In This Episode
We were talking with a coaching client recently who was struggling to justify increasing prices for one of their services. She kept using the word “justify” when trying to convince herself that it was OK to increase prices. Our discussion quickly shifted to talking about what made their service different from the competition. We also chatted about the mindset of their ideal customer.
Is it all about price? If you’re building your business around being the lowest priced competitor or if the first thing you do when a prospect pushes back is reduce your prices, chances are you’re missing out. There’s also a good chance that you’re now on the slippery slope of going out of business because someone else will always be more aggressive when it comes to pricing than you.
So what options do you have? How about focusing on other benefits of your product or service? What if your prospect values her time more than money? Coming back to our coaching client, we talked about other value that should be communicated to customers. This included things like their responsiveness where they have a live person answer incoming phone calls and technicians who return phone calls in a timely manner. Things like being polite and doing what they say they’re going to do. The ability to instill confidence in their customer that they’ve made the right decision.
Who is your ideal customer? Is it one who shops around to save every last penny? Are they clipping coupons every week or only taking a vacation when they can get a great deal? Or is it someone who values their time a little more than money? Not that they want to overpay for things, but they realize that something is usually cheaper for a reason. The reason could be because the service isn’t that good or it will take longer than planned or might involve additional effort and frustration on the customer’s part.
One of the dangers of setting selling price is that too many businesses simply look at what the competition is charging to set their rates. While it’s helpful to know what your competitors are doing, it’s also key to understand what type of customer you are trying to attract and what’s important to them. Believe it or not, price might not even be in the top 5 of things your ideal customer cares about!