We have lost track of the amount of times we have heard people say that they raised their prices and they got MORE business.
Wait a minute! More business?
Yes! In fact raising your prices can lead to more sales. But isn’t that counter intuitive?
Well actually it’s because it is a statement of value, “Oh wow that’s expensive, it must be good!” On the other hand – a low price can (not always) also suggest a lack of confidence in it’s quality.
So is the price you charge the correct amount? That’s a tough question and one that you always have to re-evaluate, however there is actually a right price for everything.
What is this magic price that is correct for everything? Well here you go:
The correct price for everything is in fact the maximum the customer is willing to pay.
Read that again.
Have you ever pushed your prices up to see how much you can actually get away with?
Pricing is merely a perception in peoples mind, and depending on their life experiences and how your product/service is seen to solve a problem for them, determines what value they place on your offering.
So value is different for everyone but most importantly it is down to you and your confidence in your own offering. Many people feel the need to drop prices to encourage sales, but this perhaps just shows poor marketing ability. Moreover people don’t charge enough because of their own confidence and self esteem about one’s products or services. (Here’s an article on how to never drop your price).
Either way if you don’t believe in your services (and show that), then who else will?!
The simple test here is to just raise your prices and see how you get on! Test, test, test…
If you don’t get the sale, you can always offer a discount later on, so you have nothing to lose.
If you don’t believe you can just simply raise your prices, try working on these things first and increase your prices gradually:
– Build your brand
– Improve your market positioning
– Become an expert in your field
– Improve the perceived value with great design
– Value adds
– Provide a remarkable experience
– Improve the quality of your work
– Demonstrate your results and your excellent feedback
Another crucial pricing point is that when you are at 100% capacity, you might need to hire someone else to grow your company. However if you are at 100% capacity it is tough to find time to do that. Moreover you are over worked, tired, and often this can lead to poorer standards, lack of reinvestment, lack of marketing, and ultimately losing customers or not finding new ones.
Besides, how many of you are working flat out, and still can’t hire someone? It’s a sad truth but many small business owners don’t have high enough prices. Therefore your prices should be high enough so that even at 85-95% capacity you are making enough money to hire someone else to help you build your business. Because if you are 100% busy, you just don’t have the time to take out to manage the hiring process as it can be time intensive. So if you are 90%-100% busy and can’t hire someone then you are probably not charging enough or need an additional stream of income from your business.
ACTION: So have a look at your prices, raise them! Test them.