Your goal today ? take a look at your current opportunities!
Raise your prices ? Raise Your Value:
Most entrepreneurs undercharge what their product or service is worth, especially if they are new in business. But you don?t have to!
And creating more revenue is quicker and easier than you think. One surefire way to double your revenue is to raise your prices. But as your prices rise, so must your value. As you increase your prices, you have to make sure you are delivering way more value, not simply more assets or deliverables.
Here are some specific tips from Jason Cohen, a millionaire who has grown multiple million-dollar businesses and now helps startups at asmartbear.com. You can watch it in video form below and here is the action guide!
TIP #1: If you?re going to raise your prices, you have to raise your game.
If you?re going to raise your prices (and you should) – you have to raise your game. You can?t charge $1000 a month and be crappy; you have to earn it. You want to be four times more expensive and four hundred times better.
With extra cash flow comes the time to dedicate to better service and the security to focus your full energy on creating a better product. Instead of constantly scraping by and searching for new clients/ customers, you?ll have the peace of mind needed to be truly great at what you do.
And while your profit margins will be much greater for the same amount of work/ product, the difference is in the client/customer experience. When you charge more the experience must be amazing, support must be amazing, and or the product must be amazing. It doesn?t have to be any one thing but you have to be amazing to justify that.
?People purchase based on value, not on how much work it was to make it.? ? Jason Cohen
Tip #2: Clients pay based on the value you provide, not how much effort it takes for you.
Have you ever felt that you can only charge a certain amount because that?s all your service/product is worth? A lot of business owners don?t FEEL like they can charge more. They have perceptions of what the market is willing to pay or how much they are worth.
The truth is clients and customers pay based on what they?re getting out of it ? how it?s changing their life, how it?s making them successful ? not based on how much effort it was for you to acquire them, deliver the product/service, or provide continued support. For a higher quality output, they?re willing to pay top dollar.
But in reality, you set the bar. You choose your market and where you want to sit in that market.
And the downside to doubling your prices? There is none. When you TEST a price double, it takes the risk out. You can always change it back.
Simply test your higher price on new customers, while maintaining your previous pricing structure for your current clients.
If you don?t get the new customers, it doesn?t hurt. But if you do, it?ll improve your profit margins tenfold. Win-win!
You have a few easy and quick-to-implement options for pricing structures that you can use right away.
- Creating Tiers
- Incentivizing Annual Prepays
- Prepay Strategies with Current Customers
Creating Tiers
For recurring revenue products/services, you?ll see that most successful businesses use tiers. Because there is proven pricing psychology regarding how and why tiers work.
Did you know that no matter what the tiers are, people are more likely to pick the middle tier?
So by offering different tiers, the average purchase will be above the lowest tier mathematically, which gets you into a better place financially.
There is also some strategy behind naming your tiers, as well.
For example, Jason Cohen?s new company, WPEngine, offers the following tier structure:
Tier 1: Personal ? $29 a month Tier 2: Professional ? $99 a month Tier 3: Business ? $249 a month
Call your highest paid tier ?business? because people who have businesses will think ?I need the business one? and they purchase the most expensive tier.
Action Item:
-See if you can create a tiered structure in your business. Would you be able to add a lower or higher level package? Outline it in the action guide (click here to download).
Annual prepays
If you are having cash flow issues, annual prepays can be a great tactic to get cash in the door quickly.
As a coach, I require a 6-month commitment, and I give a discount to anyone who wants to pay the whole balance up front. This strategy is great because it provides an infusion of cash on the front end which can really help you breathe financially.
Millionaire Jason Cohen said, ?[Annual pre-pays] are transformational. They can increase the cash flow of the business three to five times.?
Annual prepays can be used to hire help so you can expand, search, and market for customers with the freed up time.
And in the end, your customers will thank you! They are getting a deal! They are paying less overall and you?re getting the cash flow that you desperately need. So when you need cash flow more than you need the total money, this strategy buys you time.
Ask yourself:
How much does your product or service cost?
What does it cost total for the whole commitment? (if there is no end date, use an annual price)
What discount are you willing to give? What is your new prepay price?
Prepay strategies with current customers
Give either one or two months free for current customers who pre-pay for the next year. For example: If you choose the WpEngine.com professional plan, upon checkout you can pay for the year:
- $990 per year (2 months free, a $198 savings) ? $99 per month
Action Item:
Set your price point
[Note: This is something that works extra well in November and December because people are looking to spend more money so they pay less in taxes]
Here s the template you can use to ask people for annual pre-pay prices:
Hey Carol!
It?s been amazing working with you so far, and I just wanted to let you know about a special I?m running at the moment. Around this time each year **or if they are about to expire** I offer an annual pre-pay which gives you a big discount.
Since you are already set to pay it monthly, you can get two months for free. Interested?
Just reply yes or no in the next day and we can chat about it! [Or say -Just reply yes or no and I can send you a payment link]
Warmest,
-Jaime
Download the template here!
The Biggest challenge in raising your prices (And it?s not what you think)
You may think that getting customers to pay your increased rates will be the biggest hurdle to overcome, but it?s not!
The biggest challenge can often be overcoming a mental and emotional battle with yourself.
If you are your product, sometimes the value is hard to judge, and as you consider raising prices, you might bump up against self-worth issues. This can be challenging, but not impossible to tackle if you have the right tools.
If you?re finding that you?re struggling with self-worth and doubt in the value you provide, a great resource I recommend is the book Six Pillars of Self-Esteem by Nathaniel Braden.
You can also watch my interview with serial entrepreneur Dan Martell, Lessons Learned From Multiple Failures?where he talks about how to mitigate fears associated with entrepreneurship.?
How do you Know When you?re charging Too much?
How do you know when it?s too much?
You never want to swindle your customers, so you need to know when to stop raising your prices. First, you have to be delivering the value. If customers don?t feel like the value is there, you will know.
How will you know? Your sign up rate will go down, you may get complaints, or people may start backing out more frequently. The nature of the customers and the signup rate is a very direct metric.
Be careful but keep pushing!
As you go through your price change, always remember that raising prices for new customers should never mean delivering poor quality to your old customers. However, raising prices should equate to raising the quality of your new customers. This is a delicate balance you will want to watch and maintain as you go through this transition.
If you?re concerned people will complain about the new prices, you?ll be surprised to see that they won?t!
If you grandfather all your old customers and keep their fees the same, they won?t care if you increase the price. If you have a new customer ask about the previous pricing?and want to give them the lower price, you can if you feel so inclined! You are the boss.
Doubling your prices is one of the few things I?ve found that can have so many benefits with so little risk.
Action Item:
- Download the action guide now.
- Decide to test to raise your prices. If so ? RAISE THEM TODAY. (no excuses!)
- Create a tiered package strategy.
- Incentivizing Annual Prepays – decide on what is a good mark-up strategy.
- Prepay Strategies with Current Customers – Contact at least 5 of your current customers and ask about prepay strategies.
>> CHALLENGE CHECK-IN
Stay tuned tomorrow for Day 3 and be sure and catch up with us to share Big Money Wins in our private FB group!