I’m sure you have heard it before: “To increase your profits, raise your prices.” Yes, this is the fastest and cheapest way to increase your profit, no question. However, it can feel like one of the hardest strategies to apply as it has a level of fear baked into it. What if I lose all my customers? What if they go somewhere else? What if they won’t pay the higher price?
More than price
The fact of the matter is this: most of the time, your customer is not buying from you because of your price. Yes, there is a percentage of your customers that are price shoppers, and let’s be honest, they are probably not your best or even most frequent customers. In fact, they often turn out to be some of your neediest and/or most demanding customers. Most people buy on price only when we have not been given a good reason not to.
Here is the proof… Look out at the street wherever you are right now. Everyone is not driving the least expensive car they could find, are they? If we all made our car selection on price, we would all be driving low end models, not the cars we are actually driving. Now, look around at the nearest homes. Are they all living in bare minimum housing? Probably not, they have decent houses, nice yards. Now, look at yourself. Are you wearing the cheapest clothes and shoes available? Probably not.
Price is only an issue when you have not given your customers a reason to pay what you are charging. Because we create custom products, by default charging a higher price is a sound business strategy. None of your customers can walk into a retail business and buy what you can create for them, because it simply does not exist until you put the product on your equipment and add their design to it.
Here are four strategies that you can consider to start raising your prices right now.
1. Test
This is the simplest strategy to apply. Increase your prices across the board, effective immediately. How much? That is up to you: 5, 7, 10, 12 percent, and even higher if you are feeling bold. You can always drop them again or offer a discount to your best customers if you get too much pushback. When is the last time you raised your prices, anyway? I suspect it is long past time.
2. Sell benefits, not features
People are not ordering from you because they
need clothes. They have a closet full of things to wear at home, I promise. They are ordering custom apparel and products from you to solve a problem or meet a need they have. In your marketing and social media posts, talk about the environments, events, and situations in which your logoed and decorated products are used, not about the shirts or products themselves.
3. Add bonuses to increase perceived value
We’ve established that people do not buy on price as their main trigger. What they do want is value. You can outshine any competition by increasing the perceived value of the services and products you offer. The secret to pulling this off successfully is to make sure that whatever it is has a high perceived value to them but costs you little to produce or give. For this reason, information is great because all it costs you is the time to compile it once.
Providing a size scale to your customers to help them determine how many of each size to order when ordering for a large group has high perceived value, as you will save them the expense of ordering shirts they will not be able to use (BTW, the current size scale for S-XXXL is 124421. Email me if you need an explanation of how to use and provide this key information to your customers, sizescale@nnep.com).
Another option is to offer a frequent buyer bonus, something like “Get a free shirt with your logo on every other order for 12+ shirts.” You can afford to be generous here. Do not assume that cheapest (like a free cap) is best. Remember, your long-term customer value is where the profits are. You want to give these customers an incentive to keep coming back and placing orders with you.
4. Overcome objections
Earlier, I stated that “the vast majority of us only buy on price when we’ve not been given a reason not to.” When you get an objection about the price of an order, it is because you have not given that all-important reason for them to pay you what you’ve quoted them. It is not that they are tight-fisted. It is your responsibility to ensure you have given them all the information they need to make the right decision. If people are not willing to pay the price you quoted, it is because you have not persuaded them of the value of your products and services. Do not be ashamed of charging high prices.
In fact, it can increase both the success rate of your sales efforts and improve the quality of your customers if you wear your prices almost like a badge of honor. When pressed about your price, reply with, “Yes, I realize that our price is higher than our nearest competitor. I am glad you brought that up. Here are the reasons you are better off doing business with us and paying our prices.” And then, go on to explain about your quality, that you have excellent design and digitizing services, that you will deliver, that your orders are always done by the deadline, and any other comparisons that you know your other customers value.
I absolutely agree that raising your prices requires steady nerves. People will tell you that they can get the “same thing cheaper down the street.” This suggests two things: 1) they actually can’t get it down the street; or 2) they don’t want to. I know this because if they could and they wanted to, and low price was the most important factor in their decision-making, they would be down the street right now placing their order. What they usually mean is that they want your service, your quality, and the other guy’s prices.
Value yourself and your business properly! To be successful as a business owner, it is necessary for you to have a strong sense of self-esteem. You cannot expect to earn the respect and trust of your prospects and customers unless you first respect yourself. Not to sound all New Agey, but it’s true. All respect starts with self-respect, both your respect for others and their respect for you.
To charge premium prices for your premium quality products and decoration services, you need to have the self confidence and self-respect to stand there and ask for them. You need to believe your services and products are worth the prices you’re asking for them.
It all comes down to this: value yourself and your business. Be proud of who you are and what you do. You are the only one doing exactly what you do, exactly how you are doing it, exactly where you are doing it.
