I was recently at a meeting where the majority of the people in attendance were young entrepreneurs and business owners. Most of them where unhappy with how much money they were making.
Does this sound familiar to you? Have there been times in your business life where you’ve not made enough money?
A story for you.
One of my earliest mentoring clients had a very nice business. There was only one problem, they just weren’t making enough money. We spent a little time looking at the industry and found they were under priced by about 20%.
All we did was change their pricing policy. No one left the company and they went from being barely profitable to having enough cash to pay themselves properly and grow the business. The result, they more than doubled their profits with no extra effort.
How do you know your prices are right?
Even If you survey prices of your competitors you might not know whether your prices are correct. Your entire industry might be under priced or you might be and you don’t even know it.
If you provide great value and can quantify what you do, your services might be worth more than your competitors. Apple is a great example of this. Their prices are significantly higher than their competitors. They seem to have no problem getting people to pay extra. Why do you think that might be true? Here’s a hint…..they’ve created extraordinary value. Have you done that?
Test your pricing.
There really is no other way to find out if you’re pricing is correct. If you don’t have at least some prospects saying you’re too expensive, your prices are too low. There really is no rule that says your prices have to be the same for everyone. Test to see what the right price is for your product and service.
Better yet, find ways to add perceived value for your customers. The more valuable you make your service, the more people will be willing to pay for it.
Test your offering
This is one of my favorite things. Sometimes we provide too much valude and try to charge prices to match that value. If you find you’re having a hard time getting people to say yes, make both your offering less comprehensive and lower your prices. Or leave your offerings the same and raise your prices. Both would have a positive effect on your bottom line.
On the other hand, if you have customers tell you that they can’t believe how much value you deliver, it’s time for you to think about changing your prices by making them higher. It’s really that simple.
Pricing, Pricing, Pricing
I could also say value, value, value. Here’s what I want you to focus on. I want you to focus on how you can continually improve the value you provide your customers. When you provide more value you get the opportunity to charge higher prices.
Here’s another thing about value that I want you to consider. Value is always in the eyes of the beholder. This means your clients will be the ones who tell you whether your service and products are worth the money you charge.
Do yourself a favor. Make sure you test your pricing. Test your offerings and test the products you provide. All are part of the drill when you’re working on your company’s profitability. The three will tell you what you can charge. It does take some courage to test and it’s not very hard.
What do you think? Are you willing to test your pricing? You might be surprised by the outcome you get.