Q: At the start of the year, I always dream of raising prices, but after struggling through last year I’m thinking of going rogue and actually lowering them. Is this a wise way to attract and retain clients, or is there an alternative to consider?
A: Instead of lowering prices, focus on adding value to what you sell, whether it’s a service or a product. Most of us base our decisions on how to spend by asking, Is what I am buying the best?
Think about Apple’s success, says Ross Kimbarovsky, co-founder of crowdSPRING, an online design marketplace. Apple products are never the cheapest “but many customers, after playing with those products at an Apple store, believe those products offer the best value,” he says.
Or take Zappos, the online shoe giant that has taken customer service to new heights. “By reducing the hassle of buying shoes, buying from a vendor with complex return policies and other problems people encounter when buying shoes, Zappos has created a perception of value that makes it difficult for Zappos competitors to compete solely on price,” he says.
If you’re struggling, Kimbarovsky says, you may not be delivering enough value for the money you’re charging. “If people cared only about price, everyone would drive a Yugo, wear clothing bought at a garage sale, and listen to the radio.”
“Customers always appreciate value,” says Brett Reizen, CEO of Entertainment Benefits Group, which publishes online destination sites such as BestOfVegas.com and BestOfNewYork.com.
“Free parking, extra shopping hours, free gifts with purchase, or gift cards for future use are all examples of simple value-add opportunities,” Reizen says. “Try different things and expand on the campaigns that work. Your customers will share the success and you will witness the power of value-added product marketing.”
The amount of income entrepreneurs earn depends on the perceived value of what they offer, says Lena West, founder of a social media mastermind program for women entrepreneurs called the Influence Expansion Academy (InfluenceExpansion.com).
So if yours is a service business, West says to offer a bonus session as a value-based incentive. If you coach, add on a few helpful checklists, templates or scripts. If you’ve written articles about specific topics, package them together to create an e-book and give it away as a bonus to anyone who signs up for your next program, event or product.
The key, West says, is to “make your perceived value appear as high as possible, without stretching the truth about what your offering can do for a potential client.”
Finally, consider providing a mobile app for your product or service to increase value, says Michael Alter, CEO of SurePayroll, which offers mobile apps to more than 35,000 small businesses who use its payroll services, allowing both employers and employees remote access to payroll information.
“The app economy is big and growing,” Alter says. “It is almost essential today that customers can access your product or service from wherever they are, whenever they want. The attention given to the recent launch of the iPhone 5 gives us evidence this trend is only picking up steam.”