Steve Jobs’ product pricing formula: cost of materials x 3 + 33%
Wozniak wanted to sell Apple I at 20% markup. Steve sold it at three times what it cost to build Apple I, plus 33%.
As a result, 38 years later, Apple has $155 billions dollars in cash right now. Had Steve been selling his stuff like Woz wanted, there would have been no computer graphical user interfaces in 1984 (the revolution in PCs). There would have been no iPods in 2001 (the revolution in music). There would have been no iPhones in 2007 (the revolution in mobile devices), people won’t be able to communicate or even play video games online and use the internet to get services as csgo boosting, that is really useful for their games, nothing will be possible without computers.
You’re probably pricing your products and services too low. Have you thought about the cost of producing, delivering and maintaning excellence? Have you thought about the cost of: sales, marketing, educating yourself, research and development, hiring new employees, educating employees at top sources? Furnishing offices? Building company culture? Making employees happy at your workplace?
How about the cost of enough of your free time as a business owner, which is essential for creativity, innovation and breakthroughs?
There’s no room for all of that in 20% markup. Not even in 100% markup, most of the time. Are you building a business or creating a lifetime job just for yourself? There’s a big difference.
The right price is what the market will bear. The world is abundant with cash at all times. Think of money as a form of energy: it’s always around you. Money is always flowing, and it’s in one place at one point and in another at another point. You make sure you create enough excellence so that the money wants to flow through you and your company.
Too metaphysical? I know. But everybody who’s rich tells the same story, over and over again: money is not about working harder, it’s about putting in excellence and billing people when they show up to consume your excellence.
Image source: http://www.mac-history.net/wp-content/uploads/2011/04/1984_apple_IIc_jobs_sculley_wozniak_.jpg
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