I was looking through my newsletter archives at the weekend and came
across this article from 2005! The topic is just as valid today - and I
think the tips are too... let me know what you think
What Should
You Charge?
The answer to that question is simple – you should charge what you’re worth! The explanation will take a little longer....
Many businesses bump along the break-even line because they don’t charge enough and unfortunately many go out of business for the same reason.
Whether you’re selling products or services, you have to believe in what you have to offer – or you’ll have an uphill struggle expecting people to buy. If your prices are too low, the perception of your products/services is that they are inferior in quality and durability to those with a higher price tag. In other words, cheap.
If you’re tired of customers trying to beat you down in price or saying you’re too expensive, try something radical – raise your prices! Let me explain a bit more ….
What sort of customers do you want? Those who are just looking for the best price deal or those who appreciate the quality you can offer?
Something most of us forget when setting prices is how much studying, research & development, expertise and experience has gone into our products and services. They need to be factored in, they cost you time and money to acquire. Be proud of what you have to offer, you’ve worked hard for it.
Be First Class
If you’re going to raise your prices, you’re going to have to deliver the goods. Make sure that you give a first class service to each and every one of your customers, for each and every purchase they make. Go further and delight them with great follow up and add value wherever you can – you can afford to as this is now included in your higher price.
I recently bought a new car. The young salesman was very eager to please and personally made sure all my requests (including enough petrol to get home!) were carried out. As I drove away, I thought that was the last I’d hear from him....
However the next day, he called to make sure everything was OK and said to be sure to call him if I had any problems. He called again after a week and yet again after 4 weeks – just to check that I was still completely happy with the car. Now I know I paid for this service in the price of the car but how often do you actually get it? I was and still am a delighted customer.
Two Quick Coaching Questions
What can you do to delight your customers? And when are you going to raise your prices to reflect what you’re worth?
The answer to that question is simple – you should charge what you’re worth! The explanation will take a little longer....
Many businesses bump along the break-even line because they don’t charge enough and unfortunately many go out of business for the same reason.
Whether you’re selling products or services, you have to believe in what you have to offer – or you’ll have an uphill struggle expecting people to buy. If your prices are too low, the perception of your products/services is that they are inferior in quality and durability to those with a higher price tag. In other words, cheap.
If you’re tired of customers trying to beat you down in price or saying you’re too expensive, try something radical – raise your prices! Let me explain a bit more ….
What sort of customers do you want? Those who are just looking for the best price deal or those who appreciate the quality you can offer?
Something most of us forget when setting prices is how much studying, research & development, expertise and experience has gone into our products and services. They need to be factored in, they cost you time and money to acquire. Be proud of what you have to offer, you’ve worked hard for it.
Be First Class
If you’re going to raise your prices, you’re going to have to deliver the goods. Make sure that you give a first class service to each and every one of your customers, for each and every purchase they make. Go further and delight them with great follow up and add value wherever you can – you can afford to as this is now included in your higher price.
I recently bought a new car. The young salesman was very eager to please and personally made sure all my requests (including enough petrol to get home!) were carried out. As I drove away, I thought that was the last I’d hear from him....
However the next day, he called to make sure everything was OK and said to be sure to call him if I had any problems. He called again after a week and yet again after 4 weeks – just to check that I was still completely happy with the car. Now I know I paid for this service in the price of the car but how often do you actually get it? I was and still am a delighted customer.
Two Quick Coaching Questions
What can you do to delight your customers? And when are you going to raise your prices to reflect what you’re worth?
Good article Louise.
I think business owners need to focus on two tasks
1 - how to create more value for customers and the after care service from your car dealer is a good example.
2 - capturing a fair proportion of that value.
OK fairness is not generally a concept recognised in business so let's dig a little deeper.
If you and your competitor can both create £1000 of value and they charge £300 but you try to charge £400, then the price premium is difficult to justify.
You want more to give them the same.
But if you create £1200 of value, then your price is fair because while you charge more, your customers are better off from buying from you.
On pricing there's also a huge difference in approach between...
going in as the cheapest and having to penny pinch and scrimp on service so you can create a small margin...
or
charging more and knowing that you have the margin available to give more.
Posted by: Paul Simister | March 07, 2010 at 01:48 PM
Thanks for the excellent example Paul - well said! I've found that too many businesses simply base their prices on what their competitors are charging.
Posted by: LouiseBJ | March 08, 2010 at 11:01 AM