You should raise your prices.
It’s a business cliche. Those five words of advice are so frequently dished out by successful entrepreneurs, it hurts. If you’re on the receiving end, it’s the most frustrating tip imaginable.
Because you can’t just put up your rates. You’ll lose customers. There will be riots. It’s okay for some, but not for your business. This is what struggling business owners keep telling themselves.
Yet you keep hearing (and repeating) the same advice. You should raise your prices. Yes, you should.
This article breaks down the three specific strategies you need to rocket your rates into the stratosphere. Without losing business because of it.
There’s no future in being cheap. There’s certainly zero hope in being the cheapest. Unless you’re running a global empire, your entrepreneurial success hinges on your ability to sell high margin products and services to those who value them.
Hence: You should raise your prices. This post isn’t intended to dispute that – it’s a given.
Here’s how to do it.
Technique 1 – Be a Pundit
This is like being famous, but with a twist. It’s like being an “authority” only more so. A pundit is someone who has an opinion. About everything. An opinion that you’re simultaneously respected and maybe even vilified for.
When Seth Godin talks about Intravenous Permission in his book Permission Marketing, he describes the amazing level of trust that exists when we allow a doctor to fill our IV bag with whatever drug she wants. She then bills us for those drugs. We pay without question.
The doctor is a trusted expert. That’s just the first level.
Doctor Oz is a expert and a pundit. A famous expert, whose opinion matters even on subjects he’s not explicitly trained in. Someone like Doctor Oz wouldn’t just be trusted to fill someone’s IV – he’d be paid twenty times the normal rate to give his opinion on their situation.
Pundits don’t have to be household names to be effective though. No one has heard of Garret Murray. Unless you have.
Garret Murray is a pundit. He runs a iOS development shop serving clients like Conde Nast. He has built an enormous following as an amateur photographer, gadget-freak and all round digital cool kid. People care about what he thinks. His opinions (and predictions) matter. His expertise, I’m guessing, is rarely questioned.
He’s a iOS developer. But he gets business via his blog Maniacal Rage – his platform as a pundit.
When you become a pundit, you become the ultimate authority. You’re not just a deep thinker in your own field – you’re recognized as someone who connects dots across multiple industries. Peter Shankman, Gary Vaynerchuk and Robert Scoble. All pundits. With big big prices.
It doesn’t matter if you’re selling widgets, advice or anything else. If you want to market something ultra-high end (and price it accordingly), you need notoriety.
Be a pundit. Get paid like one.
Technique 2 – Be an Artist
Here’s the thing about art. When it’s recognized as “good”, no one questions the price tag. Fifty thousand dollars for some splotches of paint on canvas? Your kid might have done it, but if the name of a recognized artisté is attached, it’s worth it. To someone, somewhere.
The scary part is misunderstood. You don’t have to become Andy Warhol for this to work. You don’t have to be dead.
Why? Because artists are recognized within niches too.
Donna Von Bruening is a high end wedding photographer who gets this. She started as an entrepreneur but has worked hard to establish herself as an artist. She’s thrown gallery parties. Produced fine art prints. Been featured in the media. You’ve probably never heard of her.
Donna is killing it, because she doesn’t have to compete with other wedding photographers. If you want a good price and some good photos, don’t hire her. If you want to make your once-in-a-lifetime day an expression of art? Call Donna and close your eyes while you write the check.
When you become an artist, you cut the connection between price and any notion of “what things are worth”. It’s art. The same rules do not apply.
Paul Rand did it. John T Unger does it. Steve Jobs still does it. When a little art is injected into a commercial product, it becomes indescribably special. No one can quite put their finger on why, because it’s art. It’s just better.
When you sell art, you sidestep logic. You appeal to your customer’s spirt. They pay accordingly.
Technique 3 – Make it Shiny
The two strategies above rely on connecting with a sufficiently affluent customer demographic. Finding them isn’t hard. A 2007 Economic Intelligence report by Barclays Wealth estimated that there are 16,600,000 millionaires in the USA alone. There are 185,800 people in the world with a net worth of more than $30 million.
However, when you start playing in the financial big leagues, you also start playing with very picky customers.
The affluent expect the finer things and the little details to be perfect. They expect to:
- Be picked up
- Be dropped off
- Have it delivered
- Get custom fitted
- Be assisted, with white gloves
- Go to the front of the line
- Have it personalized
- Be remembered
- Not have to be asked
- Get drinks/food included
- Be treated like they’re special
They’ll pay for it, too.
The wealthy have no problem paying for things that save them time or make them feel good. That’s why smart entrepreneurs create premium products and services with all the little touches included.
Private jet companies include limo transfers. Donald Trump’s hotel staff inquire about the purpose of your visit, then decorate the room accordingly. Virgin installed a spa, pool table and full blown (free) restaurant in their first class lounge at Heathrow.
If you want to pump up your prices, it’s worth including (and making room in your margin for) a bunch of luxury touches. Beautiful packaging. Same day shipping. 5 Star. Custom. Fitted. Concierge.
The wealthy are desperate for a high quality, end-to-end experience where they’re taken care of. Offer just that and you’ll start attracting customers to whom price is irrelevant.
Be a Pundit. Be an Artist. Make it shiny. Charge triple and get it every time.