Is it time to increase prices?
Let's find out
So, you think you might want to increase prices, but you're just not sure. I know for many pricing is connected to or entwined with self-worth. I want to help you cut those cords that are binding you to what is no more than a static number!
We all make mistakes with pricing, even me!
I have made some mistakes with pricing in the past and no doubt I will do it in the future. Being in business is a constant lesson in learning and you don't know what you don't know until you do.
A lot of the work I do with one on one clients is around pricing, I love me a big fat excel spreadsheet that shows how the numbers "fit" together. It floats my boat big time! It can be tough to figure it out alone though so I want to share the Five Big Mistakes I see women make with their pricing to help you out.
Price does not equal self-worth
As I explained in a different blog (you can read it here if you missed it) price is a number that is in no way related to your self-worth. If you believe that to be true you have taken a mathematical equation and made it personal. You took something black and white and made it very grey. I always say that business is easy until you add people. This is a perfect example of that.
If you're just starting out in business you might want to price a little more competitively to win business and get some glowing testimonials. That is about experience, not about self-worth.
If you have ever been on one of my webinars you will have heard me say "business is just a set of turning wheels, when the wheels all turn the right way you make money. If you're not making money one of the wheels is stuck". It is the best way I can politely say... stop making it all about you!
Lack of sales is rarely about price
I cringe when I see someone drop their prices because sales are slow. There are certain times of the year in some industries where it makes sense to have a sale to generate income. That is very different to dropping prices because you're assuming you're too expensive.
A lack of sales is nine times out of ten a marketing and sales problem, not a pricing problem. Before you diagnose yourself with the curse of prices that customers aren't willing to pay look at some numbers. How many people are actually seeing your offer? How many are buying? How long does it take for them to decide to buy?
Women drop their prices on products that customers don't know exist. If you're not sending a steady stream of people (and your tracking the numbers!) to your offer then please don't drop your prices!
Low prices confuse good customers
Guess who loves low prices? Crap customers. Guess who gets super confused and suspicious when you're prices are much lower than expectation or competition? Good customers.
When you price your product or service too low the people you want to buy from you will be turned off. We all have an expectation of what most things cost. If I ask you to design a logo I expect somewhere between $185 and $400. If you offer to do it for $60 I will assume my logo will be some kind of template deal and not unique to me.
If you quote me $50 for a gorgeous birthday cake to feed 20 I will assume it will taste like rubber and cardboard. I will probably go to your competitor who charges three times as much as I will assume they're better, even when they're not!
Your target market CAN afford to pay full price
Ladies love to underprice to keep other people happy (and wealthy) while they suffer from profitless businesses. If I had a dollar for every time someone said to me "my target market don't have a lot of money/can't afford to pay" I would be on holidays in Thailand right now.
Urgh.. I am so sick of hearing that excuse! Your target market CAN afford to pay a reasonable price. If your product is well out of their market (i.e you're trying to sell BMW's to pensioners) then you have your target market screwed up.
It is not up to you to decide who can afford what, your job is to show the value and allow your market to invest in the solution you offer. If your market is using prices as an excuse your marketing has missed the mark.
Confusing people with your weird numbers
Pricing needs to make sense to your customer. Often we know our own products and/or services so well that we can't see how it could be confusing to others. I have had clients with products that look exactly the same to a customer but have a small design variation that results in a higher price for one style. This is so confusing for buyers.
If you offer packaged pricing it needs to be very clear what is on offer. You can't offer Package A for $100 and Package B for $200 if it isn't really easy for the customer to see the difference.
When you're thinking about your pricing remember that a confused mind always says no. Ask someone who doesn't know your business to explain what they understand they will receive when they see your pricing. You might be surprised just how many people don't understand what you're offering!
Is it time for you to increase prices? Listen to the full episode for more and to really find out!
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