Why charge more?
Charge more to transform your cheap business to a premium business.
It is a mindset thing.
I have listed below excuses that a “cheap business” owner gives – against not charging a premium price. [A solution is also listed next to each excuse.]
Excuse: I am just starting, nobody knows me.
Solution: Think of creative ways to spread the word about yourself/your brand. Some of the ideas that come to mind are,
- Create a useful (for your potential customers) eBook and put it on your website for free download. Also send it to people (friends, old customers) to create initial buzz.
- Use blogging to generate leads (still very effective). Here is how to attract audience to your blog.
- Get a celebrity to write about you. This one is tricky but can be done. One way is to create an engaging product and offer equity to celebrity, in return of building buzz.
- Create a unique online experience.
- Do not think business, think buzz for a while. See what Lori Deschene of Tiny Buddha did. She started with a twitter account and used the follower base there to launch the website which is now a business for her.
Excuse: There is competition in the market with people willing to charge less that I do.
Solution: Think of ways to add value. Research and see what competition is not offering. Offer that.
Do not always think features. Think customer service also. You can offer fast turn-around time, exemplary customer service. If you are bold – you can offer “pay for performance”. Pricing higher that competition is also a good strategy to stay ahead. Just make it sure that you back it up with a stellar product.
Use cost arbitrage to get premium pricing. If you live in Asia – then work with overseas customers.
Excuse: I need money to survive – so some money is better than no money.
Solution: Good that you start with some money in the bank. If that is not the case then increase your price by 20% for each customer win – this is if you are in a project led business. If you sell software then increase 20% once every 3 months for new customers. Increase it till the time you double the current price of your offering. Do not take more than 12 months to double the price you are charging.
If you ran a cheap business – and are generous enough to share your experiences – please share why you offered low prices, in comments.
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