TT#035 - Only read this if you're interested in raising your prices...Nov 01, 2022
The easiest way to make more money as a service-based solopreneur is to raise your prices.
For many of you, that just takes having the confidence to quote higher rates for the work you're doing now. I give this advice frequently in my free strategy sessions. And I can't tell you how many thank you notes I've gotten from people that never bought anything from me, but took this advice and started making more money.
But what if your services are already competitively priced? How can you make changes to your service, offer, or positioning and start charging more?
It starts with understanding why people pay more for things. Then you can rethink how to market, sell, and deliver your services to add more value.
So, this week I'm sharing 6 reasons people will pay higher prices. And I'm hoping you can incorporate them to start earning more money in your business.
1. Specialized Knowledge
With almost every service, specialists get paid more than generalists.
Who do you think charges more:
- A doctor who specializes in working with executives, or the doc-in-the-box at CVS?
- A Mercedes dealership service center or a general mechanic who works on everything?
- A consultant who fixes large-donor programs for nonprofits, or a consultant who helps anyone and everyone "grow sales"?
The more you position yourself as a specialist, the more authority you have. Even better, your experience with past clients will be more relevant to new clients.
That translates into a higher confidence that you can solve a specific problem. And people will pay more for the confidence that brings.
Consider specializing by industry, problem you solve, platform you work on, person you work with, or something else to boost credibility and earning power.
2. Faster Results
Generally speaking people are impatient. And I'm not just projecting my own weaknesses here.
Would you rather get your car back from a mechanic in 1 hour or 1 week? Would you rather lose weight in 3 months or 3 years? Would you rather fix your customer retention problem in 60 days or 6 months?
And if any of these were really important to you, would you pay more to get that solution faster?
The data on buying psychology is a resounding yes. In fact, it's a business model for some companies.
For example, Clear is a private company that helps people expedite the security check-in process at many airports. LensCrafters was built on the idea of providing people prescription glasses in an hour or less. FedEx was founded on the concept of faster time-sensitive shipments.
If you can deliver the same results faster than anyone else, there's a good chance you can get paid more to do it.
3. Less Risk
Quite often, your biggest competitor isn't another service-provider. It's skepticism.
Potential clients are usually wondering, "Can this person really do what they say they're going to do?"
Think about it.
If you’re a sales consultant that can fix a sales team in decline, a marketer that can generate more demand, or a recruiter than can find a perfect candidate for a role... don't your services actually pay for themselves?
This is true for most advising, consulting, or coaching services. Your potential clients already know that. What they don't know is whether you will deliver or not.
That's why reducing their perceived risk will pay massive dividends. And why many companies leverage the shit out of credibility boosters like JD Power awards, BBB Accreditation, and customer reviews.
Lower the perceived risk and raise the perceived value.
4. Raise Status
One of the strongest motivations to buy something is believing it will raise our status.
That's the primary reason luxury brands exist. And why people will buy virtually identical products at dramatically different prices based on the logo it's sporting.
Jordans won't make you jump higher, but millions of people still pay way more for them than shoes that are perfectly fine - but not as cool. The Infiniti QX80 is damn near identical to the Nissan Armada, but people will still pay $20,000+ more for the former.
This is true with services, too.
Consider how much a coaching session with Tony Robbins will run you. Or how much it'd be to if Richard Branson charged to offer business advice. This is partly because their celebrity status changes how you perceive their expertise. But it's also because association with their brand would raise your status.
When you can raise your status as an exclusive service provider, you can charge more for it.
5. Fear of Missing Out (FoMO)
When demand exceeds supply, prices go up.
This simple principle drives behavior just about everywhere you look. From fashion trends to ticket prices at events. From autographed baseball cards to handmade furniture. From hotel prices to going out of business sales.
This all stems from the idea that the harder something is to get, the more we want it.
That's why marketing strategies designed to create scarcity and urgency work so well.
Scarcity and urgency both reduce supply. Scarcity through limiting availability, and urgency through deadlines that eliminate or change it.
As counterintuitive as it may seem, when you need to land more clients it may help to make your service harder to get.
6. Make Difficult Easy
The more complexity you absorb for your clients, the more they'll be willing to pay you.
Which is another way to say that the easier you make it to solve a complicated problem, the more money you’ll make. You can see this play out in marketplaces everywhere.
One example is Carvana, which allows you to buy a car online at a decent price and have it delivered to your house. Could you find a slightly cheaper price if you drove around town and haggled with used car salespeople? Sure, but that doesn't sound like much fun, does it?
It's important to remember that the more difficult something is to begin with, the more value there is in making it easy. That's why a new website doesn’t cost as much as a new marketing strategy.
People will pay good money to solve difficult problems. They'll pay more to get those results with less effort.
You don't have to pick just one of these. And some of these things are closely related to each other. More than anything, the questions you want to answer are: What are my clients willing to pay more for? And how can I offer that?
I’m on a mission to help 10,000 entrepreneurs build a business that helps them unlock the lifestyle they truly want.
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