You are probably rating your products and services the wrong way.
Free preview of the book:
Find out how two entrepreneurs used unconventional business strategies to transform their startup into a multi-million dollar business.
May 29, 2021
4 min read
Opinions expressed by Contractor the contributors are theirs.
Successful entrepreneurs usually move so quickly to come up with the next big thing that they usually come with a price on top of their head that they just find and work with. Or they can look at their competitors’ prices and take the “Goldilock approach” (neither too high nor too low). Or they figure out their costs, add a desired margin, then cross their fingers and hope for the best.
Don’t worry, we’ve all done this at different points in our entrepreneurial journey.
Fortunately, there is a much more strategic approach to pricing that will help you sell your products and services at a price that your customers will love and pay off for you.
After all, you’ve worked hard to develop a product that solves a big problem for your target market. Now is the time to make your customers happy and increase your income.
Related: Why Some Prices Are Fairer Than Others
1. Price based on “actual value” comparison
Let’s say you recently started a Keto-based coaching business to help people lose weight. You’ve put together a list of potential clients you’ve carefully built a relationship with over the past few months. Now you are ready to give them your first product: an inspiring 6 month weight loss program for people who specifically have 100 pounds or more to lose.
If customers buy your program and lose 100 pounds, what does it mean to them? How much would they appreciate if they could throw away their elastic waist jeans and have the confidence to start dating online? What is it worth to make their weight-related health problems like high blood pressure a thing of the past? One hundred thousand dollars? One million dollars?
By asking the question and talking to potential customers about their value, you establish real value for your product as seen through the eyes of your target market. Now the price you decide to charge for your course is only a fraction of its true value, but most likely more than what you originally thought you would charge. Equally important, you are now armed with powerful messaging to use in your advertising.
For example, is losing 100 pounds and being able to throw the soccer ball at your son without feeling like he’s dying worth $ 297? Of course it is! Now your price is a steal because the value you offer is so much more.
2. Use a micro-pricing strategy
Suppose you have the choice of buying an individual beer bottle or a 6-pack. When you buy an individual bottle, it comes down to being more expensive per bottle than the price per bottle as part of a 6-pack. But if you’re new to the beer brand and just want to try something different, buying a single beer for $ 3.99 instead of six of them at $ 24.99 looks a lot more appealing. This is a great pricing strategy for new customers to use because it reduces their fear of making a bad decision and gives you the ability to deliver an amazing first experience that the customer will want for more.
Related: A Simple 3-Step Approach To Successful Social Media Advertising
3. Use “premium pricing” to make a discount
This is my least preferred pricing strategy as people usually implement it in an unethical way by “inflating” a higher price (that no one would actually pay) and then offering a generous discount, which ends up being be the price you expect to pay. However, this strategy works – which is why many big box stores use this pricing strategy. It’s a powerful pricing strategy for a reason. It attracts a lot of customers, but don’t use it too often as it effectively conditions your customers to never expect to pay full price again.
I’ve just given you three solid pricing strategies to implement in your business, along with some pitfalls to watch out for. You can now let your competitors guess the riddles and start testing them!
Related: Entrepreneurship is a 7 Step Journey. Enjoy the ride.