Welcome to BIG AD EMAIL EZINE JUNE 5th 2004 issue
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{ARTICLE 1}
Raising Your Rates Can *Increase* Your Business
Copyright 2004 Diane Hughes
How many times have I heard literal horror stories from
Internet business startups? Too many times to count! I get
emails from those who just simply can’t seem to make a
living online. They’ve tried everything (according to them)
and are still struggling to make ends meet.
At some point, the "conversation" always turns to price.
That’s where I find a lot of online business people making
their mistakes. The common mindset among Internet business
startups is that you have to keep your prices rock-bottom
low in order to attract customers.
Nothing could be further from the truth! Raising your rates
(in some cases) can actually increase your business. How
so? Here are several reasons....
1. People Equate Price With Quality
I’m sure you’ve heard the expression, "You get what you pay
for." That statement comes from a long line of lessons
learned by people across the globe who have bought
something at a discounted price and regretted it later.
Maybe the product was used. Maybe it was made with inferior
materials. Perhaps a "discount" service they tried fell
through and left them in a fix. It could be any number of
reasons, but those who have tried the "bargain" or
"discount" route and have been burned are quick to look for
higher priced products and services. It makes them feel
safe.
I know of several online business owners who raised their
rates on the services they provide. What happened? For
about one week it seemed they had made the wrong decision.
Business all but stopped! However, after that "adjustment"
period, floods of leads came rolling in. They never
regretted it.
2. Customers View Higher Prices As A Status Symbol
It’s true! I’m sure you’ve met some people who love to brag
about how much they paid for everything they own. Their car
was custom ordered from the dealer and cost much more than
any old car chosen from the showroom floor. Their clothes
reflect this season’s latest trends and were purchased at
full price from the expensive department store... NOT at an
end-of-the-season clearance sale. I could go on and on.
The point is, many customers simply will not buy a product
or service at a discount price regardless of how good the
quality is. They have the "ability" to afford higher prices
and are proud of that fact.
3. Many Believe Expensive Products Are Image Boosters
I actually heard this conversation in a department store
once.
Woman One: "Look at this blouse! Isn’t it wonderful?"
Woman Two: "It’s OK, I guess."
Woman One: "But it’s an Adrian Bloom blouse! I’m going to
buy it and make all my friends jealous."
Woman Two: "Who is Adrian Bloom?"
Woman One: "I have no idea, but this blouse costs twice as
much as that Liz Claiborne one so it must be the next big
thing!"
Can you believe it? The woman had no idea who the designer
was, but based on price, she decided it would enhance her
image so she bought it.
The same is true of Internet shoppers looking for products
or services. Those who believe being associated in some way
with higher-priced businesses are more willing to spend
money because they feel it will enhance their images.
The psychology of pricing is a complicated subject, and
I’ll be the first to admit that raising rates will not work
for everybody. Before you raise your rates, consider the
following:
1. Can you offer something better or different than your
competition?
2. Will the rest of your business support the "branding" of
a higher price? (i.e., Do you have a very
professional-looking site, excellent service, and other
elements that those who pay higher prices expect?)
3. Will the new pricing structure allow you to make as
much, or more, money by selling fewer items at a higher
price rather than many items at a lower price?
It just might be that the reason your business is
struggling is that you’re charging too little. Give some
serious thought to raising your rates. It just might be the
best thing you ever did!
----------------------------------------------------
Diane C. Hughes * ProBizTips.com
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