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The 'Pricing' Problem : Add More Value! (Explained)

by payoman
11 replies
It's been a crazy week for myself and my family. We went out for dinner to celebrate my sisters 20th birthday and co-incidentally my parents settled the contract on selling their house, so it ended up being a double celebration night!

As some of you might know, I have mentioned that my Dad runs his own business and as such I find myself asking for his advice and insights on how I run my own business.

Over dinner, I told him about a new client I had made that day and had significantly increased my prices for (sort of).

I explained how I had taken my prices from $600 for a website, to $1357 (by adding hosting costs) to finally $1857 (by adding Google Places setup).

His response was that I had increased my prices by 200% over the course of 8 months and that was ridiculous! I then told him how I added value and it clicked.

In the past, I had made Google Places setup an upsell. But by including in the first transaction, I had simultaneously made the transaction MORE valuable to the client (making the increased price fair) AND differentiated myself from all the other 'web designers' by offering a non-web design service.

My point is : if you are looking to increase your prices (and you should be!), think about what you can offer, present it in its best light and charge more.

I used to simply include hosting, but I realise it's worth more than 'free', so I started chargng for it. I used to upsell Google Places, but then I realised it's so valuable that I lump it into web design.

Anyway, I hope this makes sense and helps out you guys who want to start making more money.
#add #explained #pricing #problem
  • Profile picture of the author grey38
    Ewenmack just posted a super useful post last night or two days ago on how to provide your worth in math up front. Check it out, it will help you out no doubt.
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  • Profile picture of the author Hugh
    I never try to sell a "Product".

    I sell a "Package Deal."
    I sell a "Bundle" or a Basket.

    Add more products to increase apparent value.
    Always include something that no-one can duplicate.
    Like include a listing in "ABC-City Directory". (that you own)

    Hugh
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  • Profile picture of the author dnjoseph1
    Hell yea brother! Thanks for sharing this! It's crazy how much less stressful life becomes when you earn more money per sale. You actually have a profit you can make a living with AND have money left over to invest into your business.

    Mortgage & Utilities: $1,100
    Office Space: $300
    Cell Phone bill: $200
    Business Expenses: $350

    Total Approx Monthly Expenses: $1,950

    Sell your websites for $500, and you'll need to sell 4 a month to barely squeak by.
    Sell your websites for $2,500 by adding to the package and building the value, and all your expenses are paid for with extra to put in the bank!

    Seriously man when I made this jump, things got exponentially easier! Thanks for sharing this. I hope people get "it" from reading this thread.

    Daniel
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  • Profile picture of the author Michael Ten
    Nice post. It sounds like that you are earning quite a bit of money. Good job!
    I think that I have set my prices too low in the past.
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  • Profile picture of the author failideas
    with your price increases did your sales go down?
    I mean there must be more people willing to $600 then $1300 or more
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    • Profile picture of the author payoman
      Originally Posted by failideas View Post

      with your price increases did your sales go down?
      I mean there must be more people willing to $600 then $1300 or more
      That's what I thought initially.

      But then you discover that every prospect is either 1 of 3 types :

      1. They won't pay a CENT for a website because they don't WANT to see the value in them, for MANY reasons (they have enough business, they have tons of referrals, they are well established, they don't have time to worry about it, they have a friend who can do it, they just have no interest ETC). This accounts for a LARGE proportion of cold calls to businesses without websites (I would estimate about 80%).

      2. They would consider a website, but even at any price (bar sub $300 I would guess), they are VERY hesitant and most likely to just not follow through. This has happened to me many times, EVEN with face to face appointments, let alone over the phone. People are just too tight. I would guess 15-18% of calls go like this.

      3. (This is the one you want) The top 2% are people who are ACTIVELY looking at getting a website in one way or another, whether it's just more exposure and a website can provide that, or they really want one but haven't got around to it. I would say 90% of my sales have been from these prospects.

      I freely admit I am no telemarketing guru. Hell, I haven't even SEEN a so-called 'guru' pick up the phone and sell a website (For a higher price range $1000-$2000) to 10% of his callers, let alone more than 15-25%. I am sure it could happen under the right circumstances, but since I haven't had the opportunity to meet anyone or be given specific enough training on what's required, I stick to what I know...

      Which is, that 1-2% of people will actively buy at a higher price, you just have to offer value and ask for it.

      EDIT : Put it this way, in the last 8 months of running my business, I have NEVER turned a 'not interested/nah no thanks/we have too much business' into a customer. But again, I stress I am no expert, I am just saying what has worked for me.
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  • Profile picture of the author Rearden
    The supply and demand curve is not linear.

    Plus you should be more concerned about ROI versus Gross Revenue as a success metric.
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  • Profile picture of the author failideas
    thanks for the reply
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  • Profile picture of the author spesialis
    http://www.warriorforum.com/offline-...m-pricing.html
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