The REAL Reason Clients Won’t Pay Higher Prices? (It’s Not What You Think)
Pricing is a very sticky topic among just about every CEO I've met. That's usually because we're conditioned to set our own pricing based on market "norms" – the amounts we're told that people will, and won't, pay for things.
Here's how most companies handle their pricing strategy - they take a peek at what their competition is charging – and then charge the same, or most commonly, charge less than the competition, to make their prices look competitive.
While this might seem like the logical thing to do, there are a couple of significant flaws with this strategy…
First, if we let the market dictate our prices and how we charge them, we're effectively letting our competitors determine our income.
I'll give you an example. While doing a business transformation consult for a large printing company, they told me they didn't think they could change their prices because there were industry guidelines that "set" their prices! Huh?!
You're the boss! One of the GREATEST things about being in charge of your own company is that you don't have to play by anyone else's rules. You get to decide the value of your products and services, not your competitors.
The problem is that the prevailing wisdom about attracting more clients is based on price.
Namely if you're cheaper, people will come.
The second problem is that there will always be a bigger or a more desperate competitor to undercut your prices.
Having a value proposition that you're the cheapest very rarely works, unless like Walmart, your massive size means you can (hopefully) make up in volume what you lose in margin.
Relying on low prices to attract new customers means you also have to keep under cutting your competitors, offering more for less. Or you have to reinvent your brand and change your marketing message fast.
The third issue is that people who buy at the bottom end of the market are often the most difficult.
Because price is their number one consideration, they're not loyal, they usually complain a lot and they don't appreciate your company, team, or value. Let your competitors fill their business with those kinds of customers and fight out the low prices among themselves.
So what’s the better alternative?
Leverage this surprising marketing secret:
Not everyone buys on price.
In fact, not even the majority of people buy on price.
That's why you can drive through some of the poorest parts of town and see some of the biggest TVs or newest tricked-out trucks you've ever laid eyes on.
It's also why we have so many stores that aren't the Dollar store. And why the majority of humans don't drive Kia cars.
People pay for what they value.
In other words, to not get caught serving the bottom end of the market, you have to provide compelling reasons why your customers should never buy on price, and why your services are so much better. In other words your marketing has to build your company's value (Step 2 of the Client Stampede Formula – Irresistible Message).
Why is having the right Marketing Message so important? Because if your marketing doesn't do a good job of showing your value, then your prospective customers will always default to deciding on price.
If you're hearing this objection from prospects, "you're too expensive" or "we can't afford you", you likely don't have a pricing problem, you have a marketing problem because they can't see your value.
No wonder marketing creates so many gray hairs!
That's why I spent several chapters in my Client Stampede book discussing different pricing strategies and how to create irresistible messaging that properly conveys your value.
So in summary, your ability to charge higher prices boils down to these two simple things:
1) Being great at what you do
2) Having marketing that's as good as you are.
These two things are the key to having clients happily pay you more money, at prices much higher than your competition.
When you have both these things working for you seamlessly in your business, then truly, the sky is the limit.
