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Raising Your Rates Can
*Increase* Your Business
Copyright 2004 Diane Hughes
How many times
have I heard literal horror stories from Internet business startups? Too many
times to count! I get emails from those who just simply can’t seem to make
a living online. They’ve tried everything (according to them) and are
still struggling to make ends meet.
At some point, the "conversation"
always turns to price. That’s where I find a lot of online business people
making their mistakes. The common mindset among Internet business startups
is that you have to keep your prices rock-bottom low in order to attract
customers.
Nothing could be further from the truth! Raising your
rates (in some cases) can actually increase your business. How so? Here
are several reasons....
1. People Equate Price With
Quality
I’m sure you’ve heard the expression, "You get what you
pay for." That statement comes from a long line of lessons learned by
people across the globe who have bought something at a discounted price and
regretted it later.
Maybe the product was used. Maybe it was made with
inferior
materials. Perhaps a "discount" service they tried fell through
and left them in a fix. It could be any number of reasons, but those who have
tried the "bargain" or "discount" route and have been burned are quick to
look for higher priced products and services. It makes them
feel safe.
I know of several online business owners who raised
their rates on the services they provide. What happened? For about one
week it seemed they had made the wrong decision. Business all but stopped!
However, after that "adjustment" period, floods of leads came rolling in.
They never regretted it.
2. Customers View Higher Prices As A Status
Symbol
It’s true! I’m sure you’ve met some people who love to
brag about how much they paid for everything they own. Their car was
custom ordered from the dealer and cost much more than any old car chosen
from the showroom floor. Their clothes reflect this season’s latest trends
and were purchased at full price from the expensive department store... NOT
at an end-of-the-season clearance sale. I could go on and on.
The
point is, many customers simply will not buy a product or service at a
discount price regardless of how good the quality is. They have the "ability"
to afford higher prices and are proud of that fact.
3. Many Believe
Expensive Products Are Image Boosters
I actually heard this conversation
in a department store
once.
Woman One: "Look at this blouse! Isn’t it
wonderful?"
Woman Two: "It’s OK, I guess."
Woman One: "But it’s an
Adrian Bloom blouse! I’m going to
buy it and make all my friends
jealous."
Woman Two: "Who is Adrian Bloom?"
Woman One: "I have no
idea, but this blouse costs twice as much as that Liz Claiborne one so it
must be the next big thing!"
Can you believe it? The woman had no idea
who the designer was, but based on price, she decided it would enhance
her image so she bought it.
The same is true of Internet shoppers
looking for products or services. Those who believe being associated in some
way with higher-priced businesses are more willing to spend money because
they feel it will enhance their images.
The psychology of pricing is a
complicated subject, and I’ll be the first to admit that raising rates will
not work for everybody. Before you raise your rates, consider
the following:
1. Can you offer something better or different than
your competition?
2. Will the rest of your business support the
"branding" of a higher price? (i.e., Do you have a
very professional-looking site, excellent service, and other elements that
those who pay higher prices expect?)
3. Will the new pricing structure
allow you to make as much, or more, money by selling fewer items at a
higher price rather than many items at a lower price?
It just
might be that the reason your business is struggling is that you’re charging
too little. Give some serious thought to raising your rates. It just might be
the best thing you ever did!
About the Author:
Diane C.
Hughes * ProBizTips.com
FREE Report: Amazingly Simple (Yet Super
Powerful)
Ways To Skyrocket Your Sales And Build Your Business
Into A
Tower of Profits! ==>> http://madmarketer.com/diane
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