Today I want to talk to you about Price V’s Value.
In business are you trying to compete on price and simply think that by reducing your price you will attract more customers and generate leads?
Are your prices too high or too low? This is an interesting one as I see it quite often where a business owner will advise ‘Well how about we just drop the price to attract more leads’ but I want to start off by saying that if you think that you’re going to compete on price, you are wrong and making a BIG mistake.
People buy products and services that solve problems so rather than trying to be the cheapest, meaning you’ll probably have to accept next-to-nothing margins, spend time determining where you can deliver value that is greater than the price
You have heard the saying ‘When value exceeds price people buy’.
It’s impossible to compete on price when you are a small business, and there is no benefit to being the second cheapest, so you might as well go and aim to be the most expensive. Now, that does mean you need to deliver an amazing product or service, but it’s a way easier job to deliver a super amazing customer experience and charge more for that than to try to compete.
I find most of the time business owners will undercharge for their goods or services. They never overcharge but it goes without saying that you want to make sure if you are going to charge a premium, that you offer MASSIVE value to your customers.
You want to look at how long tasks are taking you an d this is very, very difficult to do if you don’t track your time, and as business owners we all fall prey to this happening at some stage, “Oh well it just took me 15 minutes so therefore I should only charge for 15 minutes or even worse just don’t worry about charging at all.”
Maybe it took you 15 minutes because it took you five years to become an expert at it or maybe it took you 15 minutes because you have all the programs, tools and equipment that you need to pull it off in 15 minutes.
The problem is you get so close to the things that you do so well that they don’t seem like a big deal when they’re a big deal to somebody else.
Look at what you do, whether you’re a Web developer, a Coach, a Yoga Teacher, a Massage therapist, Business Automation specialist, a gun at running Facebook Ads or a Content marketing queen. It doesn’t really matter. Look at all the tasks required, all the training, all the time that you’ve given to become that expert or authority. Those 15 minutes, they’re worth a lot more than 15 minutes if you were to compete based on hourly pricing.
One of the things I recommend is that you actually ‘Do know how long it takes you to do something’, because a lot of people underestimate what it is they do, how much behind the scenes time you have invested to helping your clients achieve their desired result, your time and cost in training to stay ahead of the game so make sure you count all of that time.
Then, you can start to benchmark based on an hourly, so let’s say you’re 100 dollars an hour. Remember, 100 dollars an hour as a business owner is really only $75 when you consider taxes, and because you’re not employed by anybody, you have to pay all your own super, insurances etc.
You also have to consider all the other things that you have to do like marketing your business, employing others to do the things you are not good at like maybe a book keeper or accountant, so 100 dollars an hour is really not that much. Then think, “Alright, this project took me 20, 30, 40 hours,” and then times it by 100 and see, are you charging that? Because if you aren’t, then chances are your prices are too low.
Finally, I want you to think about the return on investment on the product or service you are offering. Not everything is created equal. If you’re building say a Sales funnel for somebody that is going to turn around and make your client a million dollars, you need to add an additional price based on the value. If you are helping someone overcome a personal issue that enables them to lead a happier healthier life, creating a business model that allows more freedom and flexibility to someone’s life you need to add an additional price based on the value of the end result achieved and not compete on price.
Let me ask you what price does your client place on achieving their desired end result?
Help them achieve that desired result and be sure to charge accordingly.
I hear you thinking you can’t charge as much for a writing a blog post as you can for helping someone change their life, so look around at the products that you offer and test the ROI because if people are making thousands, if not hundreds of thousands, that needs to be reflected in your price.
I hope this helps and I know that your mind doesn’t stop after reading this one post, so if you’re struggling to generate leads and still maintain a competitive edge in your space without dropping your price be sure to drop us a line on the Contact page . I’ll then show you how to add massive value to your goods or service being offered rather than trying to compete on price for market share.
Together with a great offer, a strong marketing message on the right channels I know we can help you solve the problem of Price V’s Value so lets connect.
And as always be sure to enjoy the ride.