How to Sell Your Premium Priced Products
This weekend, I had my niece over for diner. She has a natural ability to tell stories in pictures and I was totally immersed in one of her stories until my marketing mind interrupted to highlight the significance of this particular story. She’s a post graduate student and shared that she now goes to the gym, L.A Fitness. Before enrolling there she had checked out another gym that would have suited her student budget just fine, but the place was not up to standard, L.A. Fitness standard at least, which offered free smoothies, sauna and state of the art fitness equipment for almost twice the price. She was obviously very enticed by these extras.
I am by no means suggesting that you pad your service with costly extras to get people to pay more, the lesson here is that customers will pay more if they feel like they are getting more value.
The challenge for many business owners is the constant price negotiation with customers. Sometimes you may even start negotiating when the customer hasn’t even brought it up. Naturally, customers want to protect their own interest and pay the price suitable for them unless… You can justify it.
You know you have an amazing and valuable product (I hope). You’ve taken the time to curate the best options for your customers and as a small business owner, you can’t afford to charge those rock bottom prices some of your competitors are charging. Your cost of goods is too high, volume and margins are too low to be playing the price game. Given that you understand your target audience and how much they can actually afford to spend (earning power, etc.), here are three ways you can get customers to pay what you are asking:
Understand Buyer Motives
Why do you think people really buy? There are two main reasons both have nothing to do with price:
- To solve a problem, to not feel pain,
- To feel pleasure or some form of personal gratification/self -esteem.
My niece has the goal of keeping fit. Both gyms are able to let her accomplish this yet she chose the one that not only solves her problem of trying to stay fit but also one that gives her lots of pleasure like a great looking environment, a sauna and healthy smoothies. The gym that has positioned itself as a “Fitness and Health Club”. If price was the only reason people buy, she would be at that other gym for half the price. People want value and they want to understand how that value will benefit them. It’s not always about price, but finding a way to offer a solution that will cause the customer less pain than your competitors and bring them some more pleasure or personal gratification that comes from being associated with your brand.
It’s why we buy coffee for $4 at Starbucks instead of $1 at regular coffee shop and on days when you want to take it up a notch you’ll probably spend double the Starbucks price for an even more chic cafè (physical space matters be it the look of your website or store).
Uncover True Costs
Most customers don’t understand the true cost of a purchase because they don’t understand the key factors that need to be evaluated. So instead, they tend to feel comfortable discussing the one thing they think they understand, which is price. Your competitor is charging less, why should they buy from you instead?
In this case, this is not the time to start padding your product with more features and extras, you must uncover the true cost of not buying from you. For example, if a customer is making the decision to buy, let’s say a laptop. One cost $500 and the other $1000, how do you get the customer to pay your higher price? You would need to focus on why buying at the higher priced laptop is the “sensible decision” and will save the customer time and money in the long run.
The $500 laptop may have known flaws like lower battery life which means inconvenience and more energy consumption. Focus on showing the customer how disruptive it can be to run out of battery life in the middle of important meetings or events and how your product make the difference. Plus, having to charge this laptop every 3 hours is eating into their energy bill (perhaps something they never considered). Most customers do not see the long term pain of a particular product or service. That is where understanding your market and competitor’s products so well, will become an asset. It is your duty to help them see why you are offering the best solution and the true cost of buying a cheaper item.
Premium brands ensure that all aspects of their service or product delivery are memorable experiences for their customers. They find ways to truly add value so that price is never a debate. Think about what is valuable to your target audience and how you can add value to them from a service perspective to make them say, “yes, this is and was worth it and I would recommend it.”
Brands that charge more ensure that they place a high emphasis on service delivery. Whether this is done by offering personal contact, convenience, product packaging, great complaints handling system and highly trained staff, all touch points are on point. Every experience with the customer feels valuable to the customer. It’s very important to note that you shouldn’t just create value-added features that no one cares about and expect to charge a higher price. Your customers, those ideal personas need to feel like it is worth it.
To sell at a higher price you need to understand your competitive advantage (why your product is a much better investment than your competitors), understand the true costs to your customer of not buying from you, and last but definitely not least, deliver an exceptional service to back up your amazing products and services. In the end, your customer must feel like it is or was worth it.