How to Increase Prices and Double Profits Without Losing Customers

You can't compare apples to oranges.

Pricing is one of the biggest issues facing all businesses, and yet, most people seem to get it wrong. They simply haven't got a clue how to set their prices. But the truth is that having the lowest price is not really an advantage and having the highest price is not really a disadvantage, because price is rarely the determinate factor in selling.

Most business owners look at what their competitors are charging, then set their prices a little bit cheaper or right in the middle. This is a big mistake because you're leaving yourself wide open for attack, and you're not differentiating yourself from your competitors.

This is a weak approach from business owners who are simply too scared to increase their prices because they fear lose existing customers or prospects, or they're simply scared of what their competitors will think of them. You'll never be truly successful with that mindset. If you live by price, then you die by price. All it takes is one competitor to undercut you and you're finished. Once you escape a price-competitive environment via positioning and guerilla marketing, you really can "set your own price."

Most advice you get about dealing with price resistance is wrong. If you deal with price resistance by arguing in favor of your better service or higher quality, then you'll still find your sales work difficult. People do want superior goods and services, but they still don't want to pay premium prices for them. Many business owners fight this battle every day with their customers unnecessarily.

The secret is to switch the standards of comparison between you and your competitors. Compare apples to oranges and throw in the superior quality at no extra cost. Reinvent your products and services by packaging them. Add value; bundle goods and services together; include delivery, warranties, cast-iron guarantees, desirable bonuses, payment plans, VIP membership clubs. If you offer a service, throw in some products, and if you offer products, include a service.

If you already have set prices for products or services that you don't want to change, then fine. Simply keep the existing product or offer at the current price, and then design two to three premium packages. Call them “silver” and “gold.” Give your customers the choice, and they will most likely choose the middle or silver option, if it's appealing enough. They, in effect, decide what they are comfortable with and how much they are willing to give you. This is one of the most powerful sales tactics I know of.

Always offer the premium gold package first, and all the other packages will seem cheaper. If you want to sell more of your gold packages, then introduce a “Gold Plus” option, and so on.

Remember, some sales tactics have worked for thousands of years and still work today. For example, “The Widget normally costs $199, but you can have it today for just $99.” OK, your customers aren't stupid, and neither are you. We can all see right through these simple gimmicks, but guess what? They still work! We all love to think we got a great bargain and will rush home to tell everyone about it.

Savvy business owners and marketers learn to change the rules of the game and set their own prices based on how much they want. It's got nothing to do with what your competitors are charging. Forget about playing fair; it's time to change the rules to suit you and your business. All your life you've been conditioned to play fair and that subconscious conditioning is holding you back. Beating your competitors is all about finding or inventing an unfair advantage for yourself. Go ahead and make price comparison impossible for your customers, and make it impossible for your competitors to keep up with you.

Independent marketing consultant, author and trainer, Jimmy Krangol specializes in showing small- to medium-business owners highly effective marketing strategies. For more information, visit www.topsecretmarketing.com.