In previous articles I’ve shared with you some ideas on how to get more prospects and turn more of them into customers. But increasing profits doesn’t stop there. The real opportunity lies in how you handle your EXISTING customers. What’s great about getting more revenue from existing customers is you don’t have to spend more money on prospecting. And here’s some good news- ethically harvesting more profits from your existing customers is easier than you think.
One way to get more profits from existing customers is by raising your prices. YIKES…I know but stay with me while I explain.
If you’re like many businesses, you may think you can’t increase prices for a variety of reasons, such as competition and losing market share. Regardless of why you think you can’t increase prices, keep an open mind since what I have to share may enable you to increase prices without losing customers.
There are many price increase strategies. One of them involves employing what I call “Psychologically Acceptable Pricing™,” a term I created that has been quite successful for many businesses. What I mean by Psychologically Acceptable Pricing™ is price increases that, because of how they are psychologically communicated and structured, the customer accepts as not a higher price.
One way to psychologically increase pricing is using the most psychologically acceptable numbers. As a general rule:
Any price that ends with a “0” (i.e. $90,) can often be raised to 1, 2, 3, or 4 (e.g. $94) and still be perceived as “90 something”
Any price that ends with a 5, 6 (i.e. $95,) can often be raised to a 7 or 8 (e.g. $97, $98) and still be perceived as “mid 90’s”
- Using a price that ends with a “7” tends to be rounded down in the consumer’s mind versus a “9” tends to by rounded up ($99 is perceived as $100).
These pricing guidelines are meant to be general rules. You will need to adjust these depending on your industry, product and services, and your competitive environment. The ACTUAL PRICES that represent psychologically acceptable prices will change over time. Therefore, I want you to learn and get THE PRINCIPLE here so you can apply it at any time in the future. It’s a powerful distinction that, when you see how those pennies and dollars add up, you’re going to be motivated to really master the skill.
Will these pricing strategies work for you? The only way to know is to test them. Testing in marketing is another concept I teach. Why not pick one or more products, change the numbers the items are priced at and track the results for each item?
Scott
PS Are you having problems with implementation of new marketing ideas you’ve been learning from me and others? If so, get a Free Implementation Checkup by clicking here.
