(Photo by Rob_Rob2001.)

Way back when, the makers of Chivas Regal weren’t happy with their profit margin. In an act of desperation, they doubled the price of their whiskey without changing the formula in the slightest. Sales went up. Sales went up a whole lot.

I can’t even remember where I first heard this story, and it’s very likely apocryphal. But it’s possible to make clients happy by charging them more money — making them think they’re going to get charged an arm, a leg, and maybe a liver.

Here’s another story – a few years ago, a close friend of mine was playing a ton of acoustic singer/guitarist shows around town. He loved it, but it was tiring and took time away from running his business. He proudly told me his strategy one day: “For next year, I’m doubling my prices so I can play half as many shows.”

A few months later, I asked him how it was going. He looked a little bleary-eyed, and explained that he was playing almost twice as much, and raking in the money.

It’s all about perceived value.

Here’s the long explanation: your clients probably don’t know a whole lot about videography. If they did, they’d be doing the work themselves. And like any creative field, “quality” is very subjective. Like Potter Stewart’s “I know it when I see it” quote,  it’s difficult for them to quantify what makes good videography good and bad videography bad, but they can most certainly tell the difference between the two.

Since they don’t know a lot about what makes quality work, they have to go with what they do know — price. And that’s where perception is important. Imagine two nearly identical red cars parked next to each other. The price on one is $25,000, but the price on its neighbor is $40,000. Outwardly, they look pretty much the same. Without getting under the hood or taking a test drive, it’ll be nearly impossible to tell the difference between the two.

But one is priced significantly more. There must be a reason, right? No one would just slap an inflated price on a car without a good reason. If that car is $15,000 more, it must be better. We don’t know how — it’s just better. The inverse is true, too. If something’s not that expensive, there must be something wrong with it.

That’s one of the ways that perceived value works. Our consumer-based culture has hammered one thing into our brains since childhood, and that’s more expensive = more better. That works for a lot of people working in the creative industry, especially once they get past the mental roadblock of “I really like doing this, so I shouldn’t charge much for it.”*

My company used that strategy with a twist. We had one set of “book rates,” and an unofficial rate sheet that was what we actually charged. It gave us the best of both words — reasonable prices that make clients happy, plus a perception of elite, pricey quality that made us happy.

(Keep in mind that we did this early on. The strategy’s changed up a bit for our situation, but this may work well for you.)

What would happen is that a client would get an invoice with astronomical charges. We’d have talked about pricing and their budget beforehand, but the idea was to blow them away with the first couple of lines. Those invoices would start with crazy high charges. In some cases, more than twice the budget we’d discussed.

Then, below the sticker-shock portion of the bill, we’d put in a discount or two. Usually, they were creatively titled along the lines of “great client to work with discount,” “discount for having enough coffee for the crew,” or “making it easy for us discount.”

Those discounts would take the total charge into reasonable territory – the unofficial rate sheet, or what we actually wanted to bill out. They were tailor-made, too. Some clients had more money to spend. Some didn’t. Those discounts let us keep a perception of quality based on price, but also fit into the client’s budget.

The clients ended up believing that we had a superior product worth tons of money (we did, and do). The discount made them love us, though. We were giving them a product of a quality that they could never ordinarily afford, and through some kind of black magic, making it work within their budget.

When our prices inevitably had to go up**, it helped us out even more. We still could give discounts, they just weren’t as steep. Clients still felt like they were getting a good deal since our official list prices hadn’t changed.

Like I wrote earlier, we’ve largely moved away from this strategy now. Our business grew to a point where we’re mostly working on larger projects where the budgets, deadlines and the bill are nailed down well in advance. For smaller clients with smaller budgets, however, this pricing strategy will let you charge cheaper prices and keep your work’s perceived quality.

*This is a completely natural thought process, and a tough one to break out of. A future post will cover it in-depth.

**A session with a free small business advisor provided by the state government showed me the light. A harsh, unfeeling, soul-chilling burst of realistic light, no less. I’ll discuss it more in a future post.