You’ve seen the pithy marketing pitches.
Yet there are some business owners who find they are making LESS since they’ve started charging what they’re worth. . . .
If you’ve increased your prices, and are running into resistance, there are a few reasons why this may be happening.
We have a saying in the real estate industry, the house is only worth what a buyer is willing pay. Location and construction costs go out the window if there isn’t a buyer who writes an offer near the asking price. Value is always determined by the perception of the buyer.
Most pricing for coaching and consulting IS pretty much made up, we can choose a number out of the air and make it fly if our sales skills are adequate.
It’s true that the more my fees have increased, the better results my clients get.
(Depending on your mathematical comfort level, the following statement might be unsettling.)
But business is just a mathematical equation, increasing the price will increase revenue if the current sales average of units doesn’t decrease. This is elementary, right?
However, the problem is when there is a negative result for this equation. Some businesses may sell LESS when the sales amount increases. If the number of sales doesn’t decline more than the percentage of price increase, income will remain the same. This is simple Economics 101, supply vs demand.
For example, if you double your prices, and lose 50% of your clients, you are essentially making the same amount but working less. No problem here. The problem is when there is more than a 50% loss of sales.
Here’s the thing:
Everything must be TESTED.
Split-testing is a topic that every internet marketer knows the value of. Yet, many marketers don’t apply it to their pricing.
Charging high ticket prices is something that many coaches and consultants would like to do at some point in their business.
Generally, the more you’ve invested into your business, the more value you have to offer to your clients, and your prices should rise commensurately.
Unfortunately, many business owners undercharge and work too hard in exchange for too little revenue.
For example, I recently hosted a VIP day for a client. Her pricing was too low based on
her reputation as being the best at what she does in her community, and her upper class clientele.
We easily more than doubled the pricing for her services.
I jokingly pointed out that her previous rates were much less than what her high end clients would pay for a pair of SHOES. Based on her credibility, her clients actually EXPECTED her fees to be higher, and often paid her more than she was charging anyway. Her services have a built-in perception of value.
The bottom line is that pricing strategies need to be tested. Some business owners will need to increase their pricing gradually, and possibly upgrade their marketing, branding, and websites in order to attract higher level clientele.
When setting your prices, don’t raise them, or lower them, based on what your competitors are charging. It really doesn’t matter what other businesses are charging.
Pricing should reflect your skills, credibility,and value your deliver. Then take into account your sales skills, and confidence in the value of your services, both yours and your prospective clients’.
Yes, charge what you’re worth! Uplevel your pricing and your market.
Possibly increase your pricing gradually, to test the waters.
If sales stall, do some analysis and soul searching to determine if it’s your marketing, brand perception, sales skills, or your own limiting beliefs.
If your marketing and pricing are in alignment with the results you provide, and you will always be able to attract your ideal clients who won’t blink at investing in your services.