In my day job, I train and support software salespeople. A few do well, some scrape by, and the rest struggle. They tend to make a simple mistake – they set the price too low!
I’ve seen entrepreneurs do this too. They’re afraid to charge what they’re worth, so they make less money.
I’ve found three tricks that help people sell at higher prices, and have written up real-life stories about them. They will be more useful for consultants and service providers, but hopefully everyone can learn from them.
Tip #1: Sell value in excruciating detail.
Back in the day, a copywriter was writing an ad for smoke detectors. Not only had they been around for years, but this particular one was slightly more expensive. If you have a commodity product, how can you justify charging more?
Partly for research (and partly out of procrastination) he started reading the technical manual of this product. It talked about how it was manufactured, how it worked, and many tiny details.
On one page, he noticed something interesting. This fire alarm used gold contact points in a circuit mechanism.
That struck a chord with him – out of all the commodity smoke alarms, this one uses GOLD to ensure your safety! He finished the copy, and the ad was a hit.
What he didn’t know is that EVERY smoke alarm has gold in it.
If you’re a successful entrepreneur, you’re probably like the smoke alarm manufacturers. We look at our product and think, “Of course it has Feature A, that’s not even worth mentioning.”
Customers are coming from a completely different mindset. To them, Feature A might be completely new. They might not know that Feature A exists! And even if they are aware, they probably don’t know how difficult and time-consuming it is to provide that Feature.
Selling value takes time. It’s a discovery process – you’re learning what the customer needs and values, and the customer is learning about you. Make the effort to show why your product has a higher price, and they can justify the cost.
Tip #2: Start at a higher price.
At a conference, I was talking with a consultant. She was an expert in a specific area, and had a few celebrity clients. For privacy’s sake, I’m going to switch out her clients’ names and the type of business.
Steph Curry had started a business selling sneakers in San Francisco. It was wildly popular, and he was quickly overwhelmed.
Coincidentally, this was exactly the type of business that she consults for! Someone referred her, and they met. It was a perfect match – with her knowledge, Steph could grow the business and easily make 10x her consulting fee.
A few days later, one of Steph’s people reached out to her. She talked with them a little bit, and told them her price. The person paused and asked,
“Can you come down 15%? We think that’s fair.”
The consultant was surprised and didn’t know how to react. Her client was going to generate value far, far in excess of her fee. Why would they try and negotiate down?
It doesn’t matter what you’re selling, and it doesn’t matter how much value you create. The other person will always want a lower price.
Setting a high price up front is a great way to counteract that. The Anchoring Effect makes your high price valid. Even if the customer negotiates you down, they still associate your product with that high price.
Customers also want to feel like they’re getting a fair price. In many industries, negotiation is expected. If you don’t give a token discount, the customer might think you’re being disrespectful. Starting at a higher price makes sure that everyone wins.
Tip #3: Believe it’s worth the higher price.
Human beings are social animals. We want to copy people near us, to be like them.
When I visited Paris, I was there for maybe 10 days. I went to all the museums, saw a funk concert, and hung out with a sculptor friend from Lille.
Even during that short time, I started picking up a weird French accent. I can’t speak a lick of French, but it seemed to help me communicate.
One of my college friends was going to be there near the end of my stay. I got an email that she was in town, so I gave her hotel room a call.
This is what I meant to say:
“Hey, is Heather there?”
This is what came out:
“Allo, eez Miiz ‘eather ici?”
The urge to copy others is overwhelming. It’s so powerful, I even creeped out my friend – for a second, she thought a random French dude was stalking her!
Believe it or not, customers are actually copying YOU.
Since you know more than them about your product or service, they’re looking to you. They’ll absorb your attitudes and behaviors. And if you’re unsure about the price, they can tell.
But if you’re confident, the customer senses that too! If you know that the customer will get substantial value, they’ll pick up on that.
Believe in your high price, and customers will buy. Doubt it, and they’ll negotiate you down to the penny.
TL;DR: Sell value in excruciating detail. Start at a higher price. Believe that it’s worth a higher price.
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