Discover how to raise your prices during a slow recovery with these tips from The Young Entrepreneur Council (YEC).
Question: What are some clever ways to charge more for a service or product to existing clients without getting “the economy” complaint?
ADD SOMETHING WORTH PAYING FOR
“You shouldn’t raise prices without giving more value to existing clients. Incorporate the features or benefits that current clients are asking for, and explain why this added value far outstrips the increase in price.”
GIVE A “DISCOUNT”
“Start with a high initial price — the actual value of your product or service — and then discount it. You’ll be able to enter the market with a low price, but will have set the expectation with clients that the discount is a limited-time offer.”
DEAL OR NO DEAL?
“Ask your customers questions on what types of things could you build to improve your product. Then ask them if they would pay more for those features. Only build the features they would pay more for, then charge them more for it.”
LET THEM OPT-IN
“Don’t make it mandatory for clients to pay more. Instead, offer optional upsells for clients who want to, and can spend more money. As an example, take a look at the domain name registration process for GoDaddy and see how they upsell value-added services each and every step of the way.”
CUSTOMER SERVICE IS PRICELESS
“If you charge more, clients will expect better treatment. Give it to them. Be personal, easy to access, and quick to respond to calls and emails. They’ll be grateful and determine the extra price is worth it. Great service is always worth the price.”
FORESEE A PROFITABLE FUTURE
“You will never get the excuse about “the economy” when you can show a return on your investment. Prove that you can help your client make more money than you ask from them, and guarantee it. For example, I offer coaching services to startups and I guarantee the company will make more than the investment back in profits. I deliver for every client so the topic of “the economy” never comes up.”
OWN YOUR WORTH
“It’s not about finding a clever way to charge more; you don’t have to be clever if you offer real value. When you believe in what you’re selling — including its worth — you never have to worry about overcharging.”
MEASURE THEIR ROI
“It wouldn’t be fair to propose higher prices without highlighting the other side of the coin for the client. What will be their return on such an investment? How long will it take? If you can’t justify this for them, be honest and tell them it’s not a cost-effective decision for them to make at this time. They’ll appreciate it and undoubtedly come back to you when it is due to your honesty.”
MAKE IT MUTUALLY BENEFICIAL
“Explain why price increases benefit your customer. Will the increase allow you to add additional services? WIll it enable you to provide more personalized attention? Will it put your services out of reach by their competition? If you can add value to the relationship by charging more, most business people will understand. If you charge more without adding value, you might be on the wrong track.”
PAY FOR PERFORMANCE
“We typically charge a flat retainer every month to our clients, but we’re also trying out a new pricing strategy — a smaller retainer (base) and then a separate bill based on results. This can be more enticing for clients who aren’t necessarily ready to pay for the all-inclusive monthly retainer at first, and shows them what we really can do for their company.”
THE BACKWARD APPROACH
“If you go in to your sales meeting with your highest priced package, you can always work backwards to find something that fits their budget and your margins. The customer is always going to try and talk the number down, so you might as well go in with the number already high and know you’re going to end up somewhere in the middle.”
SCREW THE ECONOMY!
“The economy is irrelevant. It’s all about value. If you create more value than you get, the client will be happy paying your prices. Think of it this way: if you undervalue your product or service now, what will you do when the economy improves? Charging more then will go over worse than charging more now.”
ALL ACCESS PASSES!
“The best way to charge premium prices for just about anything is increased access. That’s generally what people want most of the time. Whether it’s heightened access to you or your team, more features to a product, or anything else with perceived exclusivity, people will still pay for access in a down economy.”