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Make More Without Selling More
Increasing your prices to the level of a buyer's perceived value is a critical part of being successful. Learn five important factors of setting the price right.
A few years ago, I suggested to my sister, who is a very good artist, that if she raised her prices on her pieces that she would sell more, and with the higher price, make much more for the same amount of effort. Her first reaction was that she didn’t want to price herself “out of her market.”
A year went by, and every time I saw her, I’d suggest she raise her prices. Finally, after encouragement from many others, she relented and doubled her price. Almost immediately, she began to sell more.
Two years later, she now sells her work for triple what she once charged and has a list of commissions waiting for her to get to. She has not changed her marketing or increased her exposure. She simply made her artwork “reassuredly” expensive so that her market feels they are getting value for their money.
Pricing is an important component of the success phenomenon, although many business people have no idea how to approach this piece of the puzzle. It’s taking three things into account:
1. Your perception of your product’s value 2. How much effort you want to expend 3. The buyer’s perceived value
Let’s look at your perception first. Occasionally, a business falls in love with what they are selling and will price their goods to high because they believe everyone feels the same way they do. However, more often, the product or service is priced too low. One reason for this is due to a perception of scarcity: the price setter knows “he” wouldn’t spend that much on the product and transfers that feeling to others. Whether the price is set too high or too low, both are matters of personal perception.
Now let’s look at effort. If you are putting the same amount of effort and money into the marketing and selling of your product, having a price that reflects its true value to the buyer will bring back a higher return on investment. This is a simple concept, but one that’s difficult to implement if your own perception of the product’s value is not in alignment with a higher price.
So how do you set your price? Here are five things to factor into your pricing:
1. Examine your beliefs about the value of your product; if you question how much you would spend, is this a product you want to spend your money and energy promoting?
2. If you feel good about the product, decide how much you want to make.
3. Decide how many hours you want to work.
4. Raise your fees to match what you want to make in the time you want to work.
5. Look at others in your market who are having success selling and marketing a similar product or service to determine if you are in alignment with your market.
Lastly, examine how your client perceived the value in your product. If the price is too low, the buyer might feel the product or service has limited value and will be hesitant to buy. However, once you build trust with your buyer so that they feel they are definitely getting their money’s worth, the price of your product takes a back seat, because they’ll gladly pay more for what they know will be a valuable investment.
Ultimately, you can move closer to becoming a Success Phenomenon when you increase your bottom line significantly with correct pricing.
Copyright 2007 © Marilyn Schwader