Is your business struggling? Try this…
Whilst training as a business mentor for UK start-ups I learned a few things myself which was really good for me and my business. One piece of advice was about pricing.
Our trainer gave us a particular scenario;
Your business is struggling and you have to get revenue what do you do?
Most of the students in the room came up with ideas from; more marketing, to discounts and prizes, yet none seemed to be the answer our trainer was looking for, and then he postulated;
What about putting your price up?
Most new business owners struggle putting a price on their time, and seasoned business people will say ‘NO’ to business more than newbies, because they know that in the end; a lot of it is not worth the hassle, they value time as a business commodity that cannot be replaced.
Our trainer continued with an exercise, which I can still remember even though it was a few years ago now:
You sell bananas at $2 per kilo, supermarket opens near you, and sells them for $1.60 a kilo, what are you going to do?
Selling cheaper than the ‘stack them high, sell them cheap’ faceless model of the Supermarket will kill your profit, so that’s a no-go.
What he taught us was to make the bananas $2.20 a kilo but throw in some apples as a free offer, the consumer loves a ‘because’ there is validation in the mind and logic breeds on it, this practice will get your customers talking and asking you something you have the right answer for…
“Hey Jack Supermarket is doing bananas cheaper than you!”
“Yeah but you are not getting free Apples of them are you?”
You only need to look at the rubbish in the Supermarket’s ‘bargain bucket’ to see what successful brands deem as worthy of a discount, it’s always stuff they could not sell!
Always up your value, and never drop your price. Consumers love bundles, when struggling, add something to your product to give it more value and the price is then not an issue, you can add to the ticket price, making you more profitable, less stressed and more creative for the next project!
Never forget how much profit McDonalds made from their upsell of 30c for a supersize, it cost them so little as a business as they were already making, pouring, serving the stuff, and they made abundant net profit from it.
Hence the reason I steered a lot of my mentees away from discounting models like ‘Groupon’ and ‘My daily deal’, these models should only be used by established businesses that need a tripwire product to upsell to the main features. For example:
If you are a hairdresser and you shave 50% off your normal fee to start with, you are really going to struggle to get that price out of people’s heads; they will always compare you to day one’s price.
Added to that; you have no place left to go to to be able to close the deal, because if you discount further, your potential client will smell a rat because your services perceived value is not what it first seemed.
I made the mistake, I think I have tried every mistake in the book and invented a few new ones too, In the early days I offered £100 for a simple website build (no content) with plug ins and a premium theme, in the hope that will get my business going, the challenge with that was; people perceive the value as £100 they don’t look any further. Now I don’t go less than £200 and I get more sales –go figure!
Imagine I said I have a Ferrari brand new here for $20,000 you would not even click the advert, even if it was a genuine deal, because your mind can’t see the price as being a genuine deal.
Hold your price.
Thailand is the king of forgeries and the big brands love it. They do very little to fight off the forgeries because they know the forgers are not doing their brand and their price any harm at all.
Mimickery is the highest form of regard.
Sales; as a profession is now defined as creating an environment where people come to you to buy, putting you on the front foot.
Discounting always weakens your position. Closing is now deemed as an archaic sales practice, and has no place in a modern successful selling environment.
Have a look at this hilarious video by comedian Russell Peters this demonstrates the value of people concentrating on price and less on the value and what’s in it for them.
[arve url=”https://www.youtube.com/watch?v=ude7bZzS3rs” /]
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