Getting People to Pay More for Your Product
Everybody who sells a product or service knows that if they can keep their costs the same, and they can get just as many people to buy their product or service, then by increasing price you will increase profits. The trouble is that in every simple economics class you learn about the supply and demand curves. If you increase price, then you decrease the number of people who are willing to buy from you at that price. Still, there are things that you can do in order to sell just as much product for a higher price, you just have to work a little bit harder. Here are some tips how:
1. Make it FREE - Now I don't mean give it away. I mean that make it appear that they are saving so much money by purchasing for you that it isn't costing them anything. Let's say it's a hybrid car for example. Would you rather pay $10,000 for a car that you are going to have to fuel up for $1,000 per year over five years, or $12,000 for a car that you NEVER have to fuel? Right, you are charging $2,000 more in order to give the consumer a FREE $3,000 in saved fuel costs.
2. Increase the Value - Some people want the bare bones, and some people will pay more for the finer things in life. One way to increase the price of your product is to add something of value that consumers are actually looking for. Let's take a look at the car example again. You can sell a bare bones truck for $2,000, but if you put in an air conditioner that costs you $200 you can sell it for $2,500. Most people are willing to pay for the air conditioner, so by adding that value you just made yourself more profits. It's not just addition functions or products thrown in, but it also goes for higher quality and increased durability.
3. Demonstrate a Return on Investment - This is even more important when you are dealing with a business-to-business transaction, but it applies to consumers as well. Let's say you are comparing two products, one shows that it can increase your business by 10% and the other by 20%, you obviously are going to go with the one that increases your bottom line by the bigger amounts.
4. Branding - This is tough and not something I really recommend. Research shows that it costs a LOT of money to establish a brand in a market place. If I'm going shopping for medicine I know I also fall for the brand name trap over the generics, but I'll give myself some credit and say I want to maximize the placebo effect. =)
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