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How to Charge More and Be Worth Every Penny

BY Eddy Hood In Profitability On May 22, 2013 With 2 Comments

How-to-charge-moreIf you could learn how to charge more in your business, what would that mean to you?

Let me tell you a quick story to put this in perspective. I had a gentleman call me about three years ago. He was excited to have Ignite Spot do the accounting and coaching for his business.

At one point in the conversation he said, “I really don’t have more than $100 a month to spend.” I've heard that several times before and I hated it. In my industry, I have competitors that will do bookkeeping and accounting work for pennies on the dollar because they hire staff overseas.

We don’t do that.

I made a decision that day to do what I'm about to teach you now. Since then, I've never had that conversation come up, and we don’t lose nearly as many sales opportunities.

Here's how it works.

Step #1: Decide You’re Worth More

When you try to attract people with low pricing, who do you think will show up? Cheap pricing attracts difficult relationships.

When you learn how to charge more, several things happen including:

  1. Your business will have enough cash to deliver a quality product or service for your customer. It takes money to meet and exceed expectations.
  2. You'll attract people that value quality. This may surprise you, but not everyone shops on price alone. Most people don’t want to make a bad investment and would rather spend more for something they know will work.

You’re the kind of person that wants to be the best. I know because you’re researching how to do that. Do yourself a favor and decide that you’re worth more. Image how great it will feel when you can afford to provide top tier service to your clients.

Step #2: Reframe It, Deliver It, Rejoice in It

You can’t just increase prices and hope for the best. You need to reframe your product or service in the minds of your prospects. They need to see concrete value.

Let’s learn more about reframing. This is an important concept to drive home in your business. To help out, I'm going to enlist Rory Sutherland. He spoke at TED on this very topic. This video is a bit long, about 19 minutes in all, but it's well worth it. Hang in there and watch it.

I love that speech. 

Now let’s apply it to your pricing strategy.

  1. How have you branded your business up to this point? Are you seen as the cheapest solution or the Ferrari in your industry?
  2. If you’re seen as the cheap solution, why?
  3. What do you need to offer to your customers in order to reframe your value?

If you're seen as the Ferrari and you’re still losing out to lower priced options, you're either marketing to the wrong people or you’ve increased prices without adding tangible value.

Quick example: There are some accounting firms in our industry that charge quite a bit. When I ask them why, they always say something like “We have over 200 years of combined professional experience”.

My response… So #$&@$ what?!

That kind of value proposition is vague and nobody cares. It doesn't benefit the customer directly. It only strokes the ego's of the partners at the accounting firm.

At Ignite Spot, we do several things to make our customers lives better including:

  • Coaching our clients on how to get out of of debt and become profitable by 10% or more
  • Providing an online tool for our clients to stay financially connected to their businesses 
  • Saving our clients an average of $48,000 in overhead expenses each year

See the difference? If you want to learn how to charge more, find concrete ways to be useful to your clients.

Step #3: How to Avoid Pricing Wars

Now that you know how to charge more, you need to know how to respond when a customer tries to beat you up on pricing.

When someone asks you to charge less, here's what I want you to say:

“I appreciate your concern. If you would like to find the cheapest solution possible, I would encourage you to do so. However, I know how important getting this problem solved is to you, and sometimes it’s worth investing in the right solution because it will work the way you expect it to. We’re not the cheapest provider in town, but we promise to knock your socks off with…”

At the end, simply list the tangible and concrete things that make you the best in the industry.

If you found this article helpful to your business, spread the love and share it on Google + or Twitter. There may be other business owners out there that want to learn how to charge more for what they do. You never know.

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My name is Eddy Hood. I've coached over 500 businesses on how to become more profitable. I'm the Founder & CEO of Ignite Spot, and I have mad parallel parking skills.

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