Premium prices are part of a financial strategy to improve the profitability and value of your business by increasing revenues without adding infrastructure.
Here are but a few of the reasons. A premium price helps you:
- Determine who is serious about seeking a solution…and avoid those who aren’t.
- Support your claims of a superior offering.
- Distinguishes you from “competitors” who compete on price.
- Have a greater impact because you’re dealing only with people committed to improvement.
- Keep your infrastructure smaller…making it easier to be profitable in down economies.
- Create long-term relationships with your customers.
Let’s look at each of these in more detail.
Serious buyers
Premium prices quickly weed out price and moderately-interest buyers. Price buyers will continuously look for lower-priced alternatives. Those who are moderately-interested in what you offer may be inclined to call, but typically won’t because the price is more than they are willing to pay.
Premium prices result in you attracting only those buyers who are interested in making a change to their current circumstance. Remember, the number of people who could benefit from your offering is huge; those actually interested in making a change is very small. Your market, regardless of what business you’re in, are buyers who are willing to do what’s necessary to effect change.
Supporting claims
One of the biggest mistakes business owners make is touting the superiority of their offerings, which often is true, then charging a low price. Instinctively, we equate value and price. When these two are congruent, we tend to trust the claims of superiority. When that congruency is missing, we revert to price in our buying decision.
Distinguishing factor
So many businesses claim to have superior offerings, then compete on price. This practice creates confusion in the marketplace. When buyers are confused they always revert to price in their buying decision.
Premium prices automatically distinguish your business from others in the industry. Plus the congruency of your claims of superiority and price make your marketing more credible than others in your industry.
Greater impact
Imagine that you’re dealing with a customer who is paying your price, but isn’t doing what is necessary to get a result. How do you feel? Do you feel that you’re wasting your time? Are you concerned that they may, at some point, say “ I spent all this money with [your business], and nothing happened?” Do you wish you’d never taken on this customer?
The answer to all of these questions is yes; primarily because your passion is enriching others’ lives and you’re not getting that feeling in this situation. You can only have a positive impact on another’s life if they are willing to do the work. Premium prices dramatically increase the likelihood that the person you’re dealing with is of that ilk.
Smaller infrastructure
Premium prices enable you to hit higher and higher revenue and profit goals with fewer sales. This means that you can grow revenues and profits without adding infrastructure. Indeed, your profits grow exponentially because you’re not having to invest as much in creating a larger infrastructure.
High margins and low infrastructure costs combine to make it easier for your business to weather difficult economies. Indeed, companies who successfully employ this strategy end up with significant cash reserves going into a down economy which enables them to expand geographically, or their offerings, by acquiring struggling companies for pennies on the dollar.
Long-term relationships
It’s well known that price buyers are the least-loyal customers you have. Customers who value what you offer enough to forgo other spending during challenging economies, tend to be very loyal…often for decades.
Premium prices help you identify these buyers more quickly and qualify them with just one question with 95% in your initial conversation with them.
I may have inundated you with a lot of information, so let’s gather the key takeaways.
Takeaways
A premium-price strategy offers a lot of benefits including:
- You get to work only with people you enjoy.
- You have a greater impact because your customers do their part in creating success.
- You make competitors and the economy irrelevant.
- You minimize risk by keeping your infrastructure small.
- You enjoy long-term relationships with your customers.
- You get to make more money, with less effort, doing what you love.
These are the reasons why you should be employing a premium-price strategy.
Resources
Making the EXCEPTIONAL Normal program helps you identify and nurture emerging leaders who elevate all around them to higher levels of performance and greater job enjoyment.
Financial Awareness & Strategy program where employees learn to identify opportunities to improve financial results and prioritize these opportunities on the basis of which produces the greatest impact with the least effort. Greater financial awareness = Better decisions.
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