How To Add Value Without Increasing Your Costs
A s long as you provide excellent value – people will flock to your business and pay handsomely for the privilege.
Business owners often make the mistake of thinking that price is the main issue in the mind of their prospects or customers. But what they’re missing is this: if everyone is viewed by the prospect as ‘the same’ – i.e. companies don’t take the time or effort to differentiate themselves from others and add considerable value – the only way the prospect can choose is based on price.
But when you add so much value to the business – substantially more than your competitors – you leave the prospect with little choice. And often they’ll pay much more than anyone else. Why? Because you’ve added so much value!
Also, when a customer decides to leave and turn to one of your competitors, they’ll often say, ‘Your price/fees are too high.’ What they’re really saying is this… ‘Your products or services are not worth what you charge. I’m just not getting value for money!’
There’s a big difference! You’ll be amazed at what you can charge when you start adding value.
Here’s a great example…
One of our clients was a professional wedding and portrait photographer (he’s now retired at 48 and living in Dubai). When he first met us, he was charging between $350 and $450 for a wedding. After just 12 months, he charged a minimum of $2,995 right up to $4,995 for his weddings. All we did was add value to his services.
The diagrams to the right show the effect of value on price and, more importantly, how you can increase value without spending a single penny…
1. As you can see below, we have two similar but competing products – product A and product B. Let’s say that product A is a competitor’s product and product B is YOUR product…
2. Let’s assume that each product has a similar price and value attached to it. So at the moment point 1 (shown on the first graph on page 3) is the maximum value of each product.
So if we look at pricing either product, we are unlikely to get many sales if we price the products above point 1 because the perceived value is lower than the price.
But if we set the price at, say, point 2, we’d get more sales because now there is what we call ‘added value’ – the difference between the value (point 1) and the price (point 2). The shaded area represents the added value. Agreed?
So company and product A may take the view it wants to compete heavily on price and therefore reduces its prices even further to, say, point Z in an effort to capture more customers.
Picture6That represents the situation with every business and demonstrates the maximum price they can charge – agreed? Okay, so how can we make the price more ELASTIC? In other words, how can we increase the price range we can charge customers?
3. That’s right – we add more value. How do you think we can add more value WITHOUT changing your business or even the product or service? Quite simply, we add the following Marketing Assets…
- Irresistible Offer.
- Guarantee/Risk Reversal.
- Sales Barrier Demolition.
The other element we add to significantly increase value is called ‘Moments Of Truth’. This is a large topic in itself and we will discuss it at length in another month’s issue.
Can you see what we’re doing? We’re adding value over and above what the competition are doing. Now look at the price elasticity (3 – see diagram below). You could price your product right up to point 4 now. But would you get many sales at point 4? No, you wouldn’t because at that point there’s no added value.
But what if you priced your product at point 5 – would you get many sales? Yes, you would. That’s the power of adding value and creating price elasticity.
4. So what about a price-sensitive market? We’re going to explain in a later issue why in most cases a price-sensitive market isn’t actually the case.
But let’s say at the moment you don’t want to increase your prices because you believe you’re in a price-sensitive market (or you’re nervous about doing it).
So all you do is keep the price the same. But now, after adding all this value, who do you think gets most of the sales?
That’s right – YOU do. Why? Because point 6 (see below) represents the added value product B has over product A.
Picture4So that’s how you can increase your prices or maintain your existing prices and STILL generate more customers and sales just by using the Marketing Assets (plus target market and Moments Of Truth) to add value to your business – and all done for absolutely ZERO cost!
Hopefully, this further explains to you the impact the Marketing Assets can have on your business.
Not only do they help you improve every aspect of your business growth and marketing, they also automatically build value in your products or services.
You owe it to yourself, and all the hard work you’ve put into your business, to start reaping the rewards you deserve.
Now is the time to start using the Marketing Assets to start leveraging your sales and profits and once and for all leapfrog the competition.
Base your pricing on value rather than on price and you’ll be surprised how much more money you’ll make!