Did you ever wonder how the big boys are able to charge the prices they do for their products? In this post by Ashley Neal of B2C, She goes over a few pointers on how a small business owner can position themselves to justify and enjoy the profits from an increase in prices. As always Read, Comment, Share and Enjoy!
Many small business owners want to charge premium prices for their products or services but are afraid that customers won’t be receptive to the change. In this sea of competition, in order to command the prices that you are seeking you have to separate from the pack and stand out. Once you differentiate your offerings on the market you can charge whatever you like. How do you charge premium prices and still stay in business?
Position yourself as an expert
When you position yourself as an expert, people seek you out for advice about your expertise. Consumers are willing to pay more for advice from an expert. Create a demand for your services by being the leading authority of what you do.
Get specific and cater to a niche
Narrow your target market down and you can charge more. As a rule of thumb, customers will pay more for specialists rather than generalists. If you provide virtual assistant services to business owners there is a large amount of competition. Make yourself stand out by providing virtual assistant services for lawyers. Lawyers would be willing to pay a higher price for a service that is specific to them. You can charge premium prices when being specific about who it is that you serve.
Add additional products or services that have a high perceived value
Find products or services that won’t cost you much but are perceived to have a high value. For example offer a recorded audio of one of your seminars. The CD’s don’t cost much to produce. Customers would be paying for the knowledge you are providing. So if you are already perceive as an expert and are catering to a specific niche as the previous points suggest, then there is practically no limit to the perceive value of your additional offerings. So think you can charge $1495 for four recorded audio seminars and a work book, this could cost you under $40 to produce but a high perceived value could make your offering worth so much more. What can you add on that doesn’t cost much but is perceived as a real reward?
Provide the best quality
If you provide products make sure that they are made from the best quality. Similarly, if you provide services be sure that you are providing the best service that your industry has to offer. People are not going to pay top dollar for products and services that are not up to par.
Provide a guarantee
Providing a guarantee offers comfort to the customer because you are standing behind your product or service offerings with a promise that they will be satisfied. A guarantee is like a safety net for the customer, they are willing to pay your premium price if they know they will be refunded if they are unsatisfied. Have a guarantee in place and then deliver!
Once you make the switch to premium prices. You may lose a few customers, but that’s okay because everyone is NOT your customer and some customers need to be told “NO”. The customers that you will be losing are probably the hardest to deal with and the most time consuming, meaning they are costing you a lot, but the return on your investment for them is very little. Get rid of them there are people out there that will pay your price and not give you a headache but you’ll never find them if you are being weighed down by cheap time consuming customers. “But I need the money now!” I can relate and that is why it is important to have a solid strategy for marketing to and acquiring customers that will pay your premium prices (i.e, see the previous tips mentioned above). If you give in because you need the money now, you will damage your reputation of providing a high value product or service and you risk losing money instead of gaining. Imagine Rolls Royce suddenly selling there $350,000 car for $25,000. Almost overnight the perceived and actual value of the car would drop and put them out of business and into debt.
Takeaway: Stand out from your competition by; positioning yourself as an expert, scaling down to a well-defined niche, offering additional products at low cost but high perceived value, provide the best quality, sealed with a guarantee, and be patient as you reach your target audience. Following these steps will enable you to command premium prices.
Are you charging premium prices for your products or services? What tactics are working for you? Share your small biz diamonds in the comment section below.
Have a successful day!