Then raise your prices…
…to reflect your value.
One of the key reasons why buyers resist paying for the value we provide is that they don’t have an effective way to determine value. As we’ve discussed previously, when your product/service claims aren’t supported by a price that reflects that value the buyer gets confused. Confusion often translates into “No Sale.”
Recently I was asked, in an interview, to respond to the following comment:
“In my industry, raising prices is like shooting yourself in the foot. A lot of people are willing to do things for free and most of the companies that would hire me care more about quantity rather than quality. So, they take the free option until it burns out and then get a new one.”
Before I share my response, I encourage you to take a moment to consider what your answer would be. After all, you’ve been reading these blogs for awhile now and you may even have read my book, Pricing for Profit. How would you help this individual?
Here’s how I responded. In every human interaction one person is training another how to behave. In this particular instance the seller (indeed, the industry) has trained potential buyers that their offerings have no value. How? By “continuously doing things for free.”
In addition, this individual has trained buyers that her offering isn’t any better than anyone else’s. By failing to stand firm on her pricing she in essence has told the market that, despite her claims of a superior offering, her claims are not really true.
Indeed, I can’t help but wonder whether this service provider and her contemporaries really have demonstrable results to which they can point to substantiate their value claims. If they do, then it should be relatively easy to demonstrate value. If not, then they need to reevaluate what they’re doing so that the can build a results resume for the future.
Finally, if this person is truly in a business that people don’t value, shouldn’t she consider a different line of business? If I were still trying to sell movies in VHS format today, at some point I’d have to accept the reality that there just isn’t a market any longer and move onto to something that buyers want.
It’s counter-intuitive, but raising prices, or at least holding firm on your prices, will increase demand from people who truly value what you offer. You may not have as many customers as your competitors, but you’ll enjoy greater profits without working nearly as hard as they are.