Many business owners feel all their problems would be solved if they could just increase their prices. Unfortunately, some of them have trained their customers to always ask for discounts whenever they buy, so it can be very difficult to break this cycle.
But the thing is, the customers who are screwing you down on price often tend to be the same ones who demand more of your time and resources than anyone else. The best thing is, there is a solution…
Watch this 60 second overview video before you continue:
Well it’s possible, and dare I say, you have an obligation to make it happen. It’s YOUR business and you set the rules. If you don’t do something about it, nobody else will.
But raising your prices does not mean you have to lose all of your good customers too.
Statistically 5% to 10% of people are price shoppers. They’ll search out the lowest price even if it means driving hundreds of miles to get it and settling for inferior quality and service.
You don’t want these people around, sucking the life out of you and your business.
Another 10% to 15% of people will always take the highest price because they equate high prices to the best value. Ideally this is the market you want to play in.
A great book you should read is Dan Kennedy’s How To Market To The Affluent. It will give you lots of strategies to find and target these ideal customers.
But for now, let’s look at 4 ways you can increase your prices without having a lot of price resistance from your customers.
- Find Out What Your Customers REALLY Want
Have you done your market research by surveying your customers to find out what they really want to buy from you?
Most business owners do at least some market research during the start-up phase of their business. But after that, it’s easy to get side-tracked.
Sometimes they’ll try to sell products and services without ever really seeing if the market wants to buy them.
You see, some of the easiest money you’ll ever make is when you create products and services that your market is ALREADY buying. Then all you have to do is source or create a similar product (without copying it it course) and put it in front of your prospects.
So how do you find out what your market is already buying?
Like this: Run a search in the Amazon.com marketplace for your general keyword (like “gardening”), and sort by “bestselling” products.
If you see a few similar products dominating the first few pages of results, that’s a pretty good sign that the product is popular.
Tip: Another way to find out what’s hot is to follow the money. Marketers don’t pour advertising dollars into products that aren’t selling.
So, look at Pay Per Click ads on Google, ads in your local newspaper, ads in niche magazines, banner ads on big sites and similar paid advertisements to see what’s being sold.
But an even better way is to find out exactly what problems, frustrations and goals YOUR prospects have and then find a way to offer them the products and services they need to get from where they are to where they want to be.
These days doing a survey using SurveyMonkey.com or SurveyGizmo.com is simple, yet most business owners never use these powerful tools to help them sell more stuff at higher prices than their competitors.
So what kind of questions should you ask?
Here’s some examples to get you thinking:
What’s your single biggest ___________ challenge right now?
Please be as detailed and specific as possible. (Please go beyond saying “getting clients”, or “managing time”. The more specific and detailed you are, the more likely I’ll be able to cover your topic 🙂
Which of the following best describes you?
- My business gives me my full-time income
- I have a separate “day job”
Which of the following best describes you?
- I’m a brick and mortar business owner with a local shop
- I sell products and/or services online through a website
- I’m a tradesman working alone or with a small team
- I’m a marketing consultant
- I’m a professional service provider selling to consumers
- I’m a professional services provider selling to businesses
- I’m an employee of a company
- Something completely different
What is your primary niche or market?
TEXT BOX FOR ANSWER
Please complete this question in as much detail as possible – If I could just…
TEXT BOX FOR ANSWER
By asking questions like these, you will get some deep insights into the people in your your market, and you’ll be able to come up with better solutions tailored exactly to THEIR wants and needs.
And since your competitors have probably never done this kind of deep-dive analysis, you’ll be able to charge higher prices because what you offer is clearly going to give your customers better results than what your competitors are selling.
- Develop A USP For Your Business
A USP is a “unique selling proposition”, and it’s the short statement that tells your prospects how your products are different and better than the competitors’ products.
Basically, it’s the statement that tells your prospects why they should buy from you instead of any one of your competitors.
Here are some factors around which you can base your USP:
- The strongest guarantee.
- The greatest durability.
- Outstanding dependability.
- The highest price for justifiable reasons.
- World class customer service.
- Your product was made in a special or exclusive way.
- You’re specially qualified to offer the product or service.
- Your business was first in some category (if not, you should CREATE your own category).
- And so on.
Point is, look for a benefit that appeals to your customers.
Example: The car rental company Enterprise has the USP, “We pick you up.” There may be other rental companies that pick their customers up, but Enterprise was the first one to advertise the fact and use it as their USP.
And this USP is indeed a good reason for prospects to choose Enterprise over the other rental companies.
- License Other People’s Products To Use As Bonuses
A great way to increase the real and perceived value of what you sell (which in turn will allow you to increase your prices) is to add physical or digital bonuses to your existing products or services.
What’s more, you can even choose products that are already proven winners in their own right, meaning your market will often buy your product from you JUST to get the bonus.
Don’t laugh, I’ve seen this happen dozens of times… it’s very common in some niche markets for the bonuses offered with a product to be worth 5 to 10 times the value of the product.
Here’s two Australian examples that give you clues on exactly how to do this.
The first one is YOUI Rewards.
YOUI differentiate themselves from every other insurer by giving customers free YOUI Rewards points for each policy the write.
The second example is RACQ.
RACQ’s discount program is an awesome example of how to use products and services supplied by other businesses to differentiate yourself.
Of course we’re not privy to the details, but I’d imagine this program is worth a lot to the Club in extra revenue each year.
And by positioning themselves as a ‘Club’ rather than just another business, they create a feeling of community and common purpose which helps to keep ‘members’ engaged, and allows RACQ to sell more products and services to them for much longer.
So where do you find these products for your business?
- Ask your suppliers or other businesses you do work for if they’d like to have access to your clients (so they can sell them other things in the future) by giving you free products or services you could offer
- For digital products to use as bonuses, check out Clickbank.com. The products at the top of each category or the top of your search results are the bestsellers
- Amazon.com. Again, just sort your search results by “bestsellers” to find the hot products
- If you’d like to import inexpensive products yourself to use as bonuses, take a look at Aliexpress
Another option is to look for vendors who offer an affiliate program, because they understand the power of generating front-end sales at break-even, and then profiting wildly on the future sales they make to those new customers on the back-end.
They are also used to paying referral fees for sales, and are often open to doing creative partnership deals if it can help them grow their distribution.
Example: “Gardening supplies affiliate program.”
There is absolutely no reason you can’t approach the owners of these products and ask if you can license them for a bulk rate or individually every time you make a sale.
Then at the end of each month, tally up how may products you sold and send the vendors their payment.
By bundling up several inexpensive, quality products and services with your own stuff to create a Package, you can develop a complete “solution”, which can have a much higher value than what your competitors are offering.
When you do this, you are clearly demonstrating why your offer should be priced at a higher level than your competitors.
Plus, since your prospects can no longer compare “apples to apples” (because you are offering something unique and completely different to everybody else), you don’t have to compete on price alone, which gives you a distinct advantage and lets you charge higher prices and enjoy much higher margins.
- Raise Your Prices
That’s right, you can make more money simply by raising the prices on some of your existing products.
Funny thing is, you may even discover that your conversion rate goes UP when you raise your prices.
That’s because the perceived value of your product often goes up, which makes people want it even more. One easy way to raise prices is to offer a payment plan with two or more payments instead of one.
People expect to pay more for the convenience of paying over time, so it’s a good option, especially if you cover your cost of goods with the first payment.
At the very least, in many cases a 10% across-the-board price increase will often make very little difference to your customer’s buying habits but can make a big difference to your bottom line.
Advanced Tip: I’ve seen top marketers report when testing products selling at a price of $97, TWO payments of $97 virtually doubled their net profit with only a small drop off in order volume. And if two payments will increase your profit, try THREE payments at the same price level to see what happens
This is something you should split test for yourself, along with a range of prices and other options. You never know which price is going to make you the most bottom line profit until you test it. This is something you should be doing all the time.
And a great way to make those higher prices stick is to put a time limit on your offers so people have to make a decision NOW or they are going to miss out.
ACTION STEP: Test each one of these techniques over the next few weeks and see what happens. You’ll probably be pleasantly surprised with your results 🙂
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About The Author: James Huy Vuong is a CPA, Registered Tax Agent, Business Broker, Certified Exit Planner and the owner of Your Accounting Partners, an Associate of Negotia Group. Partnering with businesses from start to scale thru to sale.
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