel out of reach for them. Based on the great community I’m seeing inside, I think it’s the right pricing for most members. For some I can tell it’s not edgy enough though. If you’re looking for a community of only entrepreneurs, for instance, a $10K program would be better. In our community people work on all different types of goals: health, relationships, finances, life purpose, meaningful work, creative skills, and more.

Pricing for Trust

Another frame I like using today is what you might call trust-based pricing. I didn’t learn about this somewhere else, at least not to my knowledge. It just gradually evolved from trying to find better frames for this aspect of business.

In doing workshops, creating courses, and running Conscious Growth Club, I experience just how wonderful it is to work closely with people who trust me. High-trust relationships are so win-win all around. Trust reduces friction and makes it easier for people to get results, which in turn leads to more appreciation. Appreciation is good all around, both for business and personal reasons.

When people ask me questions about our products and services, and I can tell they’re not really aligned with what we provide or the kind of relationship I’d like to have with them, I gently recommend that they don’t buy anything. Sometimes I’ll suggest free articles to read instead, and sometimes I’ll suggest other resources in this field that might be a better fit for them. I don’t try to invite everyone to become a customer. To me that’s a special relationship, and the alignment matters.

I’m not suggesting that people need to trust my advice blindly. That’s not the type of trust we’re talking about here.

In this case I’m referring to trust in my intentions, experience, and honesty. I want people to trust that I’m on their side and that I genuinely want to help them grow and improve. If they can at least buy into that, it makes a world of difference for us. These days I only want to work only with people who can feel aligned with having this kind of relationship. I feel very fortunate that I can maintain this standard and still attract plenty of business. Not everyone is right for this kind of relationship, but for the right people who are aligned with it, they tend to love and want nothing less. Having such a high-trust relationship is just beautiful.

I love these kinds of relationships with other businesses too. For instance, I really like the dental practice that I’ve been going to for the past several years. I’ve worked with multiple dentists there, and they’re all great. The people at the front desk are super friendly, and I sometimes joke around with them. The hygienist is awesome too. She and I chat about all sorts of things like travel and even ayahuasca. I’ve never been to another dental practice like this; previous ones felt somber, cold, and heartless. But in this place, it’s obvious that the people like working with each other, and they like their patients too. In the past, I’ve gone at least a decade between dental appointments because I disliked the experience so much. With these people I’m currently going 3x per year, which I’ve never done before. Most importantly, I trust them. They aren’t just friendly. They’re also good at what they do. I hope they stay in business for as long as possible.

I’m a good customer for them too. I show up on time. I follow their advice. I pay every bill on the spot, so they never have to bill me. I never complain about prices or try to negotiate them down.

With high trust in a coaching situation, people are willing to share deeper truths about themselves. If you only get the surface truth, coaching can only go so deep. With more trust people will share the more vulnerable parts of themselves, and that leads to even deeper trust.

When someone trusts me in this way, such as by sharing something that’s really difficult for them to share, I feel honored. It’s a privilege to be trusted with that level of intimacy. It makes me feel more invested in helping the person. Handling such situations can be delicate. Delicate is a word that in my distant past, I’d never have applied to myself. But today I like sculpting my character in that direction. I love the realm of high-trust relationships because it leads into a world of subtlety and delicacy, yet there’s still room for playfulness and fun.

In terms of pricing models, I think about pricing for trust. If I want to attract more high-trust customers (if only because they’re delightful to serve), then I think about what price will best align with attracting and developing high-trust relationships.

If I price too cheaply, it means people can buy without having to trust as much, which can flood the business with too many jaded and skeptical people that I’d rather not deal with. If they want something too cheaply, they probably don’t want something really good, which means they won’t have the right attitude for supporting me in doing my best work. That isn’t going to create a win-win relationship.

If I price too high though, it can damage trust because then people might assume I’m just doing it for personal greed. So if there’s a valid reason for pricing higher than usual, it’s important to communicate that clearly.

It’s also wise to consider the existing trust relationship. I like to offer launch discounts for new courses, such as for the new Stature course that’s launching now. Most of the people who will join during the launch already have a trusting relationship with me, like repeat customers and long-term blog readers or newsletter subscribers, so from my view they don’t have to prove themselves to me. I want to make it easier for them to join, so we’ll have a nice, high-trust group inside. And I also want to make the price lower for them as a way of saying that I trust them too and that I appreciate our relationship. I trust that even at the lower price, they’ll still take it seriously enough and do the work of the course, so they can get the benefits.

After the launch, the course can continue selling for many years, but the new people who discover it probably aren’t part of my core, high-trust audience yet. They may be new to my work. They’re not sure if they can trust me, and I’m not sure if I can trust them. So it may be better if they start with reading free articles for a while. Then they can think about taking a course when they trust me enough to do so. The higher price is a bigger hurdle for them, so it takes more trust for them to say yes.

Some people are really into growing their businesses. For me alignment is way more important than growth. If I can do both, that’s great, but between the two, I see alignment as far more important. I’d be a lot less happy if I 10X’d my business but messed up the alignment in the process. I just don’t want to work closely with people unless we can develop and maintain high-trust relationships.

I really, truly don’t want to do business with people who don’t trust me enough to make it win-win. Even if I made a lot more money trying to capture those extra sales, I wouldn’t want it. Even if I could delegate way more, including all of the customer service, I wouldn’t feel good about a customer service rep having to deal with misaligned customers either. It wouldn’t be right.

Alignment Pricing

I think the ultimate pricing model is to price for alignment. What would an aligned business look like for you, and what pricing decisions would help you create that?

Incidentally, you can use this mindset even if you’re an employee. What’s the right salary for you to request and for your employer to pay such that the alignment is there, and you’re able to invest in a high-trust relationship?

We can also see why split-testing and traditional optimization strategies look good on paper but often fall short in reality. Trying to optimize for profit is short-sighted and risks attracting many misaligned customers. That can increase support costs, negative reviews, product returns, staff turnover, etc. Many people I know who use this model would consider a refund rate of 5-10% to be pretty good. My business’ current refund rate is 0.0%. And the reason is simple, we don’t offer refunds. Instead we have an honor code. If you’d like to see my explanation of the honor code and why we have it, watch the Stature video from 27:33 onward. But the main reason is that I tested offering a money-back guarantee, and while it brought in more sales, it messed up the alignment and created more problems and friction inside the business. It really sucks to feel hesitant about investing fully in someone because I suspect they might request a refund. It’s so nice not to have to deal with that anymore.

Having an honor code instead of money-back guarantee really does turn away some business. I would almost certainly make more money in the short-term by offering unconditional refunds. But the reason I don’t is simple. The headaches aren’t worth it to me.

People have to meet a higher standard of trust to buy with our honor code – trust in me and trust in themselves to follow through. That’s the standard I want. It means fewer people getting through but way more alignment inside. And it makes the business so much nicer and more fulfilling to run. People who are jaded or suspicious just aren’t going to accept such an offer, and I’m glad for that. I’m delighted to refer their business to other people who’d welcome it.

I also think that in the long run, this approach will make the business better for staff members too. It means that staff also get to work with aligned customers who will trust and appreciate them. No staff member should have to deal with customers from hell. We’ll fire such customers from hell and keep the aligned staff. Our staff won’t be treated poorly.

Creating win-win relationships is a high standard, but it elevates so many other parts of the business. It removes so much friction and makes it easier to just do the real work of serving people. Financially it works well too. This will be a six-figure January for us, which is a nice way to start the year.

One of the biggest traps is life is trying to achieve goals that only you will care about, such as making money or achieving success in your career. Yes, those kinds of goals can still create some ripples for others, but if your intention is mostly about you and your personal gains, I’d predict a lot of stuckness and stagnation for you.

I fell into this trap as well. In my 20s I thought my goals were well-intentioned enough. I was trying to get my computer games business going, make some money, and have a nice life in the field of game development. I certainly wasn’t trying to hurt anyone. But I didn’t really care much about what happened beyond my immediate sphere. That seemed logical at the time, but I realized later that it was an irrational approach.

When I thought about goals back then, they were personal goals. I set fitness goals and financial goals and relationship goals. I achieved some of them, but the money and success goals always eluded me, even though at the time I made them a high priority.

What I didn’t realize back then was that money and business success goals are social goals, not personal goals. Do you see that?

Suppose you lived on an island by yourself. What sense does it make to set financial and business or career goals? There’s no economy. There are no social constructs. Such goals are meaningless.

Try Service on for Size

In 1999, mostly out of desperation, I decided to start volunteering in a nonprofit association. I was a member for a few years but never did much with my membership other than receiving the monthly newsletters. I recognized that something was terribly wrong with my previous approach to success because my results were terrible – lots of debt and then bankruptcy – even though I invested a lot of time and energy in the business.

I finally surrendered to the poor results I was getting and decided that I should explore new directions, if only to gain experience with other modes of living. Anything looked better than the stressed and frustrated mode of working hard on goals that I wasn’t achieving.

So I began volunteering and helping people more without worrying about personal gains. I began writing articles that same year, starting slowly at first. This totally turned my life around within a year. Sometimes it’s good to take a blind leap into unexplored areas when you aren’t getting results you want from what you’ve been doing thus far.

This attitude and practice helped me achieve what I previously thought were my personal goals. Every year since then I’ve been writing articles and seeking to be of service in other ways, which have created many ripples for other people. I know that because many of them tell me. And every year since then has been pretty financially abundant. This year will likely be the best ever in that regard.

What blocks a lot of people from being more service-oriented is that they can’t see the logic behind it. When you’re so concerned about your own gains, how are you possibly supposed to free up even more time and energy to help others on top of that?

I understand that mindset since it used to be mine. It’s an ineffective mindset though. It seems rational, but it isn’t. Is it getting good results for you? Do you see it working in your real time? Or does it only seem logical in an abstract way?

Do you really think that money and success will flow into your life because you’re hyper-focused on your own goals and needs? Great… try doing that alone on an isolated island. That should give you the best focus since no one will be there to distract you. See how far you get. What you don’t realize is that you’re essentially acting out this metaphor in real life if you regard financial and success goals mainly as personal goals.

Being hyper-focused on your personal goals for personal reasons can work in some areas of life, but it’s unlikely to get much flow going for more social goals. Financial and success goals are inherently social.

Success Is Social

Money flows from other people. Any evidence of your success, including having customers and clients, flows through people too. If you can’t achieve such goals without other people’s cooperation, doesn’t it make sense to deliberately invite their cooperation instead of just hoping it will happen?

When your goals are mostly solo, that creates friction and resistance. People aren’t likely to spend money to help you achieve such goals unless you provide a decent reason for them to care. Your own success isn’t a decent reason; it’s a pretty pathetic one actually.

Other may spend money for own their personal priorities and interests, which probably doesn’t include helping you succeed. But they may be very willing to spend money in order to participate in an interesting social flow that’s extends beyond you and them.

A simple way to sum this up is that you’re likely to receive way more help by reaching out and caring about others. If you focus on what only you want to receive, virtually no one will care to help you.

You want more abundance flowing to you? It flows from other people. And if they don’t care much about helping you, you’ll find it 10X more difficult to get that flow going, maybe 100X. Everything you try to achieve will be self-powered, and self power is weak.

You can test living in a more service-based mode for a few years like I did, but admittedly that can become draining after a while. I put in hundreds of hours in volunteer effect, and while it did help me turn things around, it’s hard to give, give, and give more.

For me this was an example of swinging the pendulum. I got terrible results from certain personal goals, so I wanted to see what would happen if I went into full-on service and volunteer mode to the extent that I had the time and energy to do so. That did improve my results very quickly, especially because it opened me up to a world of networking in my field. By reaching out to help others, a lot more people reached out to help me, such as members of the press who helped my games get more attention or other software developers who gave me good marketing advice.

Throw a Party

So what’s a good way to balance the solid social benefits of service with the inner drive and ambition of working on your personal goals?

Basically you throw a party. A good party is fun for you and for everyone else. Fun is a great binder because it’s personal and social.

There are many different kinds of fun, so you have lots of options for what kind of fun you want to create. Your party could be entertaining, amusing, playful, sexy, mentally stimulating, rowdy, etc.

The key is to recognize that a good party is both personal and social, especially if you host it in your home.

A good party is also very sensitive to the people you invite. You’ll need the right people to make it work. Invite the wrong people, and your party may become boring, creepy, frustrating, or some other form of bad.

A party is also sensitive to a good invitation. If your goals are entirely personal, that’s like making this offer:

You: Hey, I’m having a party at my house on Friday, and you’re invited!

Friend: Oh I love parties! What kind of party is it?

You: I’m inviting a bunch of people over to help me achieve my personal goals. We’ll have chips and guacamole too (as a lead magnet).

Friend: Umm… okay. Who else is coming?

You: Just me so far. Everyone keeps saying they’re busy.

Friend who’s about to ghost you for life: Okay, well I’ll try to make it, but I might be having surgery that day, so I’ll let you know!

How is that kind of offer working for you so far?

If you make equivalent offers in business and life, people will ghost you. Life will ghost you. That isn’t because you’re not a good person. It’s because you made a ridiculously lame offer. Everyone knows that wine is a much better lead magnet. 😉

If you want more money and success flowing through your life, don’t focus so much on trying to acquire and achieve. Think instead about throwing parties and inviting people with fun, interesting, and stimulating offers. Direct your ambition towards creating nice social flow.

Think about the people and businesses that you love to patronize. Think about the best companies or fields you’d love to work in. Can you see how their perceived invitations and offers are more interesting than just, Come help us achieve our goals? We wants moolah! That isn’t a typo, Dimi. 😉

When you host a party and invite people to it, everyone wants it to be a good experience, so your intentions are nicely aligned. You may still need to do some boundary management to make sure people don’t trash your home, but that mainly comes down to inviting the right people who can agree to your standards.

One of the greatest areas of stuckness among my readers stems from trying to work on personal goals that would work so much better when framed as social goals. When you do that, you have to self-power everything. It’s like hosting a party all by yourself and trying to make it fun and interesting all alone, with no one to help you, and with no guests participating. Then you may tell yourself that once you have a really good party going alone, then you’ll finally invite some people. What you don’t see is that people are the party.

In business and life, people are the success. People are the money. People are the fun.

The best part is that you don’t have to figure out all of the party details by yourself. You can co-create an awesome party together. It all starts with your intention. A party based on your personal goals isn’t likely land well. So step back and create a more aligned intention. Start telling people you want to host a fun party, and ask them if they’ll help steer you in the right direction. Ask them what would make them happy to attend? Listen. Involve them. Even if you only talk to one person about this, that can build momentum.

I’m hosting such a party right now – a character sculpting party where we all connect online to work on diagnosing, understanding, improving, enhancing, and upgrading our characters together. All for one and one for all. It’s intellectually stimulating and also playful as we explore the characters we’d most like to become, and then we work on becoming those characters for real. So far 266 people have opted into the party this year, and 150 others were already pre-invited, so there are 400+ people already inside. Fortunately I have a big house. 😉

What I’d really love for you to grasp is the mindset of moving beyond framing your goals as strictly personal and opening yourself up to the world of social flow. Most of the good stuff you want in life will come from this social flow, so it’s wise to stop trying to achieve your goals by acting like you’re on an island bouncing ideas off a shredded volleyball. If you honor this social flow and learn to appreciate it, you’ll achieve your goals more easily, and you’ll have a lot more fun in life as well.