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This is a big mistake I made in the beginning that I now feel lost money and wasted my time. I've also seen a lot of other entrepreneurs make the same mistake.
That mistake would be low balling my prices or trying to determine what my price should be. In actuality you should let the market determine those things. When I first started my business my prices were extremely low for a few reasons.
- To attract customers (obviously)
- I thought the average price of what my industry did was overpriced
- I did not think my company was worth the premium prices. "I'm a new business without a lot of the things these other established businesses have. It would feel wrong to charge premium prices"
- "I can't charge that much! No one would pay that"
The biggest issue was that I was trying to validate or determine the value of my company to myself. It does not matter what I think my service should sell for. It does not matter what I "think" people are willing to pay for my service. It does not matter that I "feel" bad charging high prices. Just like @MJ DeMarco says in his book the market does not care what you think, feel or want.
Never base prices off of what you "think" the customers will pay. For example lets say you normally charge $50 for your product. You are barely making any money because you are charging so low. You want to start charging $100 but you don't "think" your customers would pay that so you keep it at $50.
That is the wrong answer in my opinion. The correct answer would be to sell it at $100 and see how the market responds and then adjust.
Many new business owners make the mistake of playing the price game. Don't make the mistake of trying to be the most affordable to get sales. You'll waste your time and lose money. If you are barely making any money it'll be very hard to grow your new business. I started charging premium prices and people pay it. Whether I think people will or wont. They do because that's what the market is willing to pay. I've lost sales because my prices were too high. But that doesn't matter because one sale at premium prices is worth multiple "affordable" sales.
When you are trying to sell someone on your company you should be explaining why your company is worth more than the other companies. Focus on the differences. Tell them why your company is the best for them. Make them know that whenever they call your company they are going to have a quality and professional team complete the job on time every single time. Show the customer how you provide them more value than the competition. Show them how great your customer service is. Show them exactly why you are worth what you are. If the product you sell is great then the customers will see it for themselves.
I used to be anxious when I met with customers. I was not used to asking people for large sums of money. Now when I approach a customer I am thinking to myself "my service is the best and we are worth every cent because XYZ" I am confident in my company. I know exactly what makes my service different. I know exactly what makes my company better. I know exactly why I can look a customer in the eye and tell him it will be $4k.
If you cant explain to yourself why your product or service is different/better than all the other companies you need to figure out real quick. If you don't then I do not believe you will ever be successful in business. You need to believe in your product. If I did not believe in the quality of my company and the service I sell I could never sell it. If I did not believe in the service I sell, how can I sell it to other people?
It's also important to point out that you shouldn't even have to work hard to sell to someone. Your product or service should provide so much value to the customer that they already want it. If you are "forcing" a sale on someone than odds are you are selling to the wrong segment of people, or your product isn't providing enough value. Here is my view on it. The product sells itself, I am just there to sign paperwork.
Thanks for reading!
That mistake would be low balling my prices or trying to determine what my price should be. In actuality you should let the market determine those things. When I first started my business my prices were extremely low for a few reasons.
- To attract customers (obviously)
- I thought the average price of what my industry did was overpriced
- I did not think my company was worth the premium prices. "I'm a new business without a lot of the things these other established businesses have. It would feel wrong to charge premium prices"
- "I can't charge that much! No one would pay that"
The biggest issue was that I was trying to validate or determine the value of my company to myself. It does not matter what I think my service should sell for. It does not matter what I "think" people are willing to pay for my service. It does not matter that I "feel" bad charging high prices. Just like @MJ DeMarco says in his book the market does not care what you think, feel or want.
Never base prices off of what you "think" the customers will pay. For example lets say you normally charge $50 for your product. You are barely making any money because you are charging so low. You want to start charging $100 but you don't "think" your customers would pay that so you keep it at $50.
That is the wrong answer in my opinion. The correct answer would be to sell it at $100 and see how the market responds and then adjust.
Many new business owners make the mistake of playing the price game. Don't make the mistake of trying to be the most affordable to get sales. You'll waste your time and lose money. If you are barely making any money it'll be very hard to grow your new business. I started charging premium prices and people pay it. Whether I think people will or wont. They do because that's what the market is willing to pay. I've lost sales because my prices were too high. But that doesn't matter because one sale at premium prices is worth multiple "affordable" sales.
When you are trying to sell someone on your company you should be explaining why your company is worth more than the other companies. Focus on the differences. Tell them why your company is the best for them. Make them know that whenever they call your company they are going to have a quality and professional team complete the job on time every single time. Show the customer how you provide them more value than the competition. Show them how great your customer service is. Show them exactly why you are worth what you are. If the product you sell is great then the customers will see it for themselves.
I used to be anxious when I met with customers. I was not used to asking people for large sums of money. Now when I approach a customer I am thinking to myself "my service is the best and we are worth every cent because XYZ" I am confident in my company. I know exactly what makes my service different. I know exactly what makes my company better. I know exactly why I can look a customer in the eye and tell him it will be $4k.
If you cant explain to yourself why your product or service is different/better than all the other companies you need to figure out real quick. If you don't then I do not believe you will ever be successful in business. You need to believe in your product. If I did not believe in the quality of my company and the service I sell I could never sell it. If I did not believe in the service I sell, how can I sell it to other people?
It's also important to point out that you shouldn't even have to work hard to sell to someone. Your product or service should provide so much value to the customer that they already want it. If you are "forcing" a sale on someone than odds are you are selling to the wrong segment of people, or your product isn't providing enough value. Here is my view on it. The product sells itself, I am just there to sign paperwork.
Thanks for reading!
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