Are you happy with how much money you make?
Would you like your business to generate more revenue without having to sell loads more? If you’re not trading in luxury goods or services, you have probably wondered more than once how to start charging premium prices without risking losing your customers.
The key to pricing of non-commodity goods and services lies in the fact that the amount the customers are willing to pay depends largely on the perceived value of what you offer. If that perceived value is low in your customers’ eyes, your business’s offering is likely to be seen as ‘cheap and cheerful’ and your chances of being able to charge more are probably negligible.
Premium prices depend on the image and perception.
The first step towards premium pricing is the upward shift in the perception of your products and services. When you achieve that shift, some of your customers will become willing to pay more, some may leave to find another cheap product elsewhere and some new ones will arrive – those would be the ones interested in a higher-value product or service.
How do you go about that positive change in your product’s image?
First and foremost, your business must stand out from the crowd:
- customers must see it as different from your competitors;
- your products or services must fulfil customers’ needs that others don’t.
This is the only way to elevate yourself from the crowd of many similar suppliers. In other words, it’s all about positive differentiation from the market and providing more perceived value to your customers.
While this may sound like common sense, many business owners don’t think about differentiating themselves. They end up forever frustrated and suffering decreasing profit margins. Even more worryingly, some are not really sure who their customers are and what they need.
I’ll give you an example to illustrate my point.
A few weeks ago, I’ve had a casual conversation with someone (not a client) who was really unhappy. He worked hard at his business but made little money. He said he had to charge low prices due to competition from low-cost, run-of-the-mill producers of a similar product to his.
We had a little bit of a discussion about how he could differentiate his product to avoid being put into the same low-cost bracket and be able to charge higher prices. A question of market positioning duly came up and that’s when the penny dropped… He said something along the lines of, ‘Re-positioning would be quite easy as I don’t really target a specific market.’
Can you see where I am going with this?
Clearly, in order to ‘re-position’ yourself, you’d have to have a market positioning of some description in the first place… This was not the case here.
It is not possible to differentiate yourself from your competitors and command premium prices if you’re not clear on WHAT exactly you offer and WHO you serve with that offering. Before you think about pricing, make sure that you’re crystal clear on the fundamentals of your product, service and market.
I hope you have the clarity you need to position your business exactly the way you want. And if not…
⇒ Send me a message using the form below and we will arrange a chat to see how I could help you figure out the way to get where you want to be. Clarity in business really does matter.
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