Entrepreneurs: Increase Your Prices, Increase Your Profits
My nan used to say me as a teenager, “Buy cheap and you’ll more often than not, buy twice” And of course there is the old saying of “You get what you pay for”
My personal strategy when buying material stuff is to buy on quality. You know like clothes and TV’s, furniture etc.
And if I am buying services from somebody, I don’t go for cheap either. Of course I use prudence and I don’t just take on somebody’s services because they are the most expensive.
But I will rarely buy something just because it is ‘cheap’.
What happens when you see something really cheap?
If I see something too cheap it raises alarm bells with me. It makes me wonder why it is so cheap in the first place? I wonder if I am going to get a professional job done.
And more importantly, if buying a service, it makes me ask myself if the person is going to do her very best work for me? Will their heart and soul and MY interests be in their mind and on their agenda? Will they expect me not to complain or ask for more because they are charging so little?
Or are they going to do a half a job?
If people do not see the value in what you do it is because YOU are not highlighting the value in what you do
So what are your prices igniting in your potential customers’ minds? Are they raising alarm bells? Or do they place a feeling or picture in the mind of, “Wow, this person must be outstanding at what they do?”
Why it doesn’t pay YOU to do cheap…(not even for friends)
A few years ago when I was copywriting one of my dear friends was starting up his own business and was on a tight budget. He asked me to do some copywriting for him for his new website at a discounted rate. Now he knew the value of my copywriting and marketing coaching as he has seen first hand the millions it has produced for others in his network, so he approached me.
But the deal was to give him a big discount. I told him I would accept if he could accept that I would do this in my own time and therefore deadlines would have to be flexible. We both agreed. I charged him a lot, lot less for my services as a favour and because I wanted him to succeed.
Now while I was doing the work for him, I spotted a much better strategy in the answers to the questions I sent him regarding the main benefits of his services.
But here’s the bummer: I failed to tell him about it. I didn’t act on it. I kind of had a gut feeling that it would work far better and override the strategy he wanted to use at the time and get better results.
The reason I didn’t act on it? I was charging too little; I was doing it too cheaply. I wasn’t fully open to the prompting and gut feeling because I wasn’t treating the work like I would have done had it been a high paying client.
I would have gone after him all guns blazing with what I had seen hidden amongst his answers he had sent to my earlier questions. But in the back of mind I must have been thinking, “I am just doing a favour for someone”.
So instead I felt like I failed him for a short while. His strategy didn’t work (like I knew it wouldn’t) and so neither did my copy. And my copy had never failed since I had become world-class. He ended up paying somebody else and paying twice because he wanted it cheap.
We both lost (Except on our friendship of course).
Instantly Increase Your Profits by 10% to 20%
On my marketing boot camps I ask the attendees, “Who would like an instant increase in their profits of say 10% or 20%?” Obviously, all the hands are thrown into the air. And then I tell how so very easy it is to achieve.
“Put your prices up by 10% or 20% immediately” I will exclaim.
I do this really early on the first day of the boot camp. The majority of the participants (I never have more than 10 different businesses, but the entrepreneurs are allowed to bring their team if they have one) will then go to great lengths to tell me that they can’t do that.
- “You don’t understand my business”
- “It’s different for my industry”
- “Everyone else has low prices, I will go out of business”
- “My clients can’t afford it!”
- “I charge the industry norm”
And various other answers I will get too. I don’t answer these objections directly, one-by-one at this point. But by the middle of day two, 95% have increased their prices.
But I do pose these 2 questions to get them thinking about their prices:
- Is there anyone offering very similar or the same services cheaper than what you are?
- Is there anyone offering very similar or the same services for more than what you charge?
So what are you charging for your services? Could you increase your prices right now? Or do you think it is different for you? Maybe it is.
Here’s why and how you should charge more for your services
First of all if you are following the industry norms then your competition has set your prices for you. You are following. If you are unique and different and offer better value why can’t you take the lead and charge more for what you do? Who says nobody will pay it? Have you tried?
But people buy on price and I have to be competitive…
Do people buy on price alone? Do you? Do you always buy the cheapest? Or have you bought something that is more expensive than the industry norm? People do not buy on price alone.
(Perceived) Value will determine price (And other strategies)
If you are placing your marketing strategy on price alone you will be in trouble, eventually. Why? because somebody will come along and charge less than you do. Then what are you going to do? Lower your prices? You’ll be fighting forever more in a price war that will eat away your profits and send you bust.
And not only that it will demoralise you and ruin your self-confidence.
When you are shouting from the rooftops and clearly highlighting what an amazing, outstanding service you offer and deliver on those promises, you will automatically attract higher paying clients.
I had a cleaning company at one of my boot camps and the entrepreneur said it was impossible to put his prices up as he wouldn’t get any work. What he didn’t realise was that I had researched his competition and some of them were charging double what he was for the very same services.
So I challenged him.
“Are they (His competition) busy? Or is the company being run by an eccentric billionaire with unlimited funds who just set it up to sit there and do nothing?” I wryly asked him. They were the busiest cleaning company in the area incidentally.
If everyone is saying Yes to your offer you might be too cheap. As a rule of thumb, about 20% to 25% of your potential customers should be saying “No” to your offers
A female entrepreneur came to me once who was conducting leadership workshops for companies. When I found out she was only charging $500 for two days I told her to increase her prices. She was worried that she wouldn’t get any clients. I told her to charge $2,500 a day.
When you charge more for your services, it forces you to ‘Up your game’. It helps you get creative and add even more value for your clients and customers. And that means more business for you, not less.
She thought about it. Then she told me that she couldn’t charge that much but she was willing to ask $995 per day. I didn’t want her to charge that much either. But I said that figure so her mind would open up to the possibility of increase.
Not only does she have more work and more referrals she has 4 x more in the bank.
(Incidentally, she now charges $1,300 per day)
Another entrepreneur I coached was selling two day boot camps and 12 months mentoring, once a month, as a programme. He was charging just $2,250 After attending his two days and a couple of his mentoring sessions, I told him to increase his prices.
Putting your prices up will ensure you ‘up your game’. Up your game and more customers will refer you
So we did. We put the prices up to $11,300 OVERNIGHT. Guess what? Sales of his membership INCREASED three fold overnight too. He achieved more sales.
We also ensured that we had added even more value to what he was offering.
In both of the above cases the entrepreneurs were open to the concept. Here’s why they could charge more for what they did.
- Offered amazing services with exceptional value
- Highlighted their expertise and authority within their field
- Were fully confident in their services and what they could do for their clients
- Had their clients genuine interests at heart
- Infectiously passionate about what they did (And still are)
- Believed totally in what they were doing and that their services would make the lives of their clients easier, faster, healthier or wealthier
Now that they were suddenly charging more they upped their own game. They felt better and their passion to serve others increased too. Their customers benefited because they received an even greater service and so those customers referred more business.
A question to ask regarding price
When deciding whether or not to increase your prices or what to charge in the first place, ask yourself,
“How much are my services worth to my client?” In other words, what are all the tangible and intangible benefits to your clients?
Highlighting Your USP (Unique Selling Point)
Yes I know you have heard of this. But again, common knowledge is not necessarily common practice. I have coached many an entrepreneur who has not highlighted their main benefits of what they do; or what makes them, well, unique. Their great qualities have been hidden in amongst the bumph on their site.
Some people fail to highlight their USP at all. This is common. Why? because they feel they will be boasting or bragging about themselves.
One of the entrepreneurs on one boot camp I conducted was a chef with his own restaurant. He had come 3rd in some cooking world championships overseas (Cannot remember what the competition was now) the year before. It wasn’t even on his web site.
As an entrepreneurs, your mind should be flexible. Can you put your prices up?
To me this was a big deal. I want food being cooked by someone who has come 3rd in the world.
So we highlighted this both on his site and at his eatery, including in his menus. We also looked at other outstanding ways we could give his customers a unique experience.
So we put his food prices up by 30%. He got more customers and reservations. His takings increased the very same day. yeah, sure, in the short term he lost a couple of regular customers.
In the process he really updated and up-graded what he was doing. He put more pride and love into his cooking.
You may read that and think how obvious. But self-promotion can be tough for some entrepreneurs and to him this was no big deal. But to his customers it was. And, like I say, it made him up his game.
If people don’t pay, they don’t pay attention. To a certain degree, the more people pay, the more they will pay attention.
The psychology behind higher prices
In a test done in the USA a placebo flu medicine was put in several drugstores at different prices, ranging from cheap to what was considered really expensive for the treatment of flu. The higher the price paid of the placebo medicine, the more positive feedback the ‘medicine’ received and LESS complaints of allergic reactions.
People who pay more will report better services and better experiences than people who pay cheaper for the same product or service.
I charge more than the industry norm for my coaching. Why? because like the two entrepreneurs above I have a full belief in my ability to get people the breakthrough they desire or seek in the fastest time possible; or I get them performing beyond their expectations fast.
I give my clients my all. There are no half measures. I do whatever it takes to go beyond what the results they want.
Sure I have some offers on every now and again but usually only if I need some new video testimonials or something else I can use in my marketing. But I dictate those discounts, my clients don’t.
Okay, I may not be able to charge a million bucks a day like Tony Robbins does (yet), but my 50 years of studying people, 27 years of studying self-improvement and almost 14 years of coaching people, I am worth more than an average price.
The value to my clients is almost immeasurable and priceless.
Your prices I mean. But before you can do that make sure you up your game too. Aim to be a leader in your field and learn all you can. Establish yourself as an expert and authority at what you do. Why would you want to be average and only charge average prices?
Surely, you are exceptional at what you do right? Your services greatly benefit the people they touch right? If you can answer yes then maybe you should look at increasing your prices? You, and more importantly, your customers will benefit greatly.
Never sell your services short. It’s not about a quality service, that’s a given and very 1990’s. The rules have changed. It is about being (perceived as) one of the best at what you do. People now have the choice to not only want the very best, they are demanding the best.
Up your game and constantly seek to give your very best for your customers. Let them enjoy the best experiences possible from whatever it is you provide. One of the ways to open your mind and achieve that is to up your prices.
And then of course ensure your potential customers can see that message clearly in your marketing and ensure you deliver on all of your promises.
What can you do now?
If you are a forward-thinking entrepreneur who wants to improve the value you give your customers, get your authority and expertise seen by potential clients and increase your profits then drop me an email and let’s talk.
I have a proven track record helping entrepreneurs get more customers and increase profits through their marketing using 6 must have strategies that work in today’s competitive world.
(I only take on select entrepreneurs who are passionate about what they do, have a grand purpose for their customers at heart with exceptional products or services. People who are just out to make a fast buck needn’t apply)