I can say quite confidently that you’re probably not charging the right price for your product or service.
Pricing is the quickest and easiest way to grow your business with massively increased profits.
Now correct me if I’m wrong, but here’s how most people go about pricing their products or services (I’m sure you’re no different) …
- You look at what your competitors charge (many people don’t even do this simple step!)
- You decide ‘where’ you want your customers to view you – are you ‘low priced,’ ‘middle of the road,’ or ‘high end’?
- You then price your product or service based on the results of the two scenarios above
This is what’s known as ‘price positioning,’ and to a certain extent it does serve a purpose, but what it means is you base your own prices on where you see yourself positioned in the market in relation to what your competitors charge. You might be saying to yourself, ‘well that’s fine – isn’t that how I should be doing it?’ WRONG!
If you charge too low, your prospects will automatically think you can’t be that good. On the other hand if you charge high prices, you’d better make sure your clients receive excellent value from you – because that’s what they’ll expect.
Ultimately what I’m saying is that you cannot determine how much people are prepared to pay – you must let your clients or customers decide what the perfect price is. You could be lucky and get the price right, but the odds are stacked against you.
How do you get around this problem? It’s actually quite easy when you think about it. You see, by using what I call the ‘Perfect Price Formula,’ you let your clients or customers decide what they think your product or service is worth.
The ‘Perfect Price Formula’ is based on Value. Value is what people are prepared to pay – it’s not what you think your product or service is worth, but what people think it’s worth to them. Value is subjective, and that’s why you cannot determine what the perfect price is – only your clients or customers can do that.
To give you an example, let’s say you offer a service that saves people time. The value of that service to some people might be $50, to others it might be $5,000 – it all depends on how much time they feel they can save by using your service.
The ‘Perfect Price Formula’ is actually quite simple:
- You must first identify the Value of your product or service to your clients or customers
- You then multiply the Value by a Value Factor
- The result is the ‘Perfect Price’
The Value Factor is a number that you determine, based on how much you need or want to earn from each sale.
For example, if you feel you need to earn $100 from each sale, and the Value of your product or service is $10, then the Value Factor would be 10 (100/10).
So, if we use the example above where the Value of your service is $50, then the ‘Perfect Price’ would be $500 (50 x 10).
It’s as simple as that!
The ‘Perfect Price Formula’ takes the guesswork out of pricing, and means you will always be charging the right price for your product or service.
Of course, there is a slight downside to using this formula – and that is you might lose a few customers along the way. But the customers you do keep will be more than happy to pay you what your product or service is really worth, and they will also be more likely to refer other customers to you.
So, what are you waiting for? Give the ‘Perfect Price Formula’ a try – I guarantee you won’t be disappointed with the results!