In honor of Mother’s Day, Jimmy Kimmel did a funny segment a week or so ago…
He asked moms to share one shocking thing that their kids didn’t know about them.
Moms revealed such things as how they mud wrestled naked in high school and entered and won a hot legs contest…
Jimmy said the reason for asking the question was because a lot of people operate under the illusion that their mothers were never young.
Business owners often also operate under false assumptions—one of the most common is they believe their customers, clients or patients make buying decisions solely based on price.
One of the biggest mistakes I see business owners make is to jump to the conclusion that the reason customers aren’t buying their product or service is because of the price. This knee-jerk reaction causes business owners to underprice and leave thousands of dollars on the table—and that’s just the obvious side effect.
Think about this for a minute.
If people buy solely on price, why would someone ever choose a Cadillac SRX over a Chevrolet Equinox? The two cars are virtually the same, only the Cadillac costs around $14,000 more than the Chevrolet.
Or why would someone buy a steak from Nobu Dallas where you’ll pay $144 for a six-ounce steak that you have to grill yourself at your table versus going to Outback Steakhouse and paying $10.99 for a six-ounce steak that includes sides, bread and someone else to cook it?
I know what you are thinking… “But my business is different.”
Don’t let yourself fall into this trap.
The truth is only about 10 percent of consumers make their buying decisions based solely on price. No matter what the product or service is (and this is NOT the 10% you should be selling to in the first place!)
I don’t care if you are selling white picket fences that look exactly the same as your competitors. Your business is not interchangeable with another business. And the sooner you figure this out, the sooner you will be on the path to more profits and more independence.
When you give this some thought, you will probably admit that you’re not extracting the maximum price your market will pay for your products or services.
And here’s another thing you might not know. Not only do people not make decisions to purchase on price, but no less than 5% to as high as 20% of consumers almost ALWAYS opt for the perceived ‘better’ or premium option or choose the higher priced item. This is as much or more because of who they are and their self-image and mindset than because of the value positioning. You’ll find this to be especially true the more affluent the person is.
Making blind guesses about why someone doesn’t purchase your product or service will never lead you to a profitable solution—especially when you are making guesses that assume your product or service are too expensive.
Here are three quick things you can do to make more money starting today…
- Raise your prices by 5% – That’s it. If this was all you did each year over the course of 5 years you’ll be making almost 28% more than you are today for the exact same work. In ten years you’d be making almost 63% more! Think about it…whether you’re a hairdresser, dentist, accountant, restaurant owner or retailer who has treated customers, clients and patients right do you really think they’ll leave over a change of 5%? Truth is, most won’t even notice it! So give yourself a raise today and increase your prices! If 5% scares you…try 3%.
- Create a premium version of whatever you do. This should be something that has a very high margin. One of the best ways to do this is to add on an element that saves your customers time or travel. Can your service be delivered faster for a premium price? Is there a premium version of the product you usually sell?
- Find something to cross sell to your clients, customers and patients. You’ve probably my story about being hired by Pepperidge Farms and tasked with increasing sales at their retail outlets. If not hang around for a while and you will. This strategy is similar to the strategy restaurants use by telling you which wine (and more recently beer) pairs well with your meal.
P.S. – Get “The 10 Rules to Transforming Your Small Business into an Infinitely More Powerful Direct Response Marketing Business” for FREE. Click here to claim your customer-getting, sales-boosting tactics.