Learn how to pick the optimal price for your product in this series. Clay discusses the factors you need to consider when pricing your product.Sign Up to Watch
- Okay, we're back with episode two: "Know the Market" Clay, tell us what are the principles for knowing the market? - Well you have to know your customer. So, I could think of a ton of examples of this, but, I was in New York here last week and they have these food trucks that serve Indian food. - [Female Commentator] I love food trucks. - And so, if you're serving Indian food, just understand that nobody who does not like Indian food is going to come there. That doesn't mean you should serve Indian food and burgers. And I saw some food trucks who didn't get it. And I saw a few that did get it. - [Female Commentator] Okay. Could you tell success between the ones who did it? - You can absolutely do it. And so the guy who's like the authentic Indian food guy, he's got a big old line. I mean, it's huge. The guy who's just doing the, Gyros? Are they called Gyros? The sandwiches...? The Greek food? -Yee yee yee. Gyros. The "G" is silent. - Unbelievable. See the education I'm getting here. Gyros. And then we had another person that was serving, the... I want to say it's Flan? Am I making up that word flan? - Yes, flan! Mexican dessert. - Yeah, so people are getting in line for those things. But the guy is like, we serve hamburgers, and Indian food, and, you know, Coca Cola. - It's just like, no. No one's in that line. So you have to know your market. So I'm asking you right now, who is your ideal and likely buyer that you're going after? - How do you decide that though? - Well, you know me back in the DJ days. - I do. - So I used to DJ the club Millennium, which was a disaster, that was not a good life choice. - I remember that. - I DJ'ed a lot at the Yucatan Liquor Stand, that was awesome. And I also DJ'ed at Carroni's. All three, regrettable mistakes. But the problem is, they liked me. So then I would keep coming back. And my whole job was like, "Alright folks, it's Thirsty Thursday at the Yucatan Liquor Stand. How many ladies do we have here? Ladies! Oh, ladies night every night here at Yucatan Liquor Stand. We have volleyball up front, and up next folks, we're gonna be playing the yaddah-yaddah game." And every week I'm like, I hate my life. But that was, I didn't decide. I wasn't intentional about ideal and likely buyers. I just took whatever business came to me. So now as I've gotten older, and you know we have five kids, I've built the family. I've realized: I don't want to go out, I want to go in. - Right, right. That's a part of getting older too, I want to go home you know? - I mean, people are like you want to go out, no I want to go in. - I want to go home, yeah. - So I'm just saying, I have decided now, my most precious memories of things I cherish the most, this next Friday, you know, Thrivers you might know this; but my dad, he's dying of ALS, and we're right kind of at the... Closing in there. So he told me, He said, Son, I can't go to my reunion. And I know he's been waiting for this. He's been looking forward, like pushing towards, like that's a goal he has: I want to be alive until, I want to get to one more reunion. He's very into the high school buddies. So he said, "I just can't go I just can't breathe anymore." He's on a respirator. And I was like - I'm kind of that jerk entrepreneur guy and I'm like "Dad, if money was not a cost, or issue or obstacle would you go?" And he's like, "Well, but um, yeah, but it's like 35 cents a mile." And I say, "Assuming it was paid for, what would you have to ride in?" And he's like, "I think I would have to ride in a limo bus, or a van." And I'm like, okay what else? And then if you went, could you physically go? Even if you went there for five minutes, would you feel...? And he goes, "Yes, I want to go." And he grew up in Waco, so he wants to go. He wants to visit his mom and dad's burial site. He wants to visit his old house one last time. So I'm like, well we're freaking going! And he's like, "No way!" But that was - for me, that's what I cherish. I do not cherish going out to eat with customers. - Yeah, I understand. - I hate going out to eat with customers. So, Thrivers, just being real: I like meeting you at workshops, and I love connecting, but I don't wanna meet every single person who gets their hair cut at Elephant in the Room, and sit down and meet them for dinner. - Well, there's only so much time, and you have to be wise with your time and what you're doing. - I want to sit down with my son and talk about the intricacies of whacking a golf ball. - Yes. - So all I'm saying is you have to define your ideal and likely buyers that you want to work with. Don't just take what comes because if not, you're going to find yourself at the Yucatan Liquor Stand on Thirsty Thursdays, DJ'ing until the end of your life. - And I love how you were intentional, even with your dad, just asking him, okay what would it take to get here? It's kind of taking that time to think through that process. - And it's brutal, because if you're not careful... Another example, I want to give you a bunch of them real fast. A bakery lady I used to work with, she used to make a ton of cupcakes. And I said, why do you make cupcakes? And she said, "Because customers always ask for them." But you don't have to make them just because they ask for them. Well, but I want to keep them happy. Well, you don't make any profit on them. You sell them for two dollars, and you maybe make 50 cents. You realize you'd have to sell a thousand a week just to make 500 dollars? And, you wouldn't have any room left in your ovens to make cake. She's like, "I know, I had to turn down some cakes recently because we're making so many cupcakes. - Wrong choice. - We all do it in some way, so you have to define your ideal and likely buyers, and friends. Now, principle number four: You definitely want to know your competition. You've got to know. There's a book called "Made in America" by Sam Walton. I just want to put the book up on the screen so people can see it. But Sam explains in the book how to beat Wal-Mart. - You're kidding me. - No, he says, "If you want to beat me, open a sporting goods store next to us." Because there will be traffic already. - What a great guy. I love Sam Walton. - He was real. - I know, like old school realness. Love it. - He says, listen, if you open up one right next to us, people are already going to show up. And he's like, I'm only going to stock the baseball gloves that I can get at a very cheap price. The most broad ones. But I'm not going to have a specialty catcher's mitt. I'm not going to have a specialty soccer ball, I'm not going to have... - Dick's Sporting Goods, like somebody needs to get on that, you know. Get next to a Wal-Mart. - That's right And so he's like, If you have a specialty store, you will beat me. Because there's no way, I'm on the - I try to price things low and have the broad, general things. I'm never going to be a specialty store. So he says if you want to beat us, open a specialty store. And it's super super important, that you right now, as Thrivers think about who's your competition even if they're Wal-Mart, and how are you going to beat them? Don't try to out Wal-Mart, Wal-Mart. You know, Amazon right now, there's big studies coming out - - Wait wait wait, you said don't try to out Wal-Mart Wal-Mart. That's good. - Well, you hear it. Like, the Amazon study that came out, it just came out, and Amazon said: We're taking...the study shows that Amazon is taking more and more market share from Wal-Mart. - Oh wow. - But Wal-Mart is entrenched. They're like, we're not changing our business plan. You know why? Because there's certain people who want to go out, to a store, to buy the thing. And there's another group of people who says, I want to ship it. Now for me, I'm just being real, I don't like ordering stuff online. - Me neither, I'm kind of suspicious sometimes. I want to touch it. - I hate waiting. We bought that freaking couch over there - I know Thrivers can't see it. I waited on that thing for like nine weeks. Like what is this? Is there an Amish guy, hand carving this right now? - Well I mean, if you get it and you don't like it, the hassle of sending it back. It's like I don't want to bother with that. - Put it back in a box. - Yeah, I'm not - I don't want to do that. Gotta go to the UPS store or Post Office. I don't want to bother. - I hate ordering online. So Wal-Mart has found there's a certain group of people, and not every person who's under the age of 30 wants to order every single thing online. - Truth. - That's why Airbnb has done well. How many people want to go on vacation and stay in somebody's house? To me, I'm like I don't even want certain family members at my house. I mean, I'm being real. Certain family members go, Hey, we're in town, can I stay? And I'm like, nope - I'll get you a hotel. - Nope we're not in town, we're gone. - We're out of town, doors are locked, we'll put you in a hotel though. - I like the idea of Airbnb. Like I think it's a neat idea but I don't know if I'm ready. What if they're crazy, you know? - But see, Airbnb isn't trying to out-Hilton, Hilton - Because you're not going to beat them. - You're not going to. So you've got to find out your niche. So Thrivers, we're for people who want to have some fun. They want to laugh, they want to learn, they want to learn what you need to know to grow your business. You're not into this BS zone where you're talking about walking on the hot coals, and trying to overcome to mental adversity, while paying 23,000 to a guy you met online. We're not going to have those "woo woo" things. We're all about the real deal how do you do it. And for those of you who enjoy it, that's great. People who do want to go to the woo woo seminar and pay 23,000 dollars to walk on hot lava, that's fine. - I'm hosting one of those at my house this weekend. - Oh, really? - So pay me, okay? - Pay Sharq. - But yeah, we're here to give you practical tips, and up next, we're going to be talking about the formula for pricing. - Bang.
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