Profits are the key to any business success. Pricing is the one of the major elements to determine your bottom line profits. The biggest challenge in this economy is the knee-jerk reaction to cut pricing to bring in more sales. That only works if you have a great up sell process or lifetime value of a new customer or client after the initial sale.
Oone of the most important components of price:
If you or your staff only can sell by price, and your solution by you or your staff is to offer a discount to convert a new client or customer that means you do not have to develop sales or marketing skills. If your business can not sell by anything else but price, it is doomed to fail eventually.
Again, if price is your ONLY way to sell, that is a huge problem. One big reason for this is that it takes a lot of work to develop real sales skills, marketing skills and work on your language product and customer service to constantly improve and get better.
Here are some great tips from an event I attended in the past on pricing strategies with Dan Kennedy, a great marketer. I always take great notes at events and I know there are some great nuggets in here to help you with your pricing strategy.
Five Ways to Raise Prices and Sales Results
1. Power. What advantages does your product or service offer. Do you offer a systems advantage or advertising advantage over your competition? Is your ability to implement better? What is your true economonic advantage you price, that is the best. What results will your product or service produce? Sometimes you have to do a better job of explaining the process that you go through and don’t assume everyone knows the steps you take your client or customer through. If you can become the celebrity expert in your field that is an ideal approach. The celebrity expert is almost always the highest in fees charged.
2. Change who you are selling to. If you are attracting cheap customers what bait are you using to get them? Either your website, copy, language, positioning is giving the impression that price should be the only criteria to determine if your product is better than someone else’s.
Sometimes a copy writing change can be powerful. If you change your copy from those looking to increase their income vs. increase their net worth, net worth communicates to a very different audience. That may seem small, but that is really a huge difference in copy and WHO you are selling to.
3. Strongly consider selling to the affluent. They are the least affected by price. This group is least affected by the recession. Those who spend 90% of their income on necessities…they are most affected by the current economy.
4. Always offer a premium version of your product or service. At least 20% of any buying group will take the premium version of your product or service. Some of you may have one but you or your sales staff may use their own judgment as to whether they would shell out that kind of money for the premium version. That is very bad. You are using your own economic situation to judge others. You should at least offer it and you may find 1 out of 5 take you up on the offer. Of course, if you improve your presentation and the value of the premium option and study how to sell to the affluent that would make a big impact with your results.
5. Influence with Writing. Sales skills are vital to your results. Copy writing is sales skills in writing. Most do not work on either set of skills. Find tools, books in both areas to improve upon your communication. This alone will dramatically increase your sales results. Having better skills will help you obtain higher prices also. I love to ask sales people what was the last book they read or CD they listened to that make an impact on their sales skills. Most people will answer, “10 years ago I went to a training by my company, or I am a natural at selling I do not study anyone else.” Basically those are excuses, and there are no sales skills present.
Don’t fall for the trap that since the economy is bad, you must lower your prices. It actually may perpetuate you going out of business sooner than later. Working on these five areas to improve your result will have the biggest impact in your pricing strategy and overall sales success!
Scott Letourneau is the founder and CEO of Nevada Corporate Planners, Inc. Since 1997 NCP has helped thousands of entrepreneurs in all 50 states establish the correct foundation & keep the IRS off their back as they incorporate with confidence and get their business off to a fast start to profits. Go to www.nvinc.com for free training on what entity and state is best for your business