At some point, you may find that you have an opportunity in your business to begin charging more for your products or services. However, there are understandable concerns that you’ll likely have — what if you have to dramatically change your product? How will existing customers feel about a price hike?
It is possible to begin charging more to improve your profitability without drastically changing your product offering.
The secret is in changing the perceived value of your product. Perceived value is basically the value that your customer places on your product and its importance to him or her. This is a completely separate idea than market value — instead, it measures how your customers feel your product satisfies their needs.
Therefore, if you can increase your perceived value, you have a better opportunity to raise your prices without causing too much of a stir. Here are some tips for doing exactly that:
- Add tiers. If you have more than one level of product, you can have more than one level of prices. You often see this in web hosting packages, for example — there will be a deluxe package, a basic package and a business or “premium” package that offer different levels of services for different prices. Depending on your type of product or service, this could be a good option for you.
- Get more testimonials. Testimonials and good reviews are more likely to make people buy your product, and people will be more likely to spend slightly more on a well-reviewed product than a product without any or very few reviews.
- Push your benefits. If perceived value has to do with the way your product or service fulfills the needs of a customer, then you need to make sure that your customers know exactly how your product does that.
- Give a guarantee. If you strongly stand behind your product or service, don’t be afraid to give a satisfaction guarantee. This will make people more willing to give your company a try.
- Raise prices. Sometimes all you need to do to improve your perceived value to raise your prices is… raise your prices. Being the “budget” option isn’t necessarily the best marketing tool.
In addition to these tips, remember that you don’t want to raise prices too much at any given time. However, these tips should help you to be able to start charging what you feel your product or service is actually worth.
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