Perhaps you’re reading this title, Why You Should Charge More, and you’re ready to scream, “Are you crazy? We already pay enough for taxes and mortgages. Why raise prices?”
But think about the last time you bought a ten pack of pens at the dollar store for less than $3. How much of an emotional impact did it have on you when you lost it? Now say you bought a Titanium, 18K limited edition gold pen for $24,000. You’d probably have it locked up somewhere for safekeeping. And every so often, you would take it out to sign only the most important of documents.
You might say, but who spends $24K on a pen? You could buy a car, or some fine clothes with that!
Point being, you will cherish the pen that costs you more money.
You invested a huge sum into it, so you will store it in a secure place and put some effort into its care.
The same can be said about your education. If you signed up for a free workshop, but you started to sneeze nonstop that day, you might miss the workshop because you should nurse that possible cold. Or you might attend the workshop and take some notes, then unintentionally misplace those notes somewhere. And with your busy schedule, it’s not worth the effort to turn the house upside down to find those notes again.
If, however, you paid $5000 for a course, you would make every effort to attend class, even if you work late that day, and it would mean having only three hours of sleep that night. You would take notes and then apply what you learned as soon as possible… otherwise… you’ve just wasted a chunk of cash. Especially if you had to take out a loan to pay for that course.
It’s like going to a buffet.
You want to get your money’s worth.
This concept is no different if you’re going into business for yourself. You might think, “I can’t charge that much. People can’t afford it. They already pay enough for a lot of other things.”
“My competitor charges less than me, so I should charge less than them to undercut their prices.”
“I’m very experienced, but my business is new, and I really need that first customer, which means I should offer more discounts!”
In the end, both you and your customer will suffer from the cheaper prices.
If you bring a lot of quality experience to your new business, or you know you’re selling a quality product, offering cheaper prices to build your customer base will only cause you frustration. You’ll feel undervalued.
Meanwhile, your customer will think that your product or service is only worth so little. More established businesses charge twice as much as you… so maybe your service is not as good. They won’t be thinking about how you offered a discount just to catch your first five customers.
For one pen.
Why should you charge your customers more?
Charge more because you offer value. And at a higher price, you customer will go out of his or her way to ensure that they value your product or service. They will take care of that $2K or $4K pen. They will immediately apply what they learn from your $5K course. They will make sure they do all the homework and not miss any classes whatsoever. You get the idea.
Be reasonable, however. If you’re an experienced educator who is trying to decide between charging $2K or $4K for your course, charge the higher amount if you truly have the expertise and can truly deliver the value to give your students their money’s worth. Don’t charge $4K just because the number sounds good.
Even expert wine tasters agree: if you pay more, you think you’re getting more value
Another example about expecting more value with a higher price tag is shown with wine tasting. Some people wonder if expert wine tasters can actually tell the difference between cheap wine and expensive wine.
In a test where an average bottle of wine was poured into two bottles, one with a superior label, and another with an ordinary label, “Forty experts said the wine with the fancy label was worth drinking, while only 12 said the cheap wine was.”
The takeaway from the wine test is that a perception of price raises our perception of value.
So, if you’re a business owner, and you know you have great value to offer in your service or product… don’t be afraid to charge more, particularly if it means you’re charging what you’re actually worth.