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Using a Higher Price as a Tempation not a Turn Off

Lock this concept into your mind: The higher the price, the higher the perceived value and quality. With that higher perceived value comes the temptation, for those who can afford either choice, to step up the quality that price promises. A higher price creates the perception which in turn creates the satisfaction in the buyer once paid.

The Case of Gibson Guitars
I was privileged to have been raised in Kalamazoo, MI, the home of Gibson Guitar. I have never played the guitar but over the years it has been interesting watching the company grow and develop. They made legendary guitars, pioneered the electric guitar as in the famous Les Paul Custom. Watching one of my favorite guitarist ever, Eric Clapton, I notice how often he used a Gibson guitar.
With the growth of the industry in the 60's and 70's came the huge pressures of competition and soon the Japanese invaded the market in much the same way they did the auto market. High quality, defect free and inexpensive instruments.
Gibson's response was so typical. In order to compete they felt they needed to cut their prices figuring that they could make up through volume what they were loosing in market share. What actually happened was the opposite. Cutting prices resulted in a drastic decrease in volume. The classic laws of "supply and demand" just did not work. Why? Gibson cheapened their perceived value which only a higher price can command.
With the survival of the company now at stake they began to smell the coffee, higher priced coffee. They increased their pricing. Gradually, volume began to return and the profits with them. Over the years the more they increased the price the more they sold.
If you are a musician with a "starter kit" band or budget you may well only be able to afford the cheaper instrument. Yet all the while you know that when you finally "make it" and step into a higher level professionally, you will also step up and get a Gibson. It's a sign of success.

Higher Price = Perceived Value = Greater Prestige = Self Satisfaction
My Fossil watch tells time just as accurately as any Rolex. Why spend $3,000 for a Rolex when a Fossil or Seiko will do exactly the same thing for under $100? Because for those who have the money, higher price is a temptation not a turn off. What makes an Acura four door sedan worth $5,000 more than a Honda four door sedan built on the same chassis? Successful people want to be seen and perceived as successful. Owning an Acura gives them that. Being seen driving only a Honda is not good enough.
Customers that focus on price alone and purchase your services on price alone will drop you just as fast as they hired you and dropped that last guy. These are not the customers you want. You should simply avoid the discount buyer. They will give you a 3 out of 10 in a customer satisfaction survey anyway. Discount customers do what they always do, shop for discounts and a lower price than you have. They will then use that competitor to beat you up or turn their back on you. Discount customers will rarely refer business to you, are very poor judges of quality and will demand more from you in customer service time. You can not build a top quality business on them.

Start with yourself and adjust your own mental attitude
One of the first things that needs to be adjusted is your own frame of mind. If you don't believe it yourself you will probably never be able to sell it. Stop being afraid of charging more than the next guy, assuming you both aren't selling the exact same widget. Even if you are, what is your "added value"?
Once you've mentally worked it through and adjusted your confidence level, approach your next sales call in reverse mode to your usual. The usual may be silent prayer that they will buy something from you.

Potential Clients should have to "Qualify" to Buy from You!
Yes, you read that right. Reverse the roles by interviewing them on your initial consultative interview. Put yourself in the mental frame of mind to be actually deciding if you want to work with them or not. You might surprise yourself by actually refusing to work with some of them because you can see what was coming. In business consulting, philosophies have to match at a certain level. If the clients starts working you on price a bit hard, demanding option A for my option C price, be ready to walk away from the table and dust off your shoes. If you cheapen the price, you will cheapen your product and it's perceived value. What you offer is a top quality product and what you truly believe is one of the best values on the market. Of this, if you have few doubts, it will be seen and read by your potential customer.
When price becomes the chief obstacle you also have to realize you may have messed up at another level. It's not that you should charge less, you just need to sell better. If the value is presented, the price will always fall into line.

Consider Starbucks
So, the next time you are standing in line at Starbucks and paying three times as much for that cup of java as you know you should, think about why you are doing it. The experience? The aroma? The perceived value? If they dropped their prices by half, would you still be as excited about stepping up to it?
What are your prices saying about you and your company? If you are scurrying to just make sure you are the lowest price in your market you may well be sowing the seeds of ultimate failure. Position ourself and your image. Brand and image must be massaged for success. Start with raising prices.

About the Author

John Clark is the President of Wow Web Works, a web design and business marketing company in Portage, MI. You can see many more business ideas at the company website, Wow Web Works or their blog.

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