This is the final part of a 3 part blog on ‘raising your prices’. Go and check out the other parts as well.
Three Critical Pricing Components.
After you gather this vital information, use it to establish three critical components in your business that will easily justify any increase in price you elect to enact.
These three critical components are.
- Your Market Dominating Position.
When you communicate your Market Dominating Position to your prospects in a way that connects with them both logically and emotionally, then the value of your product or service immediately skyrockets in their minds. This is the point where you will experience the greatest success when raising your prices, Ignore it, and your prospects can’t differentiate you from your competitors. Checkout the video of how to create your own market dominating position in the free resources section. (www.johnolivant.com)
- Adding additional value to what you sell.
Many businesses operate using a model just like every other business in their niche or industry. Since most businesses were born and bred into that industry, their ability to pull ideas from other industries into their own is extremely limited. One of the smartest things you can ever do as a small business owner is to adopt a systematic study program of businesses outside your own industry.
These typically cost very little, but add immense perceived value to your business. In some businesses, offering free education is an excellent value added service, especially if your product is complex. Free education can take many forms:-
– special report.
– white paper.
– special link that directs them to a section of your website.
– justifies any marginal price increase you choose to impose.
You need to adopt a value-added mindset, continuously ask yourself how we can improve the way we help or service our prospects and customers. Ask yourself and your staff the following questions daily.
– What problems can we solve for our clients?
– How can we have a greater impact this month over last?
– How can we give more value to them this month?
– How can I provide more than they’re currently getting from my competitor?
Move from the “me-oriented” thought process that says, “How am I going to get more clients?” to the “you-oriented” thought process that says, “How much more value can I add?” A good rule of business is the more value you give, the more money you will make. If you were perceived by the marketplace as the one who offered the most value for that price, who do you think would get the lion’s share of the business?
- Reversing or eliminating all risk associated with the purchase.
By eliminating the risk, you lower the barrier that prevents someone from buying from you. Strive to actually reverse the risk and remove it from the ‘back’ of the customer and place it squarely on your own shoulders. This will compel your prospects to at least sample what you have to offer, especially if you can show that the value you offer is greater than that of your competition and that your market dominating position is more compelling
The typical claim of “Satisfaction Guaranteed!” has been so overused that it’s now meaningless to most consumers. The more you consciously include risk-reversal into your selling proposition, the more you will own the customer. The challenge is to refuse to be a commodity and learn how to become extraordinary. You must learn how to separate
your business from your competition, and become the obvious choice to buy from.
What you can do to eliminate the customer’s fear of purchasing what you sell that would, make it foolish for them not to do business with you.
• A guarantee is an absolute scientifically calculated risk.
• The return rate will become a mathematical constant over time and you will be able to calculate your exact cost.
Think about how you will reverse the risk for your customers, come up with an idea and test it on the next ten customers that come in your door. If you start to close more sales, then you’ll know for sure you’re onto a winning formula.
The three critical components of:-
– establishing a market dominating position
– adding additional value to your product or service
– reversing or eliminating the risk of purchase can propel your business to a dominant position in your industry.
Now that you’ve positioned what you sell in this dominant position, what’s the best way to communicate your price increases?
Prospects buy based on emotion, but they justify it with logic, so when you raise your prices, your success will be greater if you communicate to your customers the reasons why, If you let the customer in on your reasoning, they will be more inclined to do business with you.
Don’t underestimate the power of the word “because”.
The power of “Because”.
In 1978, Ellen Langer, a professor of psychology at Harvard, conducted an experiment that revealed the power of the word “because.”
Langer had participants request to cut in front of a line of people waiting to use a copy machine. She had participants try three differently-worded requests, to see which was the most successful.
- “Excuse me, I have 5 pages. May I use the xerox machine?”
- “Excuse me, I have 5 pages. May I use the xerox machine, because I have to make copies?”
- “Excuse me, I have 5 pages. May I use the xerox machine, because I’m in a rush?”
The results were as follows:
- “Excuse me, I have 5 pages. May I use the xerox machine?” (60% compliance)
- “Excuse me, I have 5 pages. May I use the xerox machine, because I have to make copies?” (93% compliance)
- “Excuse me, I have 5 pages. May I use the xerox machine, because I’m in a rush?” (94% compliance)
As you can see, the requests that gave a reason (because) for their request had a 33% higher success rate. This is simple psychology, but it really can make a big difference in helping you increase your prices without experiencing push back. So when you’re communicating that you need to increase your price, use the word “because”. Although I’m raising the price by 3%, it’s still a great value because:-
– I’m including a 100% no-questions-asked guarantee
– I’m including this additional service.
– My expenses went up by the same amount due to X
– I’ve upgraded the quality of my staff so we can serve you better
– I’ve invested additional funds to streamline your buying process
– I’ve added technical support or live customer support
– I’ve upgraded my product or service so you get far greater value for your money… or a higher ROI if that language is more appropriate.
Never forget that testing is the key component when it comes to raising your prices safely and successfully. There is no need to risk your financial future when you have the power and the ability to attempt a small test. The purpose of testing is to demand maximum performance from every marketing action. When you test one price against another, you’ll be amazed how one price can produce significant changes in your profits.
You owe it to yourself, to your business and all of those it impacts to test various price increases, If you could increase your price by a mere 5% and you discovered that your profits increased by 20%, wouldn’t you want to know that? And if you could test that while limiting your risk, you’d be foolish not to give it a try.
Recap of Major Points:-
If you want to raise the price of your product or service, you may be able to do it by small amounts and get away with it.
– raising the price from £92 to £97 or £99.
– reverse the risk of your offer as much as possible
– incorporate these changes into your Market Dominating Position
– communicate those changes to your customers in a way that they “get it” logically and emotionally.
– test your price changes on a small segment of your market.
– make the changes to your prices
Want help to raise your prices?
It’s ok reading about it, but the hard part is actually implementing a price rise. I’ve helped hundreds of businesses raise their prices successfully, and the best part of it is that my fees are paid from the new prices that you charge so it doesn’t cost you a penny.
Want to know more, then get in touch. Either drop me an email @ info@johnolivant.com or call on +44 1482 408585 to book a 30 minute FREE pricing audit Today..
Twelve intensive half-day meetings.
