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ONLINE BUSINESS HELP

Raising Your Rates Can Increase Your Business
By: Developer Shed
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    2004-09-14

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    Raising Your Rates Can Increase Your Business
    by Diane Hughes

    How many times have I heard literal horror stories from Internet
    business startups? Too many times to count! I get emails from
    those who just simply can’t seem to make a living online.
    They’ve tried everything (according to them) and are still
    struggling to make ends meet.

    At some point, the "conversation" always turns to price.
    That’s where I find a lot of online business people making their
    mistakes. The common mindset among Internet business startups is
    that you have to keep your prices rock-bottom low in order to
    attract customers.

    Nothing could be further from the truth! Raising your rates
    (in some cases) can actually increase your business. How so?
    Here are several reasons....

    1. People Equate Price With Quality

    I’m sure you’ve heard the expression, "You get what you pay for."
    That statement comes from a long line of lessons learned by people
    across the globe who have bought something at a discounted price
    and regretted it later.

    Maybe the product was used. Maybe it was made with inferior
    materials. Perhaps a "discount" service they tried fell through
    and left them in a fix. It could be any number of reasons, but
    those who have tried the "bargain" or "discount" route and have
    been burned are quick to look for higher priced products and
    services. It makes them feel safe.

    I know of several online business owners who raised their rates
    on the services they provide. What happened? For about one week
    it seemed they had made the wrong decision. Business all but
    stopped! However, after that "adjustment" period, floods of
    leads came rolling in. They never regretted it.

    2. Customers View Higher Prices As A Status Symbol

    It’s true! I’m sure you’ve met some people who love to brag about
    how much they paid for everything they own. Their car was custom
    ordered from the dealer and cost much more than any old car
    chosen from the showroom floor. Their clothes reflect this
    season’s latest trends and were purchased at full price from
    the expensive department store... NOT at an end-of-the-season
    clearance sale. I could go on and on.

    The point is, many customers simply will not buy a product or
    service at a discount price regardless of how good the quality is.
    They have the "ability" to afford higher prices and are proud of
    that fact.

    3. Many Believe Expensive Products Are Image Boosters

    I actually heard this conversation in a department store once.

    Woman One: "Look at this blouse! Isn’t it wonderful?"

    Woman Two: "It’s OK, I guess."

    Woman One: "But it’s an Adrian Bloom blouse!
    I’m going to buy it and make all my friends jealous."

    Woman Two: "Who is Adrian Bloom?"

    Woman One: "I have no idea, but this blouse costs twice as much
    as that Liz Claiborne one so it must be the next big thing!"

    Can you believe it? The woman had no idea who the designer was,
    but based on price, she decided it would enhance her image so
    she bought it.

    The same is true of Internet shoppers looking for products or
    services. Those who believe being associated in some way with
    higher-priced businesses are more willing to spend money because
    they feel it will enhance their images.

    The psychology of pricing is a complicated subject, and I’ll
    be the first to admit that raising rates will not work for
    everybody. Before you raise your rates, consider the following:

    1. Can you offer something better or different than your
    competition?

    2. Will the rest of your business support the "branding" of a
    higher price? (i.e., Do you have a very professional-looking
    site, excellent service, and other elements that those who
    pay higher prices expect?)

    3. Will the new pricing structure allow you to make as much,
    or more, money by selling fewer items at a higher price
    rather than many items at a lower price?

    It just might be that the reason your business is struggling
    is that you’re charging too little. Give some serious thought
    to raising your rates. It just might be the best thing you
    ever did!


    ***********************************************
    Banging your head against a wall just trying to make some
    money with your internet business? Tired of books, manuals,
    and lectures that give you ideas, but don't help you actually
    turn ideas into profits? ===>> http://madmarketer.com/diane


    DISCLAIMER: The content provided in this article is not warranted or guaranteed by Developer Shed, Inc. The content provided is intended for entertainment and/or educational purposes in order to introduce to the reader key ideas, concepts, and/or product reviews. As such it is incumbent upon the reader to employ real-world tactics for security and implementation of best practices. We are not liable for any negative consequences that may result from implementing any information covered in our articles or tutorials. If this is a hardware review, it is not recommended to open and/or modify your hardware.

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