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3 Strategies for Raising Your Prices
Of the 28 million small businesses in America, 21 million lose money. Why do so many people lose at the game of business? The number one reason businesses fail is, simply, their prices are too low. They don’t sell their products at prices high enough, then they operate on margins so small they are unable to expand.
Related: How to Raise and Lower Your Prices
Unless you are extremely well capitalized, you should not attempt to offer the lowest prices in your market. Bragging that you are competitive on price does not gain more customers.
For 25 years I have shown companies, even whole industries, how to increase profits by raising their prices, including those who think, “But our industry is so competitive.” Every industry from insurance to heavy equipment to fundraising is competitive.
Trying to match or beat others on price is a suicide mission, not a business practice. Your business needs increased margins to expand and service customers. Price matters and you must raise yours.
There is no company that can’t increase prices if they understand a few simple tips:
1. Just Increase price. You don’t need a reason or justification to raise prices, just do it. Try increasing your prices,even a little, and see if it sticks. If you are scared to raise the price, bundle products and services to increase your average sales price.
2. Magic of alternatives. Choices allow the buyer to make sense of the price. When you show the price of a product or service, always offer alternate products or services to make logical sense of price. Provide a higher and lower offer on each side of every offer.
Related: Why You Can Raise Prices Now
3. Menu pricing. Organize your services on a menu with pricing highest to lowest. People believe what they see more than what they hear. I did this in the highly competitive automobile industry. It increased profits $400 per car.
Contrary to popular belief, selling your products or services at the lowest price doesn’t make customers more loyal or happier. The customers that cause you the most trouble typically are the one’s who paid the least.
These three strategies work whether you sell a product or a service, a tangible or intangibles, expensive luxury products or entry level trinkets, in any and all industries.
We really do get what we pay for, so sell value and the overall exceptional experience associated with what you have to offer. People will always pay more for something they love that solves a problem. Never be afraid to raise price.
Related: Four Rules for Pricing Products
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