What is the right Price?
How much thought have you given to the price you charge for your product or service? Would you be prepared to pay that price yourself? Do you believe that discounts are a perfect way to increase sales? Pricing is potentially a contentious issue and is most certainly not something, where one price or structure fits all. I believe the rule of thumb though to use as a starting point, is to set a price, which is based on the ability of your product or service to meet or exceed the needs and expectations of your customers.
Lessons from a top dog walker
My wife and I moved from a large property, where our Great Dane had tons of space to run around, into a much smaller property, as we travel a lot and needed a lock-up and go house, to accommodate our life style. As we would be away a lot and the new property was a lot smaller than our dog was used to, we needed to hire a dog walker, to regularly walk Gina and to look after her while we were away. I asked around the area and one name came up all the time. Her name was Chantell and everyone we spoke to recommended her.
We eagerly interviewed Chantell and asked all the usual questions. When we got to the question about price, she quoted a fair price.. I naturally asked the next most obvious question and asked if the price was a per hour price. She replied quite curtly that the price, she charged, was for as long as she thought was appropriate for the dog. My wife was a little indignant and offended by her response and told me that she did not like her attitude. We thanked Chantell and told her we would need to discuss a few things before making a final decision.
The following day, Jenni woke up laughing uncontrollably. I asked her what was up and she said that she had woken from a dream, where she was listening to me teach the principle of charging for value, rather time, input costs or any other extrinsic issue. We both had a good laugh and as soon as we could we telephoned Chantell and offered her the job. She was doing exactly what I teach thousands of people to do every year.
I believe that a fair price for your product or service has nothing to do with your input costs, profitability or any other internal or external factors at all. It has everything to do with the perceived value your customer sees, your product or service offers. No one will ever pay more for anything they perceive it to be worth. Would you pay $ 1000 for a product with a perceived value of $ 100? Would you however pay $ 100 dollars for a product you believe has a perceived value of $ 1000?
Obviously you would buy the $ 1000 product, if it only cost $ 100 dollars. Herein lies the secret to proper pricing. Know the value, both you and your product offer, be very astute at communicating this to your customers and prospects, so that they see the actual value and achieving the right price for your product or service is simple. As long as your customers or prospects believe they are receiving more in value than they are expected to pay, they will pay any price.
Would you Pay that Price Yourself?
The secret to make this fly, is that you must believe that the price you are asking is fair and obviously you would be prepared to pay that price for it yourself. Your customers and prospects will see right through you, if you try to sell your product or service for a higher price than you believe it is worth. Your tone of voice, body language and all other non-verbal communication, will be telling your customer that the price is too high. The same is true if you try to sell your product for a fair price, which you believe is a fair exchange for the value your product or service offers. They will see your authenticity, honest, commitment and belief and will buy with confidence.
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