Fire sale! Everything must go! It’s a time-honored tradition in marketing. You want more sales? Slash prices. Undercut the competition and give your customers (and those of your competition!) an offer they simply can’t refuse.
You’ve seen the “Running of the Brides” at Filene’s Basement, haven’t you?
Since 1947, once a year, the clothing store Filene’s would dramatically slash its wedding gown prices. We’re talking 40%-60% off. The response was legendary and intense (see above!) Hundreds would line up, often overnight, for their chance at finding the perfect dress at a hugely reduced price.
Sounds ideal, right? A literal stampede of customers rushing through your doors, dying to get their hands on your product. One small problem though. In 2011 Filene’s Basement went out of business. After filing for bankruptcy.
Maybe low, low prices aren’t the only way to go?
Maybe you could actually increase your prices and make more profit of every hard won sale. Versus having to win new bargain hunting customers, over and over, to make the same amount of money.
Do you worry that charging more won’t work in these still-shaky economic times? Think again.
Let me tell you about a company that launched a pricey product during a much worse economic time than this – specifically, the great stock market crash of 1929. Just a few months later, when everyone was paralyzed by the American Great Depression, Henry Luce launched Fortune Magazine.
At the time, most publications charged 5 cents. Henry charged a dollar an issue for his. And guess what? It sold and it sold well. By 1937, they had 460,000 subscribers and half a million dollars in annual profit.
At the end of the day, only one supplier can really be the cheapest. So why does everyone else still have customers? Easy. They have brands and USPs that resonate with their customers, far more effectively than a lower price ever would. They have customer loyalty and unique ways they differentiate themselves.
Fortune Magazine proves this. Even when people had very little money to spare, they still bought Fortune because the artwork, writing and insights were top-notch. People still wanted a luxury product.
So how do you achieve this level of respect, and charge more?
Here are a few things to think about:
1. Offer a Crazy Good Guarantee
One thing that gives most bargain hunters pause is their fear of the term “As Is”. When you shop in the clearance section, all too often you see “Final Sale, No Returns” kind of language. Basically warning customers that if they want this deep discount, they can have it…but they will be stuck with it. No givebacks, no options.
Conversely, the way to make customers feel better about paying a bit more is to offer them a Crazy Good Guarantee. Offer them their full money back within the first year. Offer them full money back even if they send the product back 90% used up. Offer full money back, plus you’ll pay for their shipping.
Most customers never, ever bother to ship things back so you’ll likely not have to take back all this used, expensive product. But offering it to them is often enough to tip them over into buying from you, even at a higher price.
2. Accept Any and All Payment Types
Again, most discount places are very strict with their payment rules. They’ll only accept cash, or money orders. Got an Amex? Sorry, we don’t take that? Discover card? Forget it about.
So make it ridiculously easy for your customers to pay you and you’ll remove one more barrier for them to buy from you. The easier you are to buy from, the more they’ll return to you, no matter if you cost a bit more than Mr. Discount.
3. Brand Your Expertise with Content
Becoming the ‘go to’ person in your industry will ensure that customers will come back to you time and again, because they trust you. Spend time setting up a consistent blogging and social media presence. If you do this, and are constantly feeding your consumers great and useful information, they will instinctively trust you and turn to you when it’s time to make a purchase.
4. Niche Your Marketing
The more you can convince your customer that your product is specifically for them, the more you can charge. So take the time in your marketing, or even your product naming, to get very specific. You want to assure your customer that they are paying a premium price because this product or service was created with them in mind.
Trade magazines are a great example of this. If you’re a small business owner looking for advice and ideas, you could subscribe to Inc. Magazine and pay $12.99 a year. But if your small business happens to be a funeral home?
You might want to instead get more customized advice from “Funeral Service Times Magazine”, even if it costs $90.50 per year. The perceived value of that advice increases the more niche it gets!
5. Add Value
To charge more with confidence, try throwing in things that don’t cost you that much, but which have huge perceived value to your customers. For instance, say you sell a product that might be confusing for your customers to install or assemble. So they have a choice. They can either risk DIY’ing it the wrong way and messing it up or paying an extra fee for someone to come install it for them.
Why not offer to throw in a DVD that features a video of you or one of your installers walking them through, step by step, how to install your product correctly. You give them confidence to do it themselves and save them potentially hundreds of dollars on installation!
6. Make The ROI Clear
Speaking of saving them money, this is something you want to outline clearly and loudly. If they buy your widget and install it on, say, their HVAC system, tell them how much they can expect to save on their monthly energy bills. And for how long.
Put a big fat formula on the product page, showing how quickly they’ll ‘get their money back’ and then how much it will continue to save them once it’s paid for themselves. The more you connect the ROI dots for them, the more likely they might be to fork over money for your product vs. your competitors. (Note – that competitive product might be able to save them just as much money but chances are, they’re not crowing quite as loudly about it as you are!)
7. Sell Some Personality
There are two kinds of shoppers. Folks who want rock bottom prices and nothing you can do will convince them otherwise. That’s fine. You don’t necessarily want that kind of customer, as they are a bit robotic and disloyal in their search for savings.
The good news is that most of your customers are very human. They are like anyone else, they will gravitate towards the funniest guy at the pub or the most interesting story-teller at the luncheon.
So infusing your customer relations with a little bit of personality and even humor is a great way to bond more with your customers.
Once they like you, they’ll come back again and again, and even tell your friends about you. The conversation will never be about how much you do or don’t charge, it will be how awesome you are to do business with.
A great example of this is the (now famous!) online CD seller called CDBaby.com. The story goes that the owner sat down and compiled this unique ‘confirmation’ email in about 20 minutes. He had fun with it and let his personality come through.
This one simple email went viral, has been featured on all kinds of business and marketing websites and, even brought in 20,000 new backlinks and an enormously increased awareness of his company.
He talked to his customers like they were his friends and they started to feel the same about him. That couldn’t have hurt his growth. (By his eighth year in business he was making $250k profit per month.)
I’ll end this post with the language in that actual email itself. Let it inspire you to think differently about your business. To be different and to feel good about charging a premium price for that difference:
“Your CDs have been gently taken from our CD Baby shelves with sterilized contamination-free gloves and placed onto a satin pillow.
A team of 50 employees inspected your CDs and polished them to make sure they were in the best possible condition before mailing.
Our packing specialist from Japan lit a candle and a hush fell over the crowd as he put your CDs into the finest gold-lined box that money can buy.
We all had a wonderful celebration afterwards and the whole party marched down the street to the post office where the entire town of Portland waved ‘Bon Voyage!’ to your package, on its way to you, in our private CD Baby jet on this day, Sunday, December 11th.
I hope you had a wonderful time shopping at CD Baby. We sure did.
Your picture is on our wall as “Customer of the Year”. We’re all exhausted but can’t wait for you to come back to CDBABY.COM!!
Thank you once again,
Derek Sivers, president, CD Baby“
So what can you do to ‘back up’ raising your prices? When’s the last time you raised them? How do you differentiate yourself from your competitors? Share your USP in the comments below.
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