I came across this post over the weekend…

Yanik Silver’s 34 Rules For Maverick Entrepreneurs

Yanik is a very successful direct marketing “guru” in copywriting and information products. Of all the people out there trying to sell you stuff, he’s one that is worth taking a good look at.

If you do nothing else, print out his list and hang it over you desk - it’s really good advice.

Last week, I talked about not undervaluing yourself by pricing your products and services too low. I suggested that you set your prices at or near the high end of the market. Fear is a natural reaction. I know – I’ve been there myself.

Here are five proven steps you can take to increase the perceived value of your offering – and your customers willingness to pay more for it.

1. Demonstrate the return on their investment. If your service’s primary benefit is that the customer will either save money or make money, this is an excellent argument to use. You need to show your prospect the expected outcome in terms of cost savings or additional revenue. Then show them how much more they’re going to make or save compared to what they pay you. To take this a step further, set your fee as a percentage of what is saved or made. Now you not only show the prospect the ROI, you essentially guarantee it.
2. Tie to price to quality. The belief that price and quality are related is widely held. If you’re selling a product, show that there are higher-quality components that cost more and therefore perform better, longer, faster, etc. If it’s a service, show that the people delivering that service are more skilled and/or more experienced than cheaper alternatives. After all, who would you rather operate on your heart – the doctor who charges $99 or the one who wants $99,000? Obviously, don’t use this “you get what you pay for” argument to justify higher prices if you don’t actually have a higher level of quality, skill, experience, etc.
3. Sell them a bundle. It’s no secret that the easier it is to compare the offerings of two different providers, the more price driven the purchase decision will be. Make it harder to directly compare. For example, you may charge more for your product but also includes additional accessories or extended warranty or service plan that your competitors charge extra for. If you’re offering a service, include a collection of ancillary services that your competitors are charging separately for – or not offering at all.
4. Provide proof. Testimonials can be the key to getting people to pay a higher price. The testimonials are providing social proof to your prospect that your product or service was worth the price. This is particularly important in for a service, where the quality can’t usually be evaluated prior to purchase.
5. Change the frame of reference. Don’t focus on comparing your product to your competitors. Instead, create an even more expensive offering as an alternative. Including the much more expensive option will change the prospect’s perception of the main product’s cost. The idea here isn’t that you expect to sell a ton – or even any – of your super expensive product or service. For example, if you are selling a service for $500, maybe you create a version of the service that you price at $5,000. When you sell to the prospect, talk about making a decision between the $5,000 and $500 versions – not about between your $500 version and a competitor. It goes without saying that the very expensive version better be something you are willing and able to deliver should someone decide they want it. Using this tactic to create a dummy product that you can’t deliver is, at a minimum, unethical.

Always keep in mind when setting your price, that your value in the customer’s mind will be directly tied to price. If you try to be the low-cost provider, you will be seen as cheap. This, of course, makes it very difficult to raise your prices over time. How successful do you think Wal-Mart would be if they tried to sell luxury goods at a premium price?

To your success,

Richard St. John presents an excellent summary of what it takes to succeed.

Check out this video of his talk at TED.

Which of these words describe what you’re doing in your business?

One of the trickiest aspects of marketing your business setting your price. Your price creates a strong message to the market about the quality of your service and its intended market. So it’s critical to make sure that message is the one you want to send.

The bottom line is that most small businesses get their pricing wrong.

They tend to set prices too low.

By setting their prices too low, small business owners undervalue themselves, their employees, and their services. This undermines the long-term health of the business.

In a service business in particular, potential customers will use a price as an indicator of the quality of the service. Because they can’t inspect the service before they buy it, many make the assumption that if people are willing to pay more- it must be better. One huge mistake that businesses make is to discount to get in the door, thinking that they’ll make it up on future business. Unfortunately, the value of the product or service becomes associated with this price, making it very difficult to increase later.

If you find yourself getting the urge to discount to bring in a new customer, do this instead.

Offer bonuses.

Instead of devaluing the product or service by cutting the price, you are increasing the value of the offer by including extra stuff. You may be thinking that it’s just semantics. Either way, the customer gets more for less.

Yes and no.

Sure, you can say that the bottom line financial impact of charging full price and then giving extra stuff away is the same as just selling them all that stuff and cutting the price.

What’s completely different is the perception. And the first law of marketing is “Perception is reality.”

Discounting creates the perception for the customer that what they’re getting is worth less because you’re cutting the price. Adding bonuses doesn’t devalue your product or service at all because you aren’t cutting the price. It is adding to the perception of value the customer is receiving.

See the difference?

Do yourself a favor. Go do these two things as soon as finish reading this.

1. Check out what your competitors are charging and see where you fall in that range. If you are at or near the bottom, think seriously about increasing your prices to be at or near the top of the range. Depending on where you’re starting from, you may need to do this in steps. And if your brand is widely seen as a low-cost provider, there will probably be only so far up that range you can go.
2. Think about what you can add to your offer as a bonus to help customers accept your new, higher prices. Always be thinking about adding value, never subtracting price.

An important assumption here is that you are offering good quality and value. If you can only charge low prices because your product or service is junk, this will fail. If that’s the case (be brutally honest with yourself – no one is looking), go fix those problems before you do anything else.

In next week’s post, I’ll talk about ways to get your customers to pay more for your products or services.

Want to make more money?

Give your stuff away!

That’s right. Give it away. Not just some half-baked junk, either. Give away your best stuff.
The Internet has done a lot of great things for marketers – but perhaps one not so great thing is that the Internet has created an expectation that things are instantly available and free.

This actually is a great thing for you.

Why?

Because its gives you an opportunity to prove yourself and earn the trust of the market. That is something that you simply can’t buy.

So what do you give away?

Of course, that depends on what you sell, but the general rule is to give your potential customers something of value to them. Something from which they can benefit – even if they never pay you a dime. This will usually be information.

If you’re in business, it’s almost certainly true that you have some knowledge or skill that your customers need. So that’s what you give them!

• Are you an SEO consultant? Tell people what factors matter in search engine ranking.
• An accountant? Explain what the latest tax law changes mean to your clients.
• A caterer? Tell people the 10 things they really need to pull off a dinner party.

Get the idea? There are a bunch of tried and true ways to get that information out there. Here are a few…

• Blogging: Writing a blog is a great way to get noticed online. If you are a consultant of any type, this is basically a requirement.
• Articles: There are many online article submission sites where what you write can get very wide exposure. Write something of interest to your market and submit it one of these sites, or to an eZine publisher directly.
• White Papers: In consulting and technology, white papers are huge business generators. It is a format that allows you to showcase your expertise by explaining an issue or showing how a problem can be solved.
• Podcasts: Always wanted to be a radio personality? Does the thought of writing make you break out in a cold sweat? No problem. Record yourself talking about an issue (or interviewing someone) and put it out as a podcast.
• Video: Video is the next big thing. With the cost of digital video equipment falling every day – and many laptops coming with webcams already built in, it’s easier than ever to shoot and edit video. A short video clip can be a very powerful way to engage prospects.

How does this turn into sales?

No matter what medium you use, always include a response mechanism. A link to your website or some other way to contact you is the key item to include. It’s important that you don’t come across as some huckster pushing something. Make sure that anything you put out there has at least a 5 to 1 ratio of good content to sales message. Even then, this is not the place to beat people over the head with a sales message – save that for when they come to your site or otherwise contact you. The job of the “sales pitch” here is to get the prospect to contact you – nothing more.

Once you have an article or podcast or video produced, it needs to go somewhere. They can’t drive anyone to your site if they aren’t seen. My next post will give you some resources to use to get your stuff out there.