| Funny thing with prices. If I ask one group of small | | | | experts, so they can charge more and you would |
| business owners whether or not they're happy with | | | | expect to pay more. |
| their prices, I can receive the answer yes. Check | | | | There's something else at play here when we talk |
| with another group however and I find they're not. | | | | about prices. And that's VFM or Value for money. If |
| Yet, many business owners struggle with this area. | | | | I'm going to spend top whack with someone, I would |
| They know they should put their prices up every | | | | expect that absolute best. If I got that, I would say |
| year, but most don't and I also know some | | | | it was worth spending that money. If not, I would |
| businesses that have all the work they can handle, | | | | feel cheated. So, if you are going to increase your |
| but are not making enough money to take on extra | | | | prices, make sure that the product and service you |
| staff to cope with the work they're generating. | | | | provide is fantastic too. |
| So, let's look at your prices. Pricing your products or | | | | What about those people who really do buy on price |
| services is mainly about one thing and one thing only: | | | | - and yes 10-12% of people out there do buy the |
| CONFIDENCE! If you're confident with your product | | | | cheapest products out there? Unless your business is |
| or service and feel it's worth what you're charging | | | | catering for this group of the market, I would say |
| for it, great. If you're not, it's time to look at bit | | | | steer clear if at all possible. Why? Well these are the |
| closer at this issue. | | | | people that typically are critical of your work, |
| Why do people buy? Think about the last thing you | | | | question everything and generally want the best deal |
| bought for fun. Now think about why you bought it. | | | | they can get all of the time. In short, they are a |
| You may have come up with answers like "It was on | | | | nightmare to work with. Putting your prices up often |
| special offer" or "It goes with the colour of my cat" | | | | means that you'll get rid of this group of penny |
| and so on. | | | | pinchers and save yourself a headache as well. Let's |
| But, fundamentally did you buy the item because you | | | | face it - would you rather work with someone who |
| WANTED it? That's the reason most people buy | | | | appreciates what you do and thinks you do a great |
| things - because they want it. There is also a | | | | job or someone is constantly asking you why you |
| difference between want and need to - I might have | | | | charged them x, even though you've done a |
| wanted my car, but I need petrol to run it. Need is | | | | fantastic job for them? |
| for things that are absolutely essential. The problem | | | | And the other thing is, if you put your prices up, you |
| is that a lot of people substitute the word want for | | | | can afford to lose some customers. Let me explain. |
| the word need and so you hear "I need a website" | | | | If you normally charge £20 an hour, it would |
| or in the case of my husband "I need a new car". | | | | take you 5 customers to reach £100. If you |
| What they are really saying though is "I want...". | | | | put your prices up to £25 an hour, you would |
| Now, have you ever seen people spend more money | | | | only need 4 customers to get the same amount - |
| than they intended to on an item? I definitely have. | | | | you can afford to lose one without losing out on the |
| What does that tell us? If they feel they need or | | | | income. If you put your prices up to £50 an |
| want the item badly enough, they'll spend the money | | | | hour, you can afford to lose 3 customers and still |
| on it. | | | | make the same amount. |
| So, you have two jobs in your business? Firstly to | | | | Someone once pointed out to me that it takes as |
| create that need or want desire badly enough so | | | | much effort to get one customer paying a higher |
| that your customers really want what you're selling. | | | | price as it does to get a customer paying a lower |
| How do you do this? Talk to them, ask them | | | | price - so why not go after the higher paying |
| questions, find out what those needs or wants are | | | | customers and get fewer of them to make the |
| and see whether you can fulfil them. | | | | same money? Just a thought. |
| Your second job is to concentrate on building | | | | My key tips on prices are then: |
| yourself into an expert - write articles, give quotes | | | | 1) Work on wants and needs - find out what your |
| to the press, write a book, give talks and so on. | | | | customers want or think they need and give them |
| Why? Well, do experts get paid more? Absolutely! If | | | | this. |
| I were to ask you which would be priced higher: an | | | | 2) Concentrate on making yourself into an experts - |
| apple pie made by my mum or one by Gordon | | | | experts can charge more |
| Ramsay, what would you say? Now, obviously I | | | | 3) Give value for money - if you're going to raise |
| know that you would buy the one from my mum, | | | | your prices, make sure that your service matches |
| but would you agree that Gordon Ramsay's apple pie | | | | 4) Put up your prices - you can afford to lose some |
| would be selling for a higher price? Why, because he's | | | | customers and the customers you will lose will |
| built his reputation. | | | | probably be the ones you don't want to work with |
| I met a guitar teacher the other day who told me | | | | anyway. |
| that this philosophy wouldn't apply to his business. | | | | 5) Finally, have some fun with prices. Do some two |
| Then I asked him how much he would pay to have a | | | | for one offers or loyalty cards. See what works for |
| lesson from Eric Clapton or from another guitar | | | | you. |
| legend. Do you see? They've made themselves into | | | | |