Get Customers to Pay a Premium Price"I want to charge $399 for my audiocassette album," a small publisher told me.
"But Nightingale-Conant also sells several audio albums on the same topic for $79," I replied. "What makes yours worth five times more than theirs?"
The answer most people would give is "because mine is better." Well, maybe it is. But "better" is a difficult proposition to sell through a direct mail package. So how can you charge a premium price to buyers to whom the greater quality of your product is not obvious? Here are seven ways to ask for and get the price you want:
1. Vertical niche. The more vertical your product, the higher the price you can charge. Your total audience will be smaller, but their need for a specific solution to their problem will help them rationalize paying your premium price. A "Selling Techniques" album priced at $399 is tough to promote, but you might get $399 for "Selling Techniques for the Automotive Aftermarket."
2. Supply and demand. It's always easier, especially when selling your services, to hold out for more money when demand for your service outweighs the supply. If you market to the point that you are generating more potential business opportunities than you can handle, you can raise your fees because you can afford to have some of these potential buyers who balk at the higher fees walk away. For service providers, the surest route to financial security is a full pipeline of leads.
3. Add value. Add value to your product or service until the buyer perceives that the price you are asking, however high, is a drop in the bucket compared with the value he is getting. One way to do so is to offer a premium that is inexpensive for you to source but has a high perceived value. Example: Ron Popeil gives away a set of steak knives when you buy his cooker on TV.
Mike Bell at Phillips Publishing suggests you give premiums whose total value is greater than the cost of the product. That way, even if the buyer doesn't love your product, he may keep it just to own the gifts he received with it.
4. Become a guru. Whether it's Tom Peters, Alan Dershowitz or Dr. Ruth, people can't get enough of gurus. Work to build your reputation and establish yourself as a guru - a leading expert - in your field. When you are a guru, people will pay a premium price for your seminars, speeches, videos, books, newsletters, software and products.
5. Demonstrate return on investment. Buyers are less reluctant to pay a high price when you show that they will get a rapid, significant return on their investment.
For instance, a direct mail package selling a $149 newsletter on employee hiring says, "Hiring the wrong person costs you three times their annual salary." The reader figures that if his average employee makes $50,000, and if the newsletter prevents even one hiring mistake, his ROI for a subscription is 3 X $50,000 = $150,000 divided by $149, or better than 1,000 to 1, which makes the $149 asking price an easy sell.
6. Unique system. Despite the glut of free stock tips and financial information on the Internet, a direct mail package from Agora Publishing successfully sold a $59-a-year newsletter with this headline, "Unlock Wall Street's Hidden Logic."
It offered the reader something he thought he couldn't get from all the free Web sites and e-mail newsletters he was offered: the secret to how the stock market really works. If the customer perceives he cannot get what you offer elsewhere, he will pay a premium price for it, provided the product offers benefits he desires.
7. Guarantee. A guarantee overcomes buyer resistance, including price resistance. When your product has a 30-day money-back guarantee, you can offer a "no-risk trial" or "risk-free 30-day subscription" rather than just say "buy my product." In essence, you are not asking the reader to buy anything; merely to try it - to accept your offer of examining it for a month in their home or office, with no risk or obligation.
To dramatize the low risk of a money-back offer, suggest to the reader that he postdate his check one month from today - then tell him you will hold his check for a full 30 days. If he asks for a refund, promise to return his uncashed check - or one of equal value - to him.