Most business owners needlessly underprice their products or services. They then try to overcompensate by raising prices – often too little, too late. They also make the mistake of ignoring opportunities to sell premium priced versions mostly out of fear.
The price your customers, clients or patients pay is a result of the target market selected, perceived value, the value proposition presented, salesmanship, credibility, celebrity status, brand and buying experience. These are just a few of the factors that play into the buying decision.
The buying decision has very little to do with objectively measured intrinsic value. If that were the case, diamonds would not cost any more than glass or coal. You can control and manipulate all the non-intrinsic factors. So you should approach price courageously and creatively.
A great way to build up your pricing courage is to do a little research and find out what else your clientele spends money on – and how much they spend.
Also take a look at what the really affluent spend on a variety of goods and services. Items like an $800 putter for golfers or a home entertainment system that costs many thousands of dollars are common among those who can afford it.
Don’t worry about so called “industry norms”.
Most business owners take a look at what their competitors are charging. They make note of the high price, the low price, and end up setting their prices somewhere in the middle.
As unscientific as it may sound, this is the way most businesses establish their prices.
Most selling occurs in a vacuum. If your selling process doesn’t, you need to change your marketing approach so that it does occur in a vacuum before an actual sale happens.
There is “price”, and then there’s “presentation of price”.
This means structuring what you sell, how you package it, how you market it and to what audience, how you deliver it differently than the competition. These small, subtle differences allow you to set a higher price, because a direct comparison to lower prices can’t be made.
Why?
You’ve built in value-added benefits and features to your product and service – something the competition doesn’t offer.
