Posted by: Troy White
I just returned from a week long trip to Nashville for Dan Kennedy’s Superconference.
With over 1,200 people there, it was quite
the mad house – but an incredible learning experience. One of the
biggest things I was reminded of here was the power of price, and how
your positioning can impact the price that you get.
With all the hullabaloo in the press about a
recession – some are calling it stagflation – many people are stressing
out and worried about the business environment they will be living in
over the next 6 to 12 months.
Some people there are cutting their prices,
but a significant number of people are doing the opposite – raising
their prices. I am going through this again myself – everything from
my products, my seminars and my copy services are going up.
So how do you determine if your price is in line or if it needs a little bump up to position yourself differently?
Let me start with a little story.
Last year, I hosted a small business summit in Calgary and under-priced it. I had a good turnout, but many of the people there had no clue on the immense value they received.
One lady from last year actually e-mailed me
recently to ask about this year’s event – the price is double last
year’s – and she thinks it is too high. In thinking through my
response – and what she got last year for the price, I realized that it
wasn’t her fault for thinking this – it was my fault for pricing it too
low and giving the wrong impression of what they got for that price.
Many of you here will know the name Ted
Nicholas – one of the grand daddies of direct response advertising and
a living legend in the copywriting world. I flew Ted and his wife
Bethany all the way from Switzerland to speak at the event last year …
the first time he had been back to Canada in many years. He usually
only speaks at $3,000 - $5,000 seminars – mine was a fraction of that
price.
So it was completely my own doing that the
perceived value wasn’t high enough in the eyes of many of those in
attendance. That said, there were quite a few who realized what they
received for the price they paid – usually people who had been to an
event like that before.
How are you positioning your products and services?
Are you trying to compete on price?
Or are you positioning yourself so the
purchase decision is not made on price, rather on the experience you
are providing them with?
Low price providers can never last!
Even Wal-Mart, who everyone uses when I say
this, is struggling and losing market share daily. They are
floundering about trying to find a new way to position itself to avoid
the bloodletting they are going through.
Experience-based selling is a much better way
to go. In your sales cycle, make it a new experience for them – show
them that you are different and that you cannot be compared based on
price.
Much like the lobster fisherman I interviewed a couple months ago …
I heard about the two young guys and got on the phone to interview them … amazing, to say the least.
In almost every single major city out there, you can find multiple seafood houses to buy fresh lobster. These guys sell lobsters at a 300% premium and are making a killing doing so!
How?
They sell an entire experience with their lobsters.
First, you cannot buy A lobster – you must send them $3,000 first.
Next, you tell them when and where you want your lobster shipped. How many, when you want them, etc.
Then, you not only get the lobster, you also get a complete BOX of other things to go with your lobster.
Plus, they have a VERY unique way of getting to know your actual fisherman.
Last, you have to stay with them for an entire year – more if you
want. No more onesy-twosy sales – these guys want you to commit to
them.
Brilliant strategy they have … and the
clients they get are very different buyers than traditional lobster
buyers. They are high net worth individuals, and they actually want to
spend more, much more, with these fisherman. I cannot reveal too much
more on what else these guys sell them (some of it is being
developed now – and has yet to be promoted – let’s just say that the
$3,000 membership fee is chump change compared to what is coming out –
and what their clients are asking for).
Another example of pricing and positioning … The color blind artist
A good friend of mine, Owen Garratt, was up
for Marketer of the Year in Nashville. Here is a guy who sells artwork
to companies and sells through a membership model. Rather than
competing with other artists, he competes with promotional companies.
His art is exceptional – incredibly detailed and intricate – and he sells them in droves to serious corporate buyers.
What makes his model HIGHLY unique is that you cannot come to him and buy A piece of art …
First, you have to become a member of his paid inner circle.
Then, if you want a custom piece of art work
done, you must upgrade your monthly membership fee to even be able to
ask for a custom piece.
That, combined with the fact he only takes on
a very small number of custom clients, his rates are reaching
incredibly high numbers. His last commission piece was well over six
figures.
Plus, Owen GETS IT.
He doesn’t actually sell art – he sells the artist.
His art is beautiful, but his newsletters are better.
His newsletters sell him – his family – his
sense of humor – and his unique position in the marketplace. They
contain recipes, book reviews, music reviews, and stories about his
kids.
And his highly affluent clients LOVE HIM!
Some of the lessons I wanted to share with you about selling premium-priced products and services:
- Never sell a product or a service. Sell the
experience. Sell the unique person they are about to become involved
with (like the lobster fisherman and the color blind artist). Sell them
on YOU – and the feeling YOU help them achieve.
- Always be thinking about ways you can tie your clients into a membership program. They do not shop for other membership programs (mainly because few people provide them).
- Always think about unique ways to bundle higher-end products and services to double, triple, quadruple your price points.
- Limit access to you. Give them access through
things like newsletters, but do not give them direct access to you – at
least don’t make it too easy. Make them go through a few hoops to get
to you directly – even charge them for the ability to do so. Rather
than giving free proposals and quotations to them – charge for it.
Immediately you become different than everyone else they deal with.
Even if they decide to go elsewhere, they will always remember you as
the one who didn’t want to give things away for free.
- Make them sell you on why you should take them on as a client. Similar to point 4, but pushing it even further. Make them go to all kinds of extremes to become a client of yours.
- Offer done-for-you type services. When you sell
products – change your way of thinking and STOP selling products. Make
it so they cannot just buy the product from you anymore. Be the one who
has the chutzpah to say no to their money and say “If you want to do
business with me – THIS is how it is done. No negotiation.”
- Delay the sales cycle. Make it seem (to them)
that it takes forever to get the deal done with you. Have an actual
process in place to slow down the sale. Make them work harder to spend
their money.
- Give them a good story to tell their friends and family. High
net worth buyers are your best place for referrals – and they love to
refer people who have a good story they can tell (the color blind
artist … the $3,000 lobster program).
- Bundling products and services. Make it so they have to buy bundle X in order to be able to buy bundle Y.
- Re-think WHO you are selling to. Is there
someone in a better income bracket that you can repackage and sell to?
(Owen did this with his art work. Rather than selling art work – he
sells corporate gifts and competes with gold shirt promotional
companies – no real competition).
Some of these strategies can easily triple or
quadruple your prices and revenues … let alone what they will do for
your profits.
Do the math – a simple doubling of price has a HUGE impact
1,000 customers buy at $100 – your cost is $40 = $60,000 profit.
If the same 1,000 buy at $200 – and your costs stay the same = $160,000 profit (270% more profits).
Even if you lost say 20% of your clients through the price increase …
800 buy at $200 (costs stay the same) =
$120,000 profit – 200% more than it used to be (plus less customers
means you can give them better service).
With everything going on in the economy - it
is highly suggested that you think through some different ways to
improve your quality of clients, raise your prices, and start selling
more of an experience.
The numbers speak for themselves.
Plus, you will be able to service your existing clients much better and make a healthier bottom line profit along the way!
To your success,
Troy White
Editor, Small Business Mastery
Supplement to THE TOTAL PACKAGE™
