You’re leaving money on the table and you know it! And yet, you have customers that are consistently complaining about your prices. There is a science to pricing. And the first law of pricing is that if your customers are complaining about your price, they have no idea why they should choose you. Here are 3 powerful pricing tricks that will help you raise your prices, your profits, and gain more ideal customers.
Price Your Product Based on Outcome
Pricing isn’t necessarily about dollars and cents, it’s about dollars and sense. Price is really nothing more than the amount of money customers are willing to trade to receive an outcome.
If you are a retailer, for example, your customer is purchasing your product to achieve a result; shovels to get holes, clothes to look good, pizza for a quick dinner, gym memberships or vitamins to be healthy, and so on.
Turn Your Customer’s Pains into Profits
The key to charging more for your product or service is turning it into an “offer”. This goes way beyond the product or service itself. An offer is the soul of what you are selling. The way you make your offer irresistible is by answering the following questions:
- What frustration(s) does your product solve for your customer?
- How often do they experience this frustration?
- How painful is it?
- How long does the pain last when it comes up?
- The last and most important question is what’s the actual cost of experiencing the frustration?
Set a Value-Based Price
Once you’ve outlined what’s most important to your customer (the outcomes) and how much their frustration is costing them, you are ready to set a value-based price. Retail margins are already slim so the best way to set a value-based price is to shift your focus to how much your customer’s time is worth and then look for what’s missing that competing alternatives aren’t providing.
Our town has a local hardware store that struggled to compete with the big box store just two miles away – until they realized that their customers were tired of asking for help and not getting knowledgeable hardware advice. Their prices are significantly higher, but customers consistently shop there when they don’t want to waste time with trial and error.
Pricing is the most powerful marketing tool at your disposal. It’s something you control and it makes a direct contribution to your bottom line. A simple 1% average increase to a retailers prices can increase your profits by more than 10%! And you can take that to the bank.
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