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5 Surprising Reasons To Raise The Price Of Your Product

5 Surprising Reasons To Raise The Price Of Your Product

Why wouldn't you charge a premium price for providing an extraordinary product/service and value? After all, it beats banging your head against the wall trying to undercut competitors' prices, doesn't it?

Selling premium products and services at premium prices leads to greater profits. If you want to make a million this year, you'd have to sell 40,000 copies of your product at $25. Or 4,000 copies at $250. Or, better yet, 400 copies at $2,500. Isn't it a lot easier dealing with 400 customers than 40,000?

Here are 5 reasons why you should raise the price of your product or service:

1) More profits

When you sell for higher prices, you make more profits in the long run. Very few companies have been able to sustain a low-price position in the marketplace. Strive to be an Apple, not a Kmart.

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2) Better customers

Price qualifies your customers. The customers that pay $1 for an e-book will whine and complain the most and strain your customer support team. But, in comparison, the customers who spend higher amounts of money, even $20 for a great set of audio startup guides, are surprisingly easier to deal with and less demanding.

Think about the last time you gave free advice to someone. What happened? Probably nothing. But if you had made them pay you for consulting, they would have heeded your advice because they perceived they had more to lose if they didn't.

We've always been taught that "you get what you pay for." It's not uncommon for a prospective customer to discount a product or offering because it's too cheap. If the price isn't in line with what it should be, you'd think there is something wrong.

3) Ability to deliver more value

Ultimately the value you provide will dictate the profits you receive. Increase the value, and your revenues go up. By selling high-profit products with higher margins, you have more wiggle room to deliver exceptional value.

You can really delight your customers. Not only can you throw in high-value extras, you can also afford to deliver great bonus and add-on features.

4) Who wants cheap products, anyway?

Some customers are only premium buyers and only want the best, high-end, upscale, name brand whatever. If you gave them a discount, it would actually decrease the response. For this type of customer, you can secure their comfort level with a premium offer.

5) Opportunity to dominate the market

This may be the biggest reason of all: You can afford to pay more to acquire a customer. If you're competing against someone who has a $40 product, and you have a $4,000 offering, you can spend more on pay-per-click ads, social media marketing, traditional advertising, offline follow-ups, testing unusual advertising places, etc.

To make money for a high-priced product from a direct-mail campaign, you'd need only a fraction of the response that you'd need to make money from a low-priced product.

In conclusion, charging a premium shouldn't make you nervous about pricing yourself out of the market. The first step is to start brainstorming the value you provide. How can you provide 10 to 100 times the value your customers expect? You can always start small by adding a "premium" or even "platinum" version of your product or service and see what happens. Doubling your price just might increase demand or, more importantly, your profits.

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5 Surprising Reasons To Raise The Price Of Your Product