My sister is an excellent artist who was afraid of pricing herself out of the market. I suggested that if she raised her prices, she would sell more, her profits would be higher and she wouldn’t have to put out any more effort.
A year went by, and every time I saw her, I’d suggest she raise her prices. Finally, after encouragement from many others, she relented and doubled her price. Almost immediately, she began to sell more.
Once she increased pricing, she triples what she once changed and her waiting list for her to get to. She has not changed her marketing or increased her exposure. She simply made her artwork “reassuredly” expensive so that her market feels they are getting value for their money.
Pricing is an important component of the success phenomenon, although many business people have no idea how to approach this piece of the puzzle. It’s taking three things into account:
1. Your perception of your product’s value 2. How much effort you want to expend 3. The buyer’s perceived value
Let’s look at your perception first. On occasion, a business will price their goods too high, often because they have fallen in love with what they’re selling and believe everyone in the world will feel the same way. So frequently, I’ve seen products or services priced far below the norm. One reason for this is due to a perception of scarcity: the person setting the price feels that they would not spend that much on the product and wonders if others would feel the same way. Whether the price is set too high or too low, both are matters of personal perception.
Now let’s look at effort. If you are putting the same amount of effort and money into the marketing and selling of your product, having a price that reflects its true value to the buyer will bring back a higher return on investment. This is a simple concept, but one that’s difficult to implement if your own perception of the product’s value is not in alignment with a higher price.
So how do you set your price? Here are five things to factor into your pricing:
1. Examine your beliefs about the value of your product; if you question how much you would spend, is this a product you want to spend your money and energy promoting?
2. If you feel good about the product, decide how much you want to make.
3. Decide how many hours you want to work.
4. Raise your fees to match what you want to make in the time you want to work.
5. Look at others in your market who are having success selling and marketing a similar product or service to determine if you are in alignment with your market.
Lastly, examine how your client perceived the value in your product. If the price is too low, the buyer might feel the product or service has limited value and will be hesitant to buy. On the other hand, when you have built trust with the buyer, when they feel they will be getting their money’s worth, price becomes less of a factor in their decision, and they will be willing to pay more because they know they will get value for their investment.
Copyright 2007 © Marilyn Schwader
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