Worth Every Penny
Because of this, he frowns on budget pricing for the high-quality products and services many customers want. Instead of cutting prices, he argues, you should consider raising prices by as much as 10 percent. Say what?
But he addresses four reasons businesses like yours often resist premium pricing. Here are two:
- We don't have the name awareness of our rivals. Although an introductory, limited-time offer can expand a new company's client base, Furtwengler advises against permanent discounts. "Whenever you feel tempted to lower your price because you don't have a well-established reputation," he notes, "ask yourself the following question: Would I rather have the prospect walk away saying 'I wish I could afford his offerings' or 'His price is so low; I wonder if his offerings are any good?'"
- Low price points matter most. Were that the case, he counters, General Motors would be crushing Honda and Toyota. "If it appears that your customers only care about price, revisit your sales and marketing messages. You're probably not doing a very good job of communicating the advantages your offerings provide or reflecting that in the prices your charge."
The Po!nt: Price your product or service to reflect its true value, then show your customers why it's worth every penny.
Source: Pricing for Profit. Click here for more information.
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