People buy for many reasons other than price. If you think you need to have the lowest price to compete, then think again.
My studio is in the lower level of a commercial building on a busy corner in a small town. Upstairs there is a Starbucks® Coffee Shop. While it is a favorite place of mine, I have some friends who have never been there. They refuse to pay $2.50 for a cup of coffee that they can get for 75 cents at McDonalds or Dunkin’ Donuts.
Fortunately for Starbucks®, there are enough people in the world who will pay the price for gourmet coffee, atmosphere, status or whatever to make them a prosperous company. As a matter of fact, in the 10 years they have been upstairs, I don’t ever recall going in there when there wasn’t at least one person at the counter. The place is a goldmine.
What do you think the response would be if someone went in and complained that they charged too much and tried to negotiate the price downward?
This is a good lesson in pricing. There is always a supply of people who will pay a premium price for a quality product or for convenience.
Starbucks can demand a premium price because they deliver value and have established an identity of quality and made the “Starbucks® Experience” something that is sought after.
Concession stands at movie theatres and sports events demand and get exorbitant prices for their mediocre food because they have a captive audience.
Convenience stores can charge higher prices because people will pay for convenience.
Remember this when you are pricing your products and services. If you are selling a commodity product it’s hard to compete on anything but price. But as an information product producer or studio owner, your products are unique. If you’ve chosen your niche market well, you are filling a need that few others are meeting.
If your product saves your clients time, gives them important information that would be difficult to find on their own, or gives them the benefit of your or another expert’s experience – they should be willing to pay a premium price.
If you sell 10 products at $50. each, you’ll make more money than selling 20 of the same product at $25. ea even though your net sales in both cases is $500. Selling 10 products at the higher price will have ½ the product cost and ½ of the handling and paper processing costs.
The same is true for services. People will pay more if your service is more convenient to get to than the studio 10 miles away or in the next town.
Give your clients what they really want and most will be happy to pay for it.
