|Putting your prices up is probably the easiest way to increase profits. A small price increase of just 6%, can translate to a whopping net profit increase of 30%. And best of all its FREE|
Have you ever measured the real impact of having a small price rise?
Then suddenly a warning alarm goes off in your head… “if I put my prices up, I’ll lose most of my customers… or maybe all of them” That explains why more than 90% of all small businesses struggle trying to compete on price alone.
What if you could instantly increase your price WITHOUT losing a single customer? Or have sales drop off. To do this, it’s important that you understand some basic facts about pricing.
First, consider the real costs when competing on price alone. Customers shopping for the best price will often take up a lot of your time with silly questions and try to extract every last bit of value, service and discount from you.
Running your business on price alone like this will have you working hard supporting the 80% of
customers that are providing only 20% of your revenue, and often they will find any reason to complain.
These people always want more, and they will certainly let you know when they don’t perceive they’re getting it. They are often poor payers and will bad mouth you if they don’t get their way. Showing you little to no loyalty and always shopping you around for the lowest price.
If you sell a product or service for $100 and you have a 30% profit margin, you end up making $30 for every product you sell. That means your cost basis for that product or service is $70
If you discount that product or service 10% and sell it for $90 instead of $100 your cost basis is still $70. Now your only making $20 in profit instead of $30.
You now have to sell 33% more product or services to get back to your original profit margin.
Who wants to work harder for less?
Seems crazy but it’s more common amongst business owners than you think, Sound Familiar?
Now, do you want to know the closely guarded secret that successful businesses don’t want you to know is?
Discounting destroys profit, and profit is the lifeblood of every business.
Higher Pricing Advantages
When you increase the price you charge for your product or service; you will automatically repel your costly price shopping prospects, and you will begin to attract those prospects who want more
That’s why it’s so critical that you always add value to what you offer, by understanding what your clients want and then giving it to them in the form of additional products, services and advantages. You Must Be Different in The Eyes Of Your Prospects, Customers and Clients.
If you offer a product for $82 and raise it to $89 or from $90 to $97, you will more than likely fall under the radar. If you attempt to increase the first digit, you may find that sales will drop off. A price of $1870 could go up to $1897 with little resistance but going up to $2000 will possibly cause a drop-off.
Questions to ask before considering a price increase
Then ask yourself the following questions
Is it easy for clients to shop around and buy what you sell from competitors?
The Six Critical Components To Raising Your Prices
After you have answered the above questions, now its time to establish the Six critical components to price increases
Market Dominating Position
Differentiating Your Business Form Your competitors
Your Market Dominating Position may be the single, most important element when building a successful business; it’s what sets your business apart from your competitors
Do you have one? Do you communicate it clearly in every sales and marketing opportunity, every advertisement that you place, and every prospect you communicate to?
What advantage do you advertise to the market so that they would be crazy to buy from anyone else but you?
What are the unmet needs of your ideal prospects, have you specifically targeted and designed your product or service to meet and then exceed these needs?
Market Dominating Position
A great Market Dominating Position allows you to focus on your specific niche market and communicate strongly that you’re the only logical choice for prospects in that niche to do business with.
If you execute this correctly, it will empower and position you at the top of your market and at the same time dis-empower your competition as a byproduct of you creatively adding value. Quite simply, you will take more of the available market share and dominate your market.
That’s why it is so important to spend time developing your Dominating Position, to have something worth saying. Making sure it’s communicated in everything you do from your ads, your conversations to every contact point; you have with a customer, at your business or in the wider community.
Market Dominating Position
Your key ability to communicate your dominating position clearly and effectively to your market and in a range of modalities that builds rapport both logically and emotionally will add “high-value perception” to your product or services.
Demonstrating “Experiential Results in Advance” Proving up to your prospects what they can expect from you in advance? By future pacing them into the beneficial results of your products, services, processes and case studies.
Only when you have reached “High-Value Perception” and “High Trust” will you experience the greatest success in implementing price rises and taking price and your competitors off the table for that matter.
Ignore it, and your prospects can’t differentiate you from your competitors, and you risk being price shopped and labelled as just another drop in the Sea of Sameness.
You may recognise some of the following more famous examples of successful, transformational market-dominating positions, Dominos “Fresh hot pizza delivered to your door within 30 munites or its FREE.” Federal Express “When it absolutely positively has to be there overnight.”
Many business owners adopt the SAMENESS mentality as the competitors in their niche.
In so they become desensitised and shut off to lucrative opportunities and ideas outside of their industry severely limiting their differentiation,
uniqueness and opportunities in their market.
One of biggest mistake business owners make is looking at their competitors for ideas and not businesses outside of their niche or industry; research find out what other businesses are doing that’s working and ask how I can map this over to my niche and make it a gamechanger?
What would it mean for your business if you were positioned at the wise person top of the mountain, your industry leader, expert, and most trusted adviser in your market? It would mean
“Effortless Price Increases.”
Typically, this costs very little but adds immense perceived value and momentum in the mind of your prospects and clients. Offering free education that solves a problem is an excellent value-added service especially if your product is complex, technical and requires detailed explanation.
Free education can cover many forms, like a Detailed Report, Video, Webinar, Seminar, Book, and even a Free session allowing your prospects to experience your outstanding products and services. All these examples go a long way in justifying any marginal price increase you choose to impose.
You need to adopt a “How can I help first value-added mindset” Continuously ask yourself how I can improve the way we deliver or provide products and service to our customers?
Ask yourself and your staff the following questions daily, what problems can we solve for our clients? How can we have a greater positive impact on their lives and overall wellbeing? How can we save or make them more money?
How can we give more value to them this month, how can you provide more than they’re currently getting from your competitors and surprise them with more than they expected?
How can you Wow them beyond their wildest expectations?
To start with you have to move from the “me-oriented” “I need profit, how am I going to get more clients?” type of thought process that is all about you. To how much more creative value can you add, by stepping up your game and designing extraordinary solutions to your customer’s problems?
Take the time to find out their problems, fears frustrations what keeps them awake at night and design your offering around that. (Who doesn’t want their life to be easier?)
The number one equation of business is “The value you deliver to your clients is directly proportioned to how much money you will make” It’s that simple.
What If you were perceived by your marketplace as the standouts in your niche, who offers over and above value for the price, who do you think would get the lion’s share of the business?
Consider your business for a minute you’re doing a relatively ok job building customer relationships but what would happen if you went the extra mile?
How would your prospects feel if, they were offered you a free discovery session or trial of your product no risk no strings attached?
A cheerful, friendly employee greets them by name when they walk in the door and offers a fresh green smoothie, bottled water, hot coffee, a free entry into a competition, an information pack, and voucher book with discounts on everyday items welcoming them to the family.
A coffee shop could introduce a coffee card buy 5 and get one free; this will ensure customers don’t cross the road to another shop because they felt like a change.
What about the first month free if you join a Gymnasium, plus a free towel, gym bag, exercise program and PT session.
The Real Estate Agent could offer free home staging including $1000 for interior improvements, landscaping enhancements or maybe even new carpet.
The Carpet cleaner could offer one room free when you buy a four-room or VIP package
An Accountant could perform a quarterly audit for a business owner who signs up for a three-year term.
Mechanical centres could offer a free clean and detail package with every service.
A driving instructor charges you for ten lessons, and you get a free GPS or fuel voucher.
A hairdresser could offer with every three hair care package a free hair colour treatment or a free brush, nail kit, or even a manicure.
A Caravan or Boat Centre could offer free storage of the purchased caravan or boat and build into the price.
You must remember to run your numbers and use the added value you are providing strategically towards underutilised or high-profit growth areas.
Always target added value towards your best-payday clients and potentially limit the offer to specific days and times within your business that are appropriate. Add-in urgency and scarcity around a limited time offer.
Creating language around your offer or product is one of the most important and powerful distinctions you can make in carving out your dominating position, your competitors are all calling what they do the same name. So by default, you will “STAND OUT.”
Create a new category “OF ONE” through giving your products and or services a unique name.
I’m not suggesting you lie steel or cheat here no, your products need to be transformational
(THAT SHOULD BE A GIVEN) and by adding Powerful Unique Language significantly increases the value, the proposition you are offering so you can raise your prices, and your customers will gladly pay the increase.
Product and Service Bundling
Bundling Is a powerful strategy of adding extra value and benefits for your clients and at the same time adding all-important revenue to your business.
It’s the process of combining a range of complementary products and services and selling them as a “Package of Solutions.” All designed to help your prospect overcome a buying decision and make their lives better with a better solution and a higher perceived value total value.
A podiatrist could offer 20% off a pair of shoes after a visit still leaving very good profit margin in the product ( You have to know your maths with this strategy) Its called giving a part of a profit away up-front for a profit you may never have got so it is completely strategic.
A Physiotherapist could offer 30% off an exercise program or nutritional program after a visit that has an exceptional 70% profit margin once created.
A Dentist could offer 20% off Teeth Whitening that has a 70% profit margin, so a 20% discount still allows a very good Gross Profit for the Dentist.
A home builder could offer a furniture package, air conditioning, entertainment or security system. The builder could discount the retail pricing by 25% but receives a 25% discount from suppliers for quantity purchasing because they are selling a package with every home.
What if the builder added just his cost of the package to the price of the home?
Would that be a great incentive to buy the home if they advertised that the full
Deluxe Package was included in the total price, and was overall not that much more expensive?
It comes down to making it as compelling and easy as you can for your prospects to buy because you have added so much value to your product and service that it becomes a No-Brainer and will envoke reciprocity and goodwill its human nature.
Target you, Ideal Market,
The 80/20 rule is probably one of the most familiar analogies, basically what it is saying is that 20% of your actions with make up the 80% of your results.
And approximately 20% of your clients will account for 80% of the revenue in your business. Meaning this 20 % of clients are your target market and you want more just like them.
So what if by targeting the 20% and going after them with everything you have meant you could increase the 20% to 40%? What would that mean for your business? Well, your revenue would double.
In fact, if you could attract 100% of your target market your revenue would literally EXPLODE.
And wouldn’t it be easier to take the price of the table for this group if you focused 80% of your time in providing extreme value to this group by applying the information your learning in this report?
Undoubtedly the answer is YES YOU COULD. So the big question is are you now going to be targeting the 20% business that gives you your “Ultimate Payday” or continues a shotgun approach trying to keep everybody happy?
Here are two examples of targeting a specific Market and Identifying the 20% “Your Ultimate Pay Day”
|Their Reason to buy
They can afford your services.
Pain relief, the ability to return to fitness activities quickly.
Speeds up a sports person’s ability to return to competition.
Speeds up their ability to return to work following an injury.
Parents can play with their kids without dealing with back pain.
Older people are able to be functionally independent.
Fitness routines, for people on weight-loss programs, can be resumed quickly.
Treatment that is effective (not just something that feels nice).
Clinics are easy and quick to access.
|Target Market Physio Example
Middle-aged (30-50 years);
Middle class (higher than average income);
White collar office worker;
With children; owning or paying off own home; Living within 10 minutes’ drive time of the clinics;
Male or Female.
This age group already makes up a large% of current clients;
They have greater disposable income and are less price conscious;
They are more likely to be conscious of their fitness and health;
They are more likely to suffer muscle strain because of the wide variation of sitting for long times and then becoming active.
IdenIdentifying 20% “Your Ultimate Pay Day”
Step one, identify your clients that have a higher disposable income and will be able to afford what you want to charge. (It has to make a good profit)
Step two, manufacture your business around focusing on and performing your highest paying activities. So instead of trying to do the thousands of things you , could do in your business.
Think about only focusing on the top three things you could do for your 20% of clients that has the biggest impact on their life in surprising them with Extra Ordinary Solutions that they would happily pay you for years to come.
(You need to be able to deliver it easily to get paid) (Plus you need to enjoy it)
Step three, you’re going to focus exclusively on winning over those high-quality clients and keeping them excited and happy, by performing what you do naturally, your highest paying, most enjoyable, sustainable, scalable or replicable activity for them.
Often overlooked but should never be underestimated the power of compelling words from your clients in taking price off the table and increasing the conversion rates in your business.
Think about the last time you were looking for a restaurant to go to did you ask a friend for recommendations, or did you go on line and check out what everyday people had to say before you committed to a booking?
The strategic positioning of testimonials not only on your website and social media pages but importantly in your marketing material is priceless.
If your sending out a piece of marketing it makes sense that you have not only targeted your ideal niche and buyer with a specific compelling message to them directly.
You have also used testimonials in your marketing that specifically demonstrates how you solved a problem, fulfilled a want, need or desire for somebody else in the same niche with the same problem, want, need or desire. I’m sure this is making sense to you right now (But are you doing it?)
Trust: People have built in biases and opinions they only have a reason for not buying especially if you have higher prices it comes down to trust or lack thereof.
They are often skeptical of sales people and have a built-in oversensitive alarm system for detecting BS. Testimonials go a long way to overcoming these built in biases and opinions because they come from a third party, unbiases sources.
Credibility: Testimonials prove that you are doing what you say that you’re a real business with happy fulfilled clients that have achieved specific results. Demonstrating a positive message about the quality and performance of your products and services.
Lowered Perceived Risks: When another person has brought and experienced your products or services and has expressed satisfaction in the result it lowers the perceived “Risk to Action Threshold” Thus opening up the opportunity for prospects, customers and clients to feel comfortable about purchasing from you.
The 4 types of Power Testimonials
Creating a system for collecting testimonials
Ask your best clients first, make it part of your sales process once the client is happy simply ask for the testimonial.
If they can’t do it right away tell them you are going to follow up with them so that they are expecting you to call.
Offer to write an example as some people are embarrassed about attempting to write a testimonial.
Always get permission to use their name and statement in all of your marketing material and offer them a bonus or gift for the privilege and a sincere thank you. Importantly use their photo it will give 50% more credibility and believability to your testimonials “because it’s a real person.”
Guidelines for credible testimonials
Don’t avoid long testimonials can often be more believable than short one liners that look pre-fabricated.
Very specific testimonials are far more powerful than vague one’s people often skim through testimonials and look at the key words like “We absolutely loved the experience” this kind of vagueness leaves open loops in your prospects minds, and they start asking themselves questions like “What did you love” “What was the experience”
“I would like to personally thank you, John, for sharing your Expert Knowledge and Renovation Strategies. Your passion for Property, Investing and teaching the secrets of Financial freedom has been life-changing for me.
By following your simple step by step system, I was able to generate a 400% return on my investment; I turned my $12k into $48,000 in only three weeks WOW. Now with my new-found confidence in the proven results I know I can repeat the process over and over again.
In fact, as I write this I am currently in negotiations to finalize my latest Property deal.
Sincerely, John, I can’t thank you enough mate.”
Daniel Simons Bondi Beach Sydney NSW
Reverse or Eliminate Purchase Risk
The concept is simple but often requires you to summon some inner strength and guts to see it through. If it doesn’t make your underwear tighten, it won’t be compelling to your prospect.
It’s a guarantee on Steroids, “The Increasable Hulk” kind that stops prospects in their tracks because it’s so compelling, and they have very little to lose but everything to gain by joining your team.
By striving to eliminate the risk, by lowering the barriers that prevent someone buying from you. The goal is to reverse the risk and remove it from the thoughts of your prospects minds altogether.
Taking away any friction so prospects can experience what you have to offer in a smooth, seamless way, especially if you can demonstrate that your offer is far more appealing than that of your competition.
Reverse or Eliminate Purchase Risk.
The typical claim of “Satisfaction Guaranteed!” “We are here for you” is very impartial and wishy-washy.
It has been so over-used that it now can be offensive to some consumers because it’s not backed up with Ironclad Proof. A dramatic demonstration of “Results in Advance” that’s the level you need to go to in todays untrusting world. “That’s what you’re your prospects whant and need to make a dessision.”
It’s important to understand there are levels of risk reversal from mild and weak all the way to complete elimination of risk and domination. So let’s run through the five levels.
Level 1 Basic Guarantee
The basic mandatory guarantee offering a 30-day refund with conditions, this type of guarantee is required by law in most countries and should be standard.
Its also offered up by most of your competitors and is vanilla in every way. If you want to take price off the table, you need to go beyond the basic zone of level 1.
Level 2 Extra Time Guarantee
Business owners who use this guaranty can experience good results extending from 30 days to 90 or even longer depending on the product and or service they are offering.
By giving consumers extra time not to feel pressured so they can test the product; you will not only increase sales but lower your refund rate by extending your guarantee. Strong yes but nowhere close to the next levels and I encourage you to think bigger.
Level 3 Try before you buy Guarantee
This type of guarantee is becoming far more dynamic, allowing you to try out the product for two days in the case of a vehicle dealership to 30 plus days with other types of businesses and products.
You pay nothing up-front or a small deposit to use the product and or service try it out, and if it’s not right or you don’t like it take it back for a full refund, or less your respective deposit.
This guarantee is now effectively making it a no-brainer for your prospects to at least try out your products and services reversing the buyer’s risk. “If you’re offered up this type of Risk Reversal in your business would it change the way you run your business?” And then you results in a positive way?
Level 4 Guaranteed to get you results or your money back
This Guarantee is more powerful again as you only pay for the product or service if it works and you get the specified result. Like a 102 HP increase in performance, pain-free in 13 days or a 17.6% increase in profit in 6 months in your business or you pay nothing.
Think about how you could incorporate this type of guarantee in your business because it creates supreme confidence as you have eliminated the risk for your prospects, and clients “Quite simply you will close more sales by adopting this approach and transform your business.”
Level 5 Customer wins every way
The strongest guarantee of them all this is where if the customer is not happy they can get a full refund or even double their money back and still keep the product or service and any accompanying gifts or bonuses.
If you complete the signature protocol plan, perform the exercises and do the training prescribed, and you haven’t felt a difference that puts a smile on your face, makes you more excited about starting your day each morning with more freedom to get through your day pain-free without breaking your bank account –
we will not only issue you a full refund – we will issue you TWICE your money back. We’ll pay you the cost of the treatment times 2. That’s $509.00 plus you get to keep the dynamic blueprint It’s the least we can do as a thank you for placing your trust in us and our business.
Now you cant get any better than that can you?
Because you cant lose, and if you structure this right inside of your business you will take your competitors off the table period.
Your guarantee and dominating position will become the ethos that you will guide the running the company an overarching statement and perception of your staff, prospects and clients.
It’s a roadmap on how you conduct yourself throughout the total business in all sectors.
It gives you something to say that is congruent with who you are and what you stand for ensuring you strive to reach for higher levels in all areas.
It guides all staff members and future staff members as to “how you roll” and wraps around the vision and mission of your company. The more you consciously include risk-reversal into your Dominating Position, the more you will influence your, prospects, customers and clients to take action and fall in love with you.
The challenge is to be defiant in being mediocre by becoming extraordinary at marketing and sales. You must learn how to differentiate your business from your competition, in the eyes and minds of your prospects and clients to become the obvious choice for them to follow you.
Think about what you can do to eliminate the customer’s fear of purchasing your products and services “There is only a reason why they don’t buy” how can you make it, so your prospects feel a real concern and if they’re missing out by not to do business with you?
A strong guarantee is an absolute mathematical and psychological calculated risk and if designed properly will take price Off The Table and massively increase your conversion.
Think about how you will reverse the risk for your customers, come up with an idea and test it measure your close rate, then you’ll know for sure you’re on to a winning formula.
Now that you’ve positioned what you sell, what’s the best way to communicate your price increases?
Communicate Your Price Increase
Prospects buy based on emotion, but they justify it with logic if you communicate to your customers the reasons why and compellingly tell your story, it will be an enjoyable process.
Although I’m raising the price by $8; it’s still a great value because… we include a 100% no-questions-asked guarantee; gifts, bonuses,etc
We pay our staff more and train them extensively to be the best so we can serve you better and always deliver outstanding results.
We only use the highest quality parts that are 100% Australian owned and Manufactured.
We have invested additional funds in streamlining your buying process, by adding technical support, live customer support, a 24-hour call centre, a free call out service, etc.
We have the largest range of stock on-hand ready for delivery.
We have a mobile service, Free delivery, Pick up and drop off On-line shopping.
When communicating your price increase remember testing is key when it comes to raising your prices safely and sustainably.
Tell the story of your Market Dominating Position communicate your offering to your customers in a positive way so that they “get it” logically and emotionally take the risk out of the equation by eliminating it.
Test your price changes on a small segment of your market make the changes to your prices.
And enjoy your extra profits.