4 Reasons Why Raising Your Price Is a Brilliant Marketing Move
It’s natural and tempting to think that lower prices will attract more clients, offer better value for your customers, and make your buyers happy. But what if you were actually doing your clients a disservice by not charging what you’re truly worth?
As a marketing coach, I advise my clients everyday on the best way to position themselves and package their services to provide maximum value to both themselves and their clients, and I’ve found that dramatically raising your prices can be advantageous for everyone involved. "Being the second-lowest price has no advantages," says business coach Dan Kennedy. If you’re not the lowest cost provider in your market, you might want to consider being the highest.
My clients typically go from offering hourly coaching or consulting services to selling packages and serving clients using a one-to-many training model. Prices range anywhere from $2,500 to $7,000 per client. They turn what used to be a $400-1,000 client into a $4,000 client, and reduce the hours spent per client. That’s a 5-10x increase in price while working less, and they get better results for their clients while doing it.
This same strategy can be applied across a variety of industries. Here’s why you should consider raising your prices today, no matter what business you are in.
1. Higher prices attract better quality clients
Clients or customers who only want to buy from you because you are the lowest cost provider will treat you as such. These “bottom of the barrel” clients will expect the world from you, blame all of their problems on you and leave you for a competitor in a heartbeat.
“In our experience, business is the most fun (and most profitable) when you focus on helping great people get better.” - Ramit Sethi
When you switch to premium prices and position yourself as the best at what you do, you’ll attract clients who value your unique offering. These types of clients tend to take responsibility for themselves and have reasonable expectations about what’s possible to achieve from your service or your work together. They are more likely to stay loyal, instead of leaving for the lowest cost option the moment it appears.
In short, they’re easier to work with, easier to satisfy, and they pay a lot more. They know that the old adage “you get what you pay for” is true, and they’re willing to invest in quality and doing things right instead of looking for the lowest price.
2. Your clients will value what you have to offer.
When you beg to work with your clients and show that you’re willing to do anything to get the sale, including lowering your prices, you’re showing your clients that you’re a body for hire and that they are in control of the relationship. As a result, you’ll often be treated like an employee rather than a trusted expert.
When you charge premium prices, offer specific and defined services, and you show an unwillingness to budge on what you’re worth, you will be treated as a respected authority in your market.
By creating some exclusivity and by being out of reach to the lower-end customers, you actually shift how your customers view you in their mind. You get to dictate the terms of the arrangement, and you get to decide exactly what value you provide instead of doing anything the client asks. This leaves you a lot less scattered, a lot more focused, and your client will treat you with respect.
Earlier this year, a violinist stood just outside the Washington D.C. subway system and performed six classical pieces. He performed on a violin made in 1713 that cost him $3.5 million dollars. More than 1,000 people walked by on their way to work. The violinist, Joshua Bell, played for 45 minutes. During that time, only six people stopped to listen. About 20 people gave him money and continued on their way. In total, he collected $32.
When he finished playing, there was no applause. There was no recognition. None of the passerby’s knew this, but Bell is one of the best musicians in the world, and he commands more than $1,000 per minute to perform his music. Two days before he played in the subway, Bell sold out at a theater in Boston where the seats average $100.
Now, we wouldn’t necessarily expect the ordinary subway user to be a fan of classical music, but one thing is clear -- people pay attention to what they’ve paid for.
3. Your clients will get better results.
When you charge higher prices, your clients will be more invested in getting results. If you sell training or education, charging low prices will cause your clients to give up at the first sign of resistance, difficulty or struggle. When your client pay $5,000 to work with you, they’re much more likely to stick with the process long enough to get results, even if that means trying and failing a few times before getting it right.
Have you ever wondered what would happen if college was free? It is free with Massive Open Online Courses (MOOC). Ivy league schools like Stanford and Harvard and Columbia release their courses for free online. The average completion rate is less than 7 percent. The average graduation rate at Harvard for paying students is 97.5 percent.
If you have a low success rate with your clients, and you don’t think it’s your product or process, try raising your prices.
4. You can offer better support.
If you want to make $100,000, you could do it by selling a $100 product to 1,000 people, or by selling a $10,000 product to 10 people. The first way isn’t going to allow you to form a real relationship or provide quality support to your customers. You can’t possibly address each client’s unique needs to make sure they get the result they paid for.
The second option gives you the freedom to spend the time making sure that every single one of your clients’ needs are addressed, their unique challenges are overcome, and they get the best possible outcome from your work together.
Think about any one of the popular fitness videos on the market today compared to a personal trainer. Which one do you think gets better results for the buyer? Sure, there’s the rare self-motivated individual who prefers fitness videos over all else and works out every morning, but for the general public, having someone to yell in your face when you don’t want to do another set of burpees is going to increase the likelihood of success.