Recently, the question of how much to charge has again crept into conversations with clients when discussing successful selling. The big question, “how much should I charge?”, goes right alongside the important, and often more baffling, question, “how do I ask for the amount I want?”
When you are planning to buy a service or a product, how much do you expect to pay? For example, if I intend to buy a Clarins Face Cleanser, I may expect to pay $40-60. If I plan to buy an Avon Face Cleanser I may expect to pay $15.
If I’m expecting to pay $15 but I discover the Avon cleanser is $40, then chances are I won’t buy it—because the price is higher than the value to me of the Avon product.
However, if I’m expecting to pay $50 for the Clarins cleanser and the price is $55, it’s likely I will buy it—because the value is worth more to me than the price for the Clarins product.
Note: if the Clarins asking price is $15 and I expected to pay $50, then chances are I will not buy it because I may be suspicious about the “cheaper than value” price and question the product’s authenticity and seller’s integrity. I will therefore choose a more expensive supplier for the same product.
There are two pieces of advice I would therefore give when you are determining or reviewing your prices and asking for them to be paid.
- Is the value of the product/service worth more than the price?
- Does your customer know the value of your product/service?
Number 1: the value of your product or service must be worth more to your customer than the price you are asking for it.
If you are selling handmade novelty or themed cakes, the value could be:
- Convenience for the parent—a cake made and delivered by someone else
- The joy of seeing their child’s face light up over a character cake
- The prestige of a custom made themed cake at their child’s birthday party where the parents of their child’s friends will attend
- The quality of unprocessed ingredients
- Support for local handmade or local produce
If you are selling professional advice or consulting services, the worth could be:
- Knowledge and acumen that may be difficult for your client to quickly learn
- Proven results that may take your client months or even years to achieve without you
- Time-saving with guaranteed results
- Ideas and innovation that your client is unable to achieve alone
- Prestige and reputation that your client will gain because of your expertise
So the question, “is the value worth more than the price?” needs to be answered.
This question should be answered first by you. If you won’t pay $200 for convenience, joy for your child, prestige, quality and supporting local, then why would your customers? If you don’t value what you are selling, this will definitely come across in your communication with your customers. So get this right first, and then you can move on to number 2.
Number 2: once you’ve determined the value of your product or service—and you believe in its value—you have to ensure that your customers know and understand this value.
You’ve decided that your product or service is of greater value than your asking price. Now, tell everyone!
When you communicate the value of your product/service, ensure you emphasise the value based on emotional triggers rather than on pragmatic features. How your customers feel is key to their buying decisions. For example:
- “Feel luxurious, and radiate beauty” versus “chemical formula for microdermabrasion skin smoothing”
- “Impress your guests and witness the joy on your child’s face” versus “buy a themed cake for birthdays or special occasions”
- “Your reputation and company prestige will rise above the competition” versus “we deliver expertise and professionalism”
Remember that any business or company can charge any price and sell successfully if the value of their product/service exceeds the asking price and their customers know and believe this to be true.