Think about some of the quality brands that are out there. You know the ones. Those companies that are synonymous with quality and excellent value for money (without being cheap). Those businesses who have made such a strong service connection with their customers that price isn’t even an issue anymore.
You know who they are. Wouldn’t you love to have your company name front of mind like that?
Well, it is absolutely possible and do-able. And you’ll be surprised by how something as simple as pricing can start you off on the right foot.
Getting the pricing of your product or service right takes practice but when you get it right, the impact on your business is huge. Improved margins, happy customers and clients who don’t haggle or ask for discounts, less work for more money. How good does that sound?
Many start-up businesses fall into the trap of competing on price. In fact, many businesses who have been around for years also make the mistake of dropping prices when competitors come onto the market.
It’s a dangerous strategy. Not only does it decrease those all-important margins and put the cash flow of the business at risk, but it also runs the risk of damaging the way your brand is perceived by the customer.
You can overcome this by intentionally building the right proposition and executing on the right strategies to charge a premium price. If you deliver the goods (both literally and metaphorically) to your client and they see the value in your product or service, they will return, regardless of price.
Price simply doesn’t become a factor in the purchasing decision when you execute the right proposition well.
Let’s look at a graphic design company as an example. A small business that started with one person grew to ten employees working out of a small office in the eastern suburbs. As the company grew, the owner started to compete with other design businesses on price focusing on providing logos and banner design for small to medium sized businesses.
The logos were running out the door! But at a very cheap price. The graphic design company was providing a basic service. They were completely overlooking the opportunity to be perceived as a strategic partner by their clients. Instead they were a logo sausage factory!
A change in direction saw the owner focus on providing ‘brand packages’ to start-ups. This service incorporated multiple products and a key consulting role – logo design, website design, social media branding, signage and the design of printed and marketing materials.
By doing this and by including face to face consulting time with their clients, the graphic design company were perceived by their clients as DESIGN EXPERTS, not just the guy down the road who will create a logo for you for $50.
They created the right proposition for their clients. They created a solution for their clients and they executed it at a smart and strategic level, charging a premium price for the service.
The result? A team of designers working on products and services that provided a higher rate of return on margins AND a list of satisfied and returning clients that did not blink at the cost of the service.
The perceived value of what the company offered had increased.
Along with their profits.
If you want to know how you can sort out the pricing products and service piece in your business, check out the 6 Steps to Building a Better Business Workshop.