I Don’t Think You’re Charging Enough
“Quality is like buying oats. If you want nice, clean fresh oats, you must pay a fair price. However if you can be satisfied with oats that have already been through the horse …that comes a little cheaper.” Unknown
Some years ago one of our clients, a prominent facial plastic surgeon, told me a story about one of his patients. She had a precancerous mole on her face that needed removal. After an initial consult, the patient scheduled the outpatient procedure that took less than 10 minutes to perform. The surgeon’s bill? Around $10,000. The patient complained to the surgeon that her bill was excessive – he was charging $1,000 a minute! Our client’s response was golden: “Madam, while it is true that the procedure to remove your mole only took 10 minutes, the knowledge to know which mole to remove? That took 15 years of advanced medical training…”
End of conversation.
Step 5 of our Client Stampede Marketing Formula is Pricing and Sales Ascension. Pricing does play a key role in your ability to attract clients – but not in the way you might think. It’s NEVER about discounting your prices. During the 1-Day Business Transformation Consult, we focus heavily on pricing strategy. In my experience, most successful businesses actually under-charge for their products and services – not over-charge.
Which of these have you heard before when talking about pricing?
● Our customers already complain that we charge too much.
● We already charge more than our competitors.
● We charge about the same as our competitors, but if we charge more, we’ll lose customers.
● If we increase prices, our sales will drop
● Sales have already been sluggish. It will hurt business if we raise our prices.
● We already raised our prices, we can’t do that again for a while.
If you’ve heard any of these objections at any time – know that you don’t have a pricing problem – YOU HAVE A MARKETING PROBLEM. Your marketing problem might be internal – or external. Or very likely both.
I’ve run across sales teams that sabotaged price increases because they falsely believed it would reduce their commissions. I’ve also helped sales teams get on board with significant price increases (sometimes 100% and 200+% increases) and champion a new message to their customers.
You see, fundamentally, pricing is determined by two things – the quality and the quantity of your marketing.
Many businesses mistakenly base their marketing message around price. They advertise that they’re the cheapest, they offer the biggest savings, etc. This is business suicide because there will always be a company more desperate than you to undercut your prices. It becomes a race to the bottom.
The power of great marketing is that it establishes value in the eyes of the buyer – usually by educating them as to why your product is the best. When a buyer is deciding which product is the best, they end up buying the one with the best marketing. But here’s the rub – if no marketing is available to help them make an informed decision, then the default decision is always based on price. The cheaper product wins when there’s no other comparison possible. You never want your business to fall into this position.
So the takeaways for your business are these:
1) If your major competitive advantage is that you are cheaper than your competitors, you have a code red marketing problem that needs to be immediately rectified.
2) If you’re eager to raise your prices but don’t know how – proceed with caution. Just hiking prices without having a clear marketing strategy in place might be met with internal sales resistance and customer wrath. Preparation is key.
3) Chances are excellent that you, like many businesses, are leaving money on the table with your current pricing strategy. Having the right marketing strategy is the fastest way to increase margin and profits – and keep your customers happy campers along the way.
