In today’s post pandemic economy, most are rushing to find a way to lower their prices in their small business, to keep their doors open and attract customers. By doing that, many times they expedite the inevitable of going out of business. That is a big mistake. If you cut your prices by 10% or 20%, that is pure profit off the top and can be very hard to overcome in your business. What is worse is finding the highest priced item to sell (and if it has the lowest profit margin) and then you cut the price by 10-20%, you have a double whammy. Your sales will go up, however your profits will nose dive and your ability to cover the overhead to continue your business many times will fail very quickly.
Here are Ten Clever Ways to Raise Prices:
1. Developing an advantage that will position your business, product or service above others.
A. Can you find a way to position your product or service as the only source ideally as an essential need? A great example is the power company. When it comes to people cutting their bills each month, one of the very last to get cut is the power bill to their house or apartment. The question becomes, how do you position what you do so that it is the last item a consumer or business owner would consider cutting? That alone could dramatically change your business.
B. Does your product or service offer a major systems advantage? Does it make someone’s life easier or more enjoyable so what you offer can be on autopilot and replace 8 other things you do not need however with your product or service, it is all in one place.
C. Does your product or service offer a true economic advantage? That is, one where they would get so much value and to buy the parts separately would cost a fortune and they see you as the best, most cost effective option.
2. Position yourself or your business as the only source of a valuable expertise. Ideally, you would become the celebrity expert in your field or niche.
A. Many times it can help to name your own niche or area of expertise. That is much better than fitting into the box as everyone else. If you do, you end up devaluing your worth to the market place.
B. If your USP positions you as the only source, that is a huge advantage. Find a way to position what you do in your industry as the Expert and only source.
3. What major advantage do you bring to the marketplace?
A. Do you offer a performance advantage? Are you able to get better results on the internet, opt ins, videos, conversion, butts in seats….if so, you are in a position to command a much higher price if you can demonstrate the advantage you offer.
B. Offering an Economic Advantage to how you can save money or make money and clearly spell it out is often the best advantage. Economic Advantage – by far the best advantage. What most small business owners is the opposite. They compete by lowering prices and end up shooting themselves in the foot by offering lower prices. That may bring some customers in the door quickly, however rarely works long term. Plus, when you start to add employees, more overhead, you are stuck with lower margins because that is what makes you unique. It is far better to find a different advantage than a lower price and offer more value.
Many people are afraid to offer a higher price or come up with a unique advantage in their marketplace to offset the higher price. They feel they may lose existing customers, which is true, the key question becomes if you lose a percentage of customers and retain the rest, are you better off from a pure profit point of view? After all, the purpose of any business is to make a profit. Not to work 60 hours per week to lose a lot of money.
Of course, you must add value and real value. Using your time is a bad way to do that one on one, because you only have so many hours in the day. It is much better to leverage your time, through seminars, webinars…and create value to grow your business.
If you find all your clients are “cheap” and have no money, that means you are marketing to the wrong group. Because if that is what you are attracting, you need to change the marketing approach.