6 Legal Secrets Behind Pricing Your Products
As a business owner, there are LOTS of things you have to learn as you go. There’s a lot of trial and error and as a business owner myself, I know this to be true!
Over the course of growing my business, I’ve had to learn from a lot of mistakes and I’m sure that you can relate.
Out of all the things that we have to navigate, one of the things that tends to trip us up the most is pricing.
Whether you’re launching a new product or service, pricing can feel sooooo confusing and overwhelming.
It’s easy to get in our heads about the value versus the actual price, so that our audience sees the investment as a no-brainer.
Is this price too high? Too low? Will people see the value? Can I increase the price later? Will people want to buy this at all?
It’s a constant battle playing in our head and trust me, I get it!
The last thing you want is to price your offer wrong and then be left with no buyers when you launch it.
Talk about total defeat.
While there are definitely some marketing strategies that you can implement when it comes to pricing your offers, that’s actually not what I’m here to talk to you about in this blog post.
I’m not an expert in pricing, but I do consider myself to be a go-to for all things legal and shocker… there are legalities for EVERYTHING in business, including the way you price your offers!
So, before you price your next product or offer, consider these 6 things first. ⬇️
6 Legal Secrets Behind Pricing Your Products
Stay Aligned with Truth-In-Advertising Laws
Truth-in-advertising laws are regulations designed to ensure that advertisements are truthful, NOT deceptive or misleading. These laws aim to protect consumers from false advertising practices and promote fair competition in the marketplace.
While the specifics can vary by country, many nations have established legal frameworks to govern advertising content and ensure it meets certain standards of honesty and accuracy.
For example, when you label a product as 'on sale', the discount should reflect REAL savings from the regular price.
Oftentimes you see business owners promoting “sales” when really they’re inflating the original price to create the illusion of a significant discount.
Not only is this unethical, it’s actually illegal! So, ensure your advertised savings are genuine to maintain trust and avoid legal repercussions.
Transparency Is Key
Tell me the biggest red flag that you see when buying online… I’ll go first. 🚩
When you see a product or service listed at one price just to find that there are actually a ton of hidden fees and additional costs that aren’t clearly stated upfront.
Talk about a MAJOR annoyance and honestly a one way ticket to a whole lot of abandoned carts.
Transparency in pricing isn’t just good business practice, it’s a legal requirement to prevent accusations of deceptive pricing practices.
Avoid Price Discrimination
Price discrimination refers to the practice of charging different prices to different customers for the same goods or services, with the primary goal of maximizing revenue or profit.
For example, let’s say you have a brick and mortar AND an online store and you charge different prices for the same products… yeah, you can’t do that!
Trying to implement this strategy takes advantage of variations in customers' willingness to pay based on factors such as demographics, location, purchasing behavior, or other characteristics.
While it’s true that wholesale and retail pricing can differ, offering different prices to similar customers in a retail setting is often problematic.
Understand the Minimum Advertised Pricing (MAP) Policies
Minimum Advertised Pricing (MAP) policies are agreements between manufacturers and their resellers or retailers that establish the minimum price at which a product can be advertised.
These policies are not meant to dictate the final selling price, but rather set a floor for the advertised price to maintain a certain level of pricing consistency across distribution channels.
MAP policies are often used to protect a brand's image, prevent price erosion, and maintain healthy competition among retailers.
If you're selling products from manufacturers who impose MAP policies, you’re legally bound to adhere to them as these policies are designed to maintain the brand’s value and market positioning.
Violating MAP agreements can lead to terminated relationships with suppliers and legal disputes.
Implement a Terms and Conditions for EVERY Offer
When you’re selling ANYTHING online, always make sure that you enforce your terms and conditions at checkout with active consent from the customer.
If you’re wondering what “active consent” means, it’s simply that little checkbox at checkout that you’ve likely had to check before that says something along the lines of, “I agree to these Terms and Conditions…”
That little checkbox that you might be familiar with is called a “clickwrap” in the legal world and is the exact way that I advise business owners to display their terms.
When you set your terms as a clickwrap (NOT a browsewrap), your agreements are more enforceable if any legal action is ever needed!
Not only does a Terms of Purchase Agreement cover how someone can use the product or service they purchase, but it also should cover policies that are a part of the purchase process, such as refunds, chargebacks or cancellations.
Keep Your Sales Copy FTC Compliant
When it comes to writing copy for your offers, you’re often taught to hook your reader in with headlines, speak to their pain points, paint a vision of their potential transformation and promise certain results so that they are inclined to buy.
This strategy certainly works and there’s nothing necessarily wrong with marketing this way… unless you’re doing it in a way that displays specific results-based claims that you can’t guarantee for EVERYONE.
This is where things get tricky!
For example, a common practice when writing sales copy is getting your audience hooked in with “How You Can…” or “How To…” and those statements are typically followed with something that your audience is desperately struggling with or really wants.
This could be a monetary result, weight loss, more leads, to reach their goals, etc. Whatever you specialize in could fill in the blank.
The only problem with this language is that what you’re saying typically can’t be guaranteed for every single person in your audience.
The fix for this is simple: assuming you’re being honest and have actually done what you promise to teach, using “How I...” in your marketing is a safer bet than saying “How To...” because you can back up what you’re saying.
Instead of waiting for someone to say, “Your sales page made it sound like I could make $X after finishing your course, but I haven’t seen any ROI! I want my money back AND money for damages!”, you simply START with FTC compliant sales copy from the start!
Learn More About Legal Social Selling
Overall, pricing isn’t just about setting a number that works for your business and your customers – it’s about weaving through a web of legal considerations.
By understanding and applying these six legal secrets, you can price your products in a way that's attractive to customers, profitable for your business, AND legally compliant.
If you’re looking for more support for selling on social LEGALLY, register for the free masterclass where you’ll learn:
- Best practices for marketing messaging and results claims
- Do’s and Don’ts of disclosures for sponsored posts, ads, and paid marketing
- How-to avoid common pitfalls and potential legal issues in social media marketing
- Best practices for using trending audio, memes and other forms of intellectual property
- Real-life case studies of FTC actions against non-compliant businesses
- Q&A session with Amber Gilormo, Esq., to answer all your burning questions
P.S. Here’s a few additional resources for best legal practices when it comes to selling online:
➡️ What FTC Compliant Sales Copy Looks Like (and Why Your Business Needs It)
➡️ 8 Steps To Legally Protecting Your Sales Funnel
➡️ 3 Legal Agreements To Implement Before You Sell Anything Online