PICKING A PRICE POINT FOR YOUR PRODUCTS AND SERVICES

This is perhaps the most interesting part of a customer’s perception of your business…Once you have decided where you want to position yourself in the price market, it will be very difficult to change. Remember, once a potential customer believes something, it is virtually impossible to change their mind. When a customer complains about price, you just haven’t shown them enough value for the price you are asking. You should be proud of your prices! 

“Yes, we are the most expensive, but let me tell you why…”

If you are known to be the lowest priced business in your market, you will never be associated with high quality or great service. If you walked onto a car dealership and saw a BMW for sale for the price of a Kia, you would be leery and suspicious. Something must be wrong for it to be priced that low. The opposite is true also… If a Volkswagen were for sale for the price of a Mercedes Benz, there wouldn’t be many takers.

Several years ago, I had a riding lawn mower I decided to sell, and so I posted it online asking $50. It had seen its better days, but it still ran and would cut grass just fine. I just didn’t want to be bothered with the hassle of trying to sell it. A week went by and not a single call. The second week went by, nothing. By the third week, I began to realize what was taking place, and I raised the price up to $200. BAM! The calls came flooding in, and I got the asking price. At $50 people thought there must be something wrong with it, and so there were no takers.

What are you worth? More importantly… what do you want to be worth? When you work for yourself like many of us do, you have both the joy and the anguish of deciding what you are worth to someone else, and to figure out ways to communicate that with potential customers. If you want to be known as the low guy on the totem pole, which I hope nobody out there does, you will never be known for offering the best quality or the best service.

We always expect to pay more for good quality, and great service. No questions asked! When you want to go out to a nice meal complete with soft candlelight and romantic music playing, with a gourmet wine selection and hand-carved chocolate bunnies for dessert, you will pay a premium fee. We call this selling the “sizzle with the steak”! When you want something quick and easy without all the glitz and glamour, you will pay substantially less. 

How do people perceive your business? Are you the intimate little bistro where you would expect to spend $200 on a nice meal, or are you the drive through where $4.95 will get you the works? More importantly, where do you want to be in the future? If you are priced too low, people will associate you with low quality, poor workmanship, and bad service. There will always be plenty of business at the bottom of the pile, but it comes with a very high price! 

Customers don’t pay us for the cost of our time, or the cost of the products or services they pay us for the value of our time, and the value we bring to their life. If we show up 10 minutes late for a meeting wearing flip-flops and a T-shirt, it shows the customer we don’t value ourselves very much, so why should be expect them to value us? If you want to be a Cadillac, act like a Cadillac, dress like a Cadillac, and project an image like a Cadillac!

If people like you and refer others to you, that has tremendous value! It means there is a demand for our time, which means we can charge more for our time. Your prices need to be based on what the market will bear, not on your expenses.

If your prices are too low, it will scare people away. It’s not that our customers won’t pay our prices, but rather that we are afraid to charge what we are worth. I’m not saying you need to raise your prices through the roof tomorrow, but you do need to be acutely aware of your current price position in the market and have a well-defined course of action on where you want to be in the future. If you want to position yourself differently down the road, start making changes TODAY that will lead you down the road to success. 

Don’t wait for another day to make the necessary changes to assure a better tomorrow!

Written by Mitche Graf.
Have you read?
The Attention Economy’s Impact on the Retail Industry by Srini Pallia.
Review and Renew your Boundaries to Recharge by Renée Giarrusso.
The 3 Principles of Talent-Centric Organizations by Carol Schultz.
How to Build a Stronger Operation With a Business Process Blueprint by Caroline Broms.
5 Facts about Work-from-Home that Management Doesn’t Want to Admit by Steve Prentice.

This report/news/ranking/statistics has been prepared only for general guidance on matters of interest and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, CEOWORLD magazine does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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