#10 of 27 Awesome Growth Hacks
Step By Step Cheat Sheets That’ll Increase Your Businesses Bottom Line.
Why your prices are almost certainly too low
Pricing is critical to the success or failure of any product or service, and in turn, the future of the business that’s selling it. If you’re selling at the wrong price, you’re missing out on profits, simple as that.
FACT 1: Too many business owners compete on price.
FACT 2: It’s a dumb strategy
Now, there are some markets where competing on price is genuinely unavoidable, but before you think this lets you off the hook here’s the truth: IF YOU ARE IN A COMMODITISED MARKET... YOU NEED TO GET OUT.
I am serious, it will always be hard, you have very few levers you can pull to bring about any change and you will never get rich.
There are four big things that you should be doing in your business that will help you to increase your prices without your customers even batting an eyelid:
- Differentiation - Differentiate your product or service from the competition
- Premium Upsell - Offer a premium version as an upsell
- Packaging - Bundle your product or service with relevant add-ons
- Price Presentation - Present your prices in the right way
Differentiate your Product or Service
If you leave your customer to decide on their frame of reference, then there’s every danger that they’ll compare the price of your apple with other apple prices.
YOU must control the comparative judgement made by your customer. DO NOT leave it up to them to choose the comparison to be made.
If you deal with price resistance by arguing that you provide higher quality, better service, etc, then you will find it difficult to sell most of the time.
People do want good service and high quality but, they don’t enjoy paying premium prices for it. If you choose to fight that battle it will be hard and, in most cases, unnecessary.
It is much easier and much more effective to just switch the standards of comparison, to compare apples to oranges and then just “throw in” the high quality and high service at “no extra cost”.
Adding additional premium products and services that you can sell alongside your existing products range is almost certainly the easiest place to start moving your average price upwards.
To get it right, it needs to be something that adds in little additional cost for you, but significant perceived value for your customer.
Packaging your product or service up, and serving it as part of a bundled offer can be a very powerful way of increasing the total price. You’ll often see a bundle selling for more than the sum of its parts.
A great example of a bundled package is a McDonalds meal; burger, fries and drink. All packaged and priced so that few people only buy two of the three, because you’d only save a few pennies.
Bundling two or more of your products or services together is a great way to shift slower-moving items, but you don’t even need to limit yourself to bundling your own stuff. There’s nothing to stop you from a tie-up with a non-competitive business in a complementary sector.
Presenting your prices in the right way is key to making sales at price points that your competitors can only dream about, without your customers flinching.
Here are a few ideas how to go about achieving this:
Individual Value Comparisons
This strategy adds up the individual values
of everything that’s included in your product or service, creating a ‘total value’ price, which makes the asking price look like good value by comparison.
Cost Avoidance Strategy
Focus on the cost of the potential problem rather than actual cost.
In most markets, it’s possible to use monthly instalments to increase your sales AND your profits at the same time. Consider offering multiple instalment plans alongside a ‘best value’ single pay option.
All our lives we’re told to ‘play fair’ and that deep psychological conditioning in your subconscious may be holding you back now.
Forget all about competing on a level playing field, selling in a competitive situation is about finding or INVENTING an unfair advantage for yourself.
Never compete on price.