Are
you interested in increasing your prices and increasing your
sales while at the same time enjoy a much higher profit margin?
If you say “yes” then you’ll find this article very useful in helping you achieve that.
“Increasing prices and increasing sales at the same time?”
You may be thinking, “Is that even possible? Everyone knows that when you increase prices the number of sales will drop because fewer people will buy; fewer people can afford your products, right?”
Wrong!
That’s the kind of typical limiting business myths and misconceptions that have been holding businesses back from optimising their profits. So many businesses are trapped and can’t achieve a breakthrough in their sales, not so much because of their poor sales system but because their leaders’ minds are trapped with such false limitations. I’ll talk about this more later on.
The great news is it’s actually easy to increase prices and increase sales at the same time. In fact in many cases, increasing your prices can actually lead to more sales!
Yup! More sales because of increased prices. I know it sounds counter-intuitive but it works.
Going Premium
With business competition getting more and more cut-throat and with the global economy riddled with uncertainties and many analysts “predicting” another economic meltdown, it is even more crucial for you to differentiate yourself and stand out from your competitors.
Going premium is one of the 11 powerful differentiating strategies that I shared in my book "Niche Dominators: Success Secrets Exposed". It is also one of the most profitable ways to differentiate yourself. Internationally acclaimed marketing guru Jack Trout actually wrote the following about my book…
“I’ve always advised companies that want to be more than they should be that ‘It is better to be niched than to be dead.’ This book tells you how to go about being niched.” - Jack Trout, author of “Repositioning” and “Differentiate Or Die”
Here’s how I apply this strategy:
Usually one of the first things I help my clients do is to position or reposition their products or services. By having the right positioning, we can usually increase their prices while at the same time increasing their customers. There are several reasons why I use this as one of my main strategies when doing an overhaul of their marketing system.
1) Products/services that command premium prices are typically perceived by consumers as having higher quality and value. This will lead to more customers.
2) Increasing the price of the product/service gives you more flexibility to pile on value added or free gifts that can often close the deal.
3) Having a premium price will give you a better profit margin which you can use to do more marketing. That will lead to more sales and brand awareness in the market place.
4) Most of the time, business owners tend to under-price their product/service because they naively think that pricing competitively is the only marketing “edge” they have over their competitors. This is especially if they are newcomers in their industry. (Such a big mistake!)
And many other very valid reasons, but those can be just empty theories spouted by some theorists. I always prefer to see real-world results. So here are just a couple of the results my clients experienced:
“I am amazed at your revamp. After the advertisement revamp, attendees increased by more than 350%. And the number of people who joined was 475% higher compared to our past average. The sales were worth over $50,000. I would definitely recommend your service to anyone who needs to increase their business in a short period of time. Thank you Sant.” - Kelvin Fong, CEO Zest Academy Group.
“In less than 3 months, not only have you helped increase my workshop price by a whopping 84%, I've also seen a 55% increase in sign-ups as compared to my previous years. Your strategies are very effective and produce results!” - Norman Tien, highly sought-after Maths Trainer
Mind Block = Profit Block
As you can see, the increase in prices can be significant… and to some, daunting. A lot of my clients fought me tooth and nail when I suggested increasing their prices. They are always worried that their sales will plummet for various reasons…
“We’re new in the market and are not known yet.”
“We’ll become more expensive than our competitors.”
“No! We’re known as the one offering best value. Our customers will run away!”
“Wah, like that, who will buy from us? I won’t even buy from us!”
Etc. etc. etc.
But eventually, after a lot of persuasion (sometimes that’s the main bulk of my work – persuading clients to heed my advice) they agreed to try it out. And of course when they saw the results, suddenly they forgot that they were violently against raising prices in the beginning.
In fact, I got involved in a training business last year and I also implemented the same strategy for them. Within a span of a few months we raised prices several times in a staggered manner. Since the start of the business we’ve almost doubled our prices, and we are still raising our prices as we’ve not reached our target price yet.
At the same time, the number of participants has increased. When the business started we could only fill about half of our training room. When we started to increase our prices, we filled out about three-quarters of our room. And now for almost every training class, our room is fully maxed out.
Initially, my partners were sceptical about implementing my strategy. We were totally new in the industry and majority of the competitors were pricing their services in the lower range. It took some time before they were comfortable about raising their prices. And now they are looking forward to our scheduled price raising exercises because they realised that when we raised our prices we have more participants. Our prices are currently about 3 to 5 times more than the average market price.
And here’s the best part!
When we raised our prices, we clearly noticed that participants are more appreciative of the value of our courses. They also tend to put in more effort in mastering the lessons in our courses, leading to a faster success rate for themselves. So it’s win-win all around.
Premium = Valuable. That’s embedded within our DNA.
But..!
Obviously you can’t just increase your prices with everything else staying the same. You must…
Add Massive Perceived Value! To increase your prices you must show your target market that you offer a lot more value than others. So if your competitors are offering good value, you must offer… not great value… but fantastic value.
And here’s the key: It’s not so much about the cost or the price of the product or service that you offer, it’s about the perceived value that your customers think they are receiving from you.
Let me repeat that because it bears repeating…
It’s not about what you deliver; it’s about what they think they’ll receive!
When your customers see that they get multiple-fold the value of what you charge, even if your prices are considered premium in your market place, your customers will still find it a great bargain.
I once watched Donald Trump say in an interview, “Built the best building using the best materials and offer the best service and people will be happy to pay premium for that.” It’s probably not word for word accurate, but it’s something along that line. And that’s the key to charging premium prices.
Pay attention now, because here’s the second part of the premium pricing equation:
“The best” is different for different segment of customers. For example, to one segment of jewellery customers gold may be the best. To others, platinum may be best. And for others, nothing is above diamond. So you must know your target market and give them what they perceive is the best.
For example: in the training industry there are so many ways to evaluate a good course. Course duration, price, topic, trainer and so many others. But we show our target market that our course gives them what they think is the best – an immediate increase in sales.
Because they see the massive value of our course, they see our course as a big bargain.
Repositioning Your Business
So if you’ve been under pricing your product or service, here are some techniques on how you can reinvent it so you can start to charge premium prices.
1. Create your own standards of comparison: You’ve heard of the saying “You can’t compare apples to oranges.” But if you want to succeed in marketing your product/service at a premium price, then that’s exactly what you need to do. You can’t compete in a market where your product can be compared with every other similar product. That’s comparing apples with apples. Instead of blindly competing on the same level, create your own standards of comparison.
For example, Cherry QQ and Geely are competing for functionality - getting from point A to point B. Toyota and Honda are competing in a different category, Mercedes and BMW are in the “luxury lifestyle” category, while Ferrari and Lamborghini are in the high performance sport cars category.
As you can imagine, BMW will not be competing at the same level as a Cherry QQ. BMW focuses on selling the luxury lifestyle dream. Interestingly many businesses are doing just that – competing in the wrong categories using the wrong standards. So if your business is a BMW, stop competing with those Cherry QQs!
2. Itemise the “work” that goes into your product/service: The luxury market is good at creating ‘perceived’ premium value for its highly-priced products and services. For instance, would you be willing to pay US$325 or more for a 90 x 90 cm piece of cloth? Well, millions of people would and have for the legendary Hermès silk scarf. Why? Because other than the brand name, Hermès has created an elaborate and often repeated story around the creation of a Hermès scarf. The media and consumers have all lapped up the details that the company had revealed about the process and work that goes into the making of a Hermès scarf.
Whenever an article is written about the Hermès scarf, some or all of these facts regularly get mentioned as well:
If you say “yes” then you’ll find this article very useful in helping you achieve that.
“Increasing prices and increasing sales at the same time?”
You may be thinking, “Is that even possible? Everyone knows that when you increase prices the number of sales will drop because fewer people will buy; fewer people can afford your products, right?”
Wrong!
That’s the kind of typical limiting business myths and misconceptions that have been holding businesses back from optimising their profits. So many businesses are trapped and can’t achieve a breakthrough in their sales, not so much because of their poor sales system but because their leaders’ minds are trapped with such false limitations. I’ll talk about this more later on.
The great news is it’s actually easy to increase prices and increase sales at the same time. In fact in many cases, increasing your prices can actually lead to more sales!
Yup! More sales because of increased prices. I know it sounds counter-intuitive but it works.
Going Premium
With business competition getting more and more cut-throat and with the global economy riddled with uncertainties and many analysts “predicting” another economic meltdown, it is even more crucial for you to differentiate yourself and stand out from your competitors.
Going premium is one of the 11 powerful differentiating strategies that I shared in my book "Niche Dominators: Success Secrets Exposed". It is also one of the most profitable ways to differentiate yourself. Internationally acclaimed marketing guru Jack Trout actually wrote the following about my book…
“I’ve always advised companies that want to be more than they should be that ‘It is better to be niched than to be dead.’ This book tells you how to go about being niched.” - Jack Trout, author of “Repositioning” and “Differentiate Or Die”
Here’s how I apply this strategy:
Usually one of the first things I help my clients do is to position or reposition their products or services. By having the right positioning, we can usually increase their prices while at the same time increasing their customers. There are several reasons why I use this as one of my main strategies when doing an overhaul of their marketing system.
1) Products/services that command premium prices are typically perceived by consumers as having higher quality and value. This will lead to more customers.
2) Increasing the price of the product/service gives you more flexibility to pile on value added or free gifts that can often close the deal.
3) Having a premium price will give you a better profit margin which you can use to do more marketing. That will lead to more sales and brand awareness in the market place.
4) Most of the time, business owners tend to under-price their product/service because they naively think that pricing competitively is the only marketing “edge” they have over their competitors. This is especially if they are newcomers in their industry. (Such a big mistake!)
And many other very valid reasons, but those can be just empty theories spouted by some theorists. I always prefer to see real-world results. So here are just a couple of the results my clients experienced:
“I am amazed at your revamp. After the advertisement revamp, attendees increased by more than 350%. And the number of people who joined was 475% higher compared to our past average. The sales were worth over $50,000. I would definitely recommend your service to anyone who needs to increase their business in a short period of time. Thank you Sant.” - Kelvin Fong, CEO Zest Academy Group.
“In less than 3 months, not only have you helped increase my workshop price by a whopping 84%, I've also seen a 55% increase in sign-ups as compared to my previous years. Your strategies are very effective and produce results!” - Norman Tien, highly sought-after Maths Trainer
Mind Block = Profit Block
As you can see, the increase in prices can be significant… and to some, daunting. A lot of my clients fought me tooth and nail when I suggested increasing their prices. They are always worried that their sales will plummet for various reasons…
“We’re new in the market and are not known yet.”
“We’ll become more expensive than our competitors.”
“No! We’re known as the one offering best value. Our customers will run away!”
“Wah, like that, who will buy from us? I won’t even buy from us!”
Etc. etc. etc.
But eventually, after a lot of persuasion (sometimes that’s the main bulk of my work – persuading clients to heed my advice) they agreed to try it out. And of course when they saw the results, suddenly they forgot that they were violently against raising prices in the beginning.
In fact, I got involved in a training business last year and I also implemented the same strategy for them. Within a span of a few months we raised prices several times in a staggered manner. Since the start of the business we’ve almost doubled our prices, and we are still raising our prices as we’ve not reached our target price yet.
At the same time, the number of participants has increased. When the business started we could only fill about half of our training room. When we started to increase our prices, we filled out about three-quarters of our room. And now for almost every training class, our room is fully maxed out.
Initially, my partners were sceptical about implementing my strategy. We were totally new in the industry and majority of the competitors were pricing their services in the lower range. It took some time before they were comfortable about raising their prices. And now they are looking forward to our scheduled price raising exercises because they realised that when we raised our prices we have more participants. Our prices are currently about 3 to 5 times more than the average market price.
And here’s the best part!
When we raised our prices, we clearly noticed that participants are more appreciative of the value of our courses. They also tend to put in more effort in mastering the lessons in our courses, leading to a faster success rate for themselves. So it’s win-win all around.
Premium = Valuable. That’s embedded within our DNA.
But..!
Obviously you can’t just increase your prices with everything else staying the same. You must…
Add Massive Perceived Value! To increase your prices you must show your target market that you offer a lot more value than others. So if your competitors are offering good value, you must offer… not great value… but fantastic value.
And here’s the key: It’s not so much about the cost or the price of the product or service that you offer, it’s about the perceived value that your customers think they are receiving from you.
Let me repeat that because it bears repeating…
It’s not about what you deliver; it’s about what they think they’ll receive!
When your customers see that they get multiple-fold the value of what you charge, even if your prices are considered premium in your market place, your customers will still find it a great bargain.
I once watched Donald Trump say in an interview, “Built the best building using the best materials and offer the best service and people will be happy to pay premium for that.” It’s probably not word for word accurate, but it’s something along that line. And that’s the key to charging premium prices.
Pay attention now, because here’s the second part of the premium pricing equation:
“The best” is different for different segment of customers. For example, to one segment of jewellery customers gold may be the best. To others, platinum may be best. And for others, nothing is above diamond. So you must know your target market and give them what they perceive is the best.
For example: in the training industry there are so many ways to evaluate a good course. Course duration, price, topic, trainer and so many others. But we show our target market that our course gives them what they think is the best – an immediate increase in sales.
Because they see the massive value of our course, they see our course as a big bargain.
Repositioning Your Business
So if you’ve been under pricing your product or service, here are some techniques on how you can reinvent it so you can start to charge premium prices.
1. Create your own standards of comparison: You’ve heard of the saying “You can’t compare apples to oranges.” But if you want to succeed in marketing your product/service at a premium price, then that’s exactly what you need to do. You can’t compete in a market where your product can be compared with every other similar product. That’s comparing apples with apples. Instead of blindly competing on the same level, create your own standards of comparison.
For example, Cherry QQ and Geely are competing for functionality - getting from point A to point B. Toyota and Honda are competing in a different category, Mercedes and BMW are in the “luxury lifestyle” category, while Ferrari and Lamborghini are in the high performance sport cars category.
As you can imagine, BMW will not be competing at the same level as a Cherry QQ. BMW focuses on selling the luxury lifestyle dream. Interestingly many businesses are doing just that – competing in the wrong categories using the wrong standards. So if your business is a BMW, stop competing with those Cherry QQs!
2. Itemise the “work” that goes into your product/service: The luxury market is good at creating ‘perceived’ premium value for its highly-priced products and services. For instance, would you be willing to pay US$325 or more for a 90 x 90 cm piece of cloth? Well, millions of people would and have for the legendary Hermès silk scarf. Why? Because other than the brand name, Hermès has created an elaborate and often repeated story around the creation of a Hermès scarf. The media and consumers have all lapped up the details that the company had revealed about the process and work that goes into the making of a Hermès scarf.
Whenever an article is written about the Hermès scarf, some or all of these facts regularly get mentioned as well:
- It takes about 2 years to complete a Hermès
scarf from design concept, engraving and printing to the hand finishing
process.
- Hermès scarf designers would spend years
composing new prints, which are then individually screen-printed with
vegetable dye.
- Hermès artisans would choose from a palette of
over 200,000 colours including a palette of 50,000 colours used
exclusively by Hermès.
- It takes about forty minutes per scarf just to
hand-roll and hem the edges to complete the entire process of producing
one scarf.
Now that you know about these facts, does it
change the way you value a Hermès scarf? I bet it does.
3. Pile on a highly attractive premium gift: This tactic is often used in the beauty industry, especially during the festive season. Marketeers of big brand beauty products understand the principle of packaging an attractive free gift to sell a higher value product or a set of products. To get women to splurge an extra $80 or $100, they include a designer-like make-up pouch or handbag as a gift if they spend above a certain amount or buy the promotional product or product set of the month.
The key to applying this strategy successfully is to choose a free gift that is highly desirable in nature and something that is perceived to be of premium value that one cannot purchase anywhere else.
When you free your mind from your own internal mind block and apply such strategies mentioned above, you can easily increase your prices and get even more sales at the same time.
3. Pile on a highly attractive premium gift: This tactic is often used in the beauty industry, especially during the festive season. Marketeers of big brand beauty products understand the principle of packaging an attractive free gift to sell a higher value product or a set of products. To get women to splurge an extra $80 or $100, they include a designer-like make-up pouch or handbag as a gift if they spend above a certain amount or buy the promotional product or product set of the month.
The key to applying this strategy successfully is to choose a free gift that is highly desirable in nature and something that is perceived to be of premium value that one cannot purchase anywhere else.
When you free your mind from your own internal mind block and apply such strategies mentioned above, you can easily increase your prices and get even more sales at the same time.
By Sant Qiu, entrepreneur and profit
strategist
Sant Qiu is an entrepreneur and highly sought-after Profit Strategist who
specialises in helping small- to medium-sized businesses radically increase
their profits, fast. He is the behind-the-scenes strategist of many business
successes and his clients include some high-profile business owners.
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