TF #002 : 4 steps to raising your prices without losing customersJul 01, 2022
Pricing is hard. When you're starting out, pricing can seem like a gamble: How much should I charge? Too high and no one will buy; too low and I won't make any money. And what if my competitors undercut me? What if people won't pay for my product or service at all? These are all valid concerns, but there are ways to make sure your customers feel good about paying more for your work.
If you're like most people, you'd love to charge more for your services. But the thought of how to do it makes you feel stressed and overwhelmed.
In this short newsletter, I will take you through an approach that has worked for my clients and me to raise prices effectively. The most significant benefit to raising prices is that you get to give all your focus to your clients because you have charged enough for contingencies, and you can put all your energy into providing the client with your best output. The outcome of this newsletter is to give you a simple framework that you can use to raise and justify your pricing.
Here are the key reasons why many experts, coaches, consultants and thought leaders undercharge:
- Base prices mostly on what others in their field are charging
- Not leveraging testimonials enough
- Not leveraging the principle of scarcity
- Price Anchoring missing in their offer suite
- Targeting the wrong clients
- Offer not structured to increase the perceived value
Here's how, step by step process that you can go though to increase your prices in a way that it is justified in your customers mind.
Step 1: Change who you are targeting as a prospective client
This is one of the key reasons why many struggle to charge premium prices for their services. They're targeting the wrong people.
I always tell my Evergreen Momentum™️ online business accelerator clients that there are three types of people who want to work with you:
- People who really want to work with you but don't have the resources to invest in your service.
- People who might have the resources but are over-thinkers and they're just reluctant to take action.
- People who have the resources and can easily afford your premium prices, and are quick action takers.
You need to find the third type of people and double down on your marketing efforts targeted at them. Trust me—you will have more fun running your business with this type of client! All my marketing efforts, and even offers, are tailored to bring this kind of client to me.
If you want to raise your prices, first you need to focus on Type 3 clients.
How do you identify Type 3 clients? When you present your offer to this type of client, they will talk about the value you will provide and the outcomes they will get. Type 3 clients will talk about the cost only when they have already accepted your offer in their minds. Whereas Type 2 and Type 1 will usually start with the price because they are short on funds.
If your target market is wrong, none of the following steps will matter. So make sure your target market is right before going any further!
Step 2: Leveraging testimonials to maximise the perceived likelihood of success for your prospective clients
Testimonials are one of the key factors that you can leverage to increase your prices.
Every testimonial or a case study you add to your portfolio increases the perceived value of your offer in your target customers mind because testimonials are a proof that you can get people results and this increases the perceived value of your offer in your target customers mind.
Testimonials are also a great way to build trust and credibility with potential clients, so if you don’t have any yet, make sure to create some before raising your prices!
But many people create their testimonials wrong. There are two key goals that every testimonial needs to hit. Every testimonial should either confirm all the benefits mentioned in your offer or remove objections that your customer might have in their mind regarding your offer.
Here is how to do testimonials right:
1- Make a list of all the benefits that you are stating in your offer. For example, in Evergreen Momentum™️ I tell my potential clients that you can sell high-ticket programs without creating a course or a website first.
2- Make a list of all the objections that people might have regarding your offer. I get this objection every single time: "how is that possible? Of course I need to shoot tons of videos first! and I don't have time to shoot videos." What does this mean? It means they don't believe that it is possible to sell a high-ticket program BEFORE creating content or videos.
3- Focus on creating testimonials that either prove the benefits or remove objections. So, I have testimonials of my recent clients who have successfully sold a high-ticket offer BEFORE creating any content or shooting a single video!
Step 3 - Always have a queue of qualified prospects outside your door wanting to work with you
Many experts are so busy delivering outcomes to their 1:1 clients that they do not get enough time to focus on marketing activities. This leads to an erratic hunt for clients at the end of every 1:1 project.
There is a simple way to have an automated lead-machine running for you, and it doesn't require any marketing knowledge at all!
1) Build an audience - Create three pillar videos that you know your target audience will watch - it could be three secrets, problems, or ways to. Run NZD 15 a day targeted video views campaign on LinkedIn with the three videos
2) Retarget - Run NZD 15 a day campaign and target all the people that have watched over 25% of the videos with a CTA to your offer
Your ad spend comes to $900 per month, and it's working for you 24/7 by getting more people aware of your products and then putting offers in front of them.
If you only do this and nothing else, you will soon flood your calendar with qualified leads. Once you have many qualified leads wanting to work with you, you can start creating scarcity by telling your clients that, for example, you can only take three new clients this month.
Then, raise your prices to the extent that causes people to notice. But make sure your price is still affordable for your target client, and you can justify the value.
You want to establish yourself as an expert in your field. You want clients who will pay a premium for your services because they know you're worth it.
Never worry about what competitors are charging—just focus on oversubscribing your business with qualified leads!
Step 4: Have a tiered pricing structure
Leverage price anchoring and have a tiered pricing structure every time you place an offer in front of your prospective client. Always give your client a cheap, a reasonable, and a very premium option.
Most commonly people will opt-in for the reasonable one in the middle, but I have had cases where people were going for the premium one! This is how I leverage the principle of price anchoring.
Price anchoring is a principle deep-rooted in psychology. By the definition, you can think of price anchoring as a cognitive bias where customers depend too heavily on a piece of initial information to make subsequent decisions. Once the opening value is set, all future arguments and estimates will be evaluated based on that anchor. Every time you see a discount with “
$100 $75” , the $100 is the price anchor for the $75 sales price.
So, get your three options ready for your next call :)
The best way to create price anchoring is by having a digital product that you can leverage to create the 3 offers:
- DIY(Do It Yourself) - An online course
- DWY(Done with you) - An online course and a group coaching program structured as an evergreen hybrid group coaching model - See the TF #001 newsletter for more info on this
- One-on-One - Premium consulting offer
Thats it for this newsletter folks, hope you find it useful. Have a great weekend, and I will come back to you with another tactical newsletter next Friday :)
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