Bedros Keuilian Podcast Show - The Power of Pricing - 051

Episode Date: June 13, 2018

Can your business still thrive when you set your prices high? In this episode, Bedros Keuilian and Craig Ballantyne show you how premium pricing actually allows you to offer clients what your cheaper competition can’t. Watch or listen now to discover why people pay for results, and how to double your income by tweaking the way you deliver your product or service. “The more people pay, the more they pay attention.” - Bedros Keuilian Here’s what you’ll discover: 0:54 - How cars and watches prove that people will pay you for status. 2:47 - Why premium pricing allows you to outmarket your competition. 4:36 - How to deliver your product or service in less time and double your revenue. 6:51 - Why pricing higher is the only way you can offer a world-class experience. 8:16 - Why profit, not revenue, reveals your business’s level of success. “Build your business around your life and your price.” - Craig Ballantyne

Trim the fat, take the one business that has the greatest potential, and increase the revenue so that you can have greater profit margins because profits feed the family. Hey, I want to talk to you about the secret ingredient in building an empire and it's called the power of pricing. My name is Craig Balantan. I'm here with Badrosk Coolian and this is the Empire podcast show. Baderos, you're a car lover. Let's talk about the prices of cars. What allows some companies to charge outrageous, what seemingly outrageous amounts for cars like Ferraris, Lamborghini, Bugatti's, you know, how do they charge that while, you know, Corvette is, you know, 150 or something like that. Sure, sure. Well, you know, it's funny because loving cars, I've learned very quickly, that when you buy, and cars and watch is the same thing. When a watch is over $1,000, it's no longer a watch is a timepiece, right?

So a $10,000, a $20,000 omega. That's a timepiece. It's no longer a watch because you're buying a lifestyle is what you're saying. What they've done is they've taken that brand, whether it's a car or a watch, and they've tied to it. it into a lifestyle and status. So Ferraris, Lamborghinis, Bougatis, Rolls Royce. And I'll give you an example. The Rolls Royce Ghost, which is a four-door sedan, sells for about $275,000. The BMW 760 series car sells for about $100,000. They are the exact same car. BMW owns Rose Royce. BMW took the seven-series vehicle and they put lipstick on it and effectively made it.

it the Rolls-Royce ghost. The lipstick being the Rose-Royce badge, right? And some, and some leather and some fur on the seeds and those sparkly little stars in the ceiling. So why are they able to take the same car and sell it for $175,000 more? Because the Rolls-Royce brand is synonymous with a lifestyle, with prestige, with status, where BMW is synonymous with quality. BMW and Mercedes quality. And then you go down lower to, you got the Honda, you got the Toyota, the Ford's and Chevy's, well, it's good transportation. It takes you from reliable transportation. Odds are your Rolls-Royce, your BMWs, your higher-end cars are going to break down more because they're far more sophisticated. More things can go wrong with them. Yet we're willing to pay more for that

status and sophistication simply because they've tied it into a lifestyle. Yeah, absolutely. And so what we want to talk to you about is premium pricing. Now, we don't want you to put lipstick on something. You are going to deliver, of course, a high value, high-quality service. But, But what are a couple things that having a premium price allow you to do in dominating the marketplace? Sure. Well, like in our R world, for example, we sell our FitBoutabwechamp franchise now for $30,000 buying fee. Really across the franchise space, that's a pretty low price franchise, right? But in the fitness rule, that's pretty high priced.

And so, one, I keep my prices high. Number two, we have a reoccurring income as well. We charge another $1,000 a month for our monthly franchise royalty fees. that money allows me to outmarket my competition. So when I started FitB out of Boot Camp the brand, there was another brand out there of Boot Camps. They were out there five years before us, and they had about 300 locations.

They were selling for $5,000 one time. I came into the market space at that time, and I sold for $10,000 with a reoccurring monthly fee. That means that I sold for a higher price and I had recurring income coming in, which meant I can outmarket the other guy 10 to 1. I can be on 10 extra platforms. You would see my advertisement 10 more times than you would see his, right?

Ultimately, we crushed him, put him out of business, and Fit Body Boot Camp grew. And so premium pricing allows you to have this room for not only additional marketing, but when we're selling our franchise, it takes 48 days to take a prospect and turn them into a franchisee. We send them so many stuff, so many things in the mail, from baseball bats, believe it or not, to wine, to exercise wristbands. to our newsletter. There's a lot of marketing that we do in between the time they've thought about opening up a Fit Body Boot Camp

and actually making the decision to pay us. We can constantly follow up with them with a lot of goodies, from sunglasses to all these fun things, because we've worked that into our pricing model. Now, you had a great mentor back when you were a young, struggling personal trainer, a guy named Jim Franco. What did Jim teach you about pricing?

You know, Jim taught me something really important. He said, listen, people are not buying your time. they're buying an outcome from you. Now, as a personal trainer, I had to really realize like, oh, wait a minute. He's absolutely right. He goes, can you deliver results in 30 minutes instead of an hour, Pedro? I said, sure. He says, now, why don't you charge me the same, but keep the workouts to 30 minutes.

I'm a busy person. I need that extra 30 minutes in my time. And you can get twice the clients in in one day if you do 30 minute workouts. And I said, but shouldn't I charge less? He goes, no, no, no. People are buying an outcome from you. They're willing to pay a premium for it. So if you charge more, then another.

thing happens, you get higher-end quality clients. Yeah. And the more people pay, the more they pay attention. And we found this in our coaching programs. When we had low-cost coaching programs, we had clients who would go, okay, you know, that's decent advice. I'll think about doing it. Now that we charge $50,000 a year for the Empire Mastermind, people take the advice and

they implement it, deploy it right away, because the more you pay, the more you pay attention. The third thing that Jim Franco taught me was that take your product or service, in my case, it was personal training, and I was selling anywhere from five to ten sessions at a time, and then when your ten sessions ran out, I'd have to resell you again. He said, take that program and sell it to me on a monthly basis. If I'm willing to pay $700 a month once, I'm willing to pay $700 a month on a recurring basis in exchange for the outcome that you're going to give me. And so all of a sudden, I was able to build legs for my business, which meant I had predictable recurring revenue coming in that I can use to market and expand and grow to five locations like I did. Yeah, absolutely. And so I want to

you know, jump off on one of the things you said there when it's the perception of what somebody's getting. And so I run my workshops for $5,000 right now. And some people have said to me, you know what, if it was $500, I wouldn't do it. Because they'd be like, what am I going to get for $500? And so they know that they're going to get that value. Plus, if I was only charging $500, I couldn't deliver these amazing lunches. We use these amazing boardrooms and the penthouse level of hotels. We deliver an experience, much like FitBody Boot Camp delivers an experience. because you guys aren't in that race to the bottom against other gyms that can't provide a great experience, right? So how do you guys use that to deliver the amazing experience by having a premium price?

Well, it's funny to say that. I mean, you look at the other fitness franchises out there, like things like Planet Fitness, Snap Fitness, and they'll charge anywhere from $10 to $19 a month for membership. Now, with $10 to $19 a month, what additional values and experiences can you give your clients and customers? You really can't. You just have no room. You have no margins for that. We charge anywhere from 150 to 197 a month, right?

Almost $200 a month to our clients, but we're able to give them a world-class experience. Not only do we give them an amazing environment to work out in, but the coaches are certified in nutrition. They're no longer personal trainers. They're actually know how to coach you. They're like personal trainers, life coaches, and nutrition coaches all in one. We allow the, we have time to actually do their nutrition evaluation, their monthly fitness evals.

We assess their injuries. a $19. $10 gym a month simply has no room to do the evaluations to have coaches who are that level of education and who are willing to pump out

and we give away shirts all day long because we want our clients to be walking talking billboards. And again, a $10 gym has no margin to do that. And so we've created a premium product for ourselves where we go, hey, you know what?

You're not just getting access to a gym with Fit Body Boot Camp, you're getting access to a result. So we help our clients reframe what they're getting for their $200. a month and it works every time. Yeah, and absolutely. I mean, even if the revenue was the same between you and Planet Fitness, it's not about the revenue, right? So let's go on a rant here about

what revenue does versus what profit does. Yeah, one of the best lessons I got was from my accountant, who's a really, really brilliant man, and in fact, he was able to build and sell his accounting company for $20 million in the late 80s, right? And so he said, listen, revenue feeds the ego, profits feed the family, and there's so much truth to that because most people think about, hey, I'm generating five, six, seven, eight million dollars a year in revenue. And I was asking, what do you take home? What do you give to your family? About $300,000 a year because I've got so many moving parts.

I got five leases. I got five sets of employees. What if you can open up two locations, create $5 million a year and take home $1.5 million, right? So, again, goes back to you, I'm not impressed with the guy or gal who has five or six businesses and each one is putting along because on paper, you might say, hey, you know what, Badros, I got five businesses and collectively they're doing $7 million a year. But we later find out that you're barely taken home $100,000 a year home because none of them are really profitable. And one of them is doing so bad that you're actually losing money.

Right, right. And we see this all the time as business coaches. So what we always tell them is, hey, trim the fat, take the one business that has the greatest potential and increase their revenue so that you can have greater profit margins because profits feed the family. Yeah, absolutely. And so I just did this with one of our Empire clients, Eric and Amy Ladeen. They have a very big nutrition coaching company and they're very successful. but they wanted to take to the next level. They wanted to raise the bar.

And so we helped them develop a concierge level program. And I wrote the emails for them. They had a huge launch, 100K and profit. And it's almost all profit because they're doing that coaching and they're just delivering slightly more value and access to them. And it really is a great opportunity. So what I recommend to every business is look inside and look for what's called the low-hanging fruit. Where can you deliver a premium service to clients that are already paying you money,

who are going to be your happiest customers, you're raving fans, and look in and find that money that's just sitting around waiting for you to take it because you are adding more value into the business. Now, on the flip side, let's talk about why it's not good to do a race to the bottom and lower your prices. What kind of trouble can you get in there? Well, you can get into a lot of trouble because at the end of the day, and I'll give you an example in the fitness space, right?

Yeah. So you see two personal training gyms out there, and one guy says, hey, I charge $45 a session. The other guy says, well, I'm going to charge $40 a session. So the other guy goes to $35 a session. This guy goes to 30 a session. Ultimately, they're racing their prices to the bottom. But at the end of the day, life continues to get more expensive. Your lease is going to go up.

Your marketing costs are going to go up. Your market costs are going to go up. And your turnover is going to go up. Your turnover is going to go up. Because no one's going to want to work for a little bit of money. You simply cannot afford to pay your staff what they deserve if you're constantly competing against the guy across the street by lowering your prices.

Instead, ask yourself, what can I do to increase so much value to create such a brand, to deliver such transformational results that I could charge 10 times what they're charging and people will still pay because the race to the bottom is a lose-lose situation for everybody involved. Absolutely. So what I want you to think about as you build your empire, as you structure your business, is thinking much like when I'm coaching my clients, I want them to build their business around their life.

I want you to build your business around your price. So if you think, okay, what can I do to deliver the greatest value and charge the highest price? You don't have to have hundreds and hundreds of customers. Sometimes you only need to have a small number of customers paying a large amount of money so you have a really super profitable business. And sometimes that is the best way to go when building your empire. So Beiros, what do you want people to take away from today's show? Well, I'll tell you what. Let me dovetail into what you said right there.

You know, I talk about having 2,500 locations with FitBody Boot Camp, right? Yep. But I don't want 2,500 franchisees. Think about what it would cost me. I would have to have twice the employees here, right, at our headquarters, to manage 2,500 franchisees. Instead, I want 2,500 locations, but with 800 to 1,000 owners, which means each owner has to own 2.5 Fit Body Boot Camp locations.

That means I can... I'm above average. You are. You own three. Once again in life, you are above average, sir. But in all seriousness, it's easier to get you to buy three locations than to get three individuals each to buy one because now we have to have more staff, which means if I have more staff, I've got more unpredictable humans working around me and with me.

Number two, I can't pay everybody a lot, so I have to kind of average out the payroll. And it's like corralling cats. I'll be able to deliver better service to 800 franchisees versus 2,500 franchisees. So to me, I will keep jacking up the price to build my lifestyle around the business that I want. Absolutely. So what we want you to take away is to add value, to charge more, deliver more, so that you can build the business around your life and the business around

your price. Thank you so much for joining us for another amazing episode of the Empire podcast. Now, the greatest compliment that you can give to us is liking, loving, and sharing this episode with all of your friends. So please go to iTunes and give us a five-star rating and then share it online and social media with everyone that you know and make sure to tag us because we love hearing from Empire listeners. And if you own a business that's doing half-star a million dollars or more in annual revenues and you know it's got massive potential and you like myself and craig valentine to help you scale it by five x 10x and 20x in the shortest amount of time possible then you might be a great candidate for the empire mastermind program that we have

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