How to Keep Your Price Profitable
Regardless of the type of business you run, you must build value, communicate that you are doing things differently by providing even more service, and highlighting how unique your proposal is. People want to feel good and receive special treatment, and they want to be told about what you’re doing. There are endless ways in which you can add value without decreasing price and create more business for yourself and your company.
You must get creative.
I own apartment buildings, and when things tighten up, people shop more diligently. They want the most apartment for the least amount of rent. Because other apartment owners are feeling the pressure, they will start to reduce their rents, which puts downward pressure on my properties and their rental incomes. I don’t want to be compared with the apartment building down the street and be forced to drop my price. I am dominating, not competing.
Therefore, I look for creative ways to add value to my property so that we keep our occupancy high and don’t erode our revenues. I distinguish myself from my competition by offering unique value- added options. When you start thinking of how to solve problems creatively—without lowering prices—you will come up with great propositions.
We did this exact exercise with one of our properties when our competition was lowering prices. Since we wanted to maintain income, we knew we would have to come up with something to differentiate our offering. We knew, for instance, that people love their animals and that many apartment complexes don’t allow them. So we added fences to each of our downstairs units that allow our tenants to have dogs of any size. Because of this proposition, rents and occupancy at my building are now higher than at my competitors’ properties, and I raised the overall value of the building by increasing my cash flow. Because I was creative and found distinctive ways to build value, my apartment product stands out from the rest of those in the marketplace.
Let’s say that you own a salon and want to offer some kind of value-added proposition that makes it more attractive for people to spend money on getting their hair cut from you. You don’t want to drop the price, though, since this will only remind them how tight money is and possibly keep them from coming to see you. Instead, you call your clients and let them know about a new initiative:
“Hey, I wanted to call and tell you that we are now offering wine and cheese in my shop for anyone who comes in to get a haircut in the next two weeks. It’s a lot of fun, and you’re past due for a cut anyway, aren’t you? We’ll also be giving out free head and neck massages—so come on in for some relaxation time!”
The cost of wine and cheese is almost nothing compared with the income you will generate from this creative value-added thinking. All you have to do is make the call, bring the wine and cheese from your house, and take an extra five minutes giving a head massage when you shampoo the clients’ hair.
Make creative, value-added offers that further enhance how well your product is perceived. Don’t reduce the price, but do sweeten your proposal by building value.
Don’t make an announcement to your customers and prospects that you are “holding the line” on prices. No one will do business with you because you showed sympathy for them. Add value to the same services that you have sold in the past by bringing extra attention to the things your product or service does.
Related article: Selling Is As Critical As Oxygen
Get even more creative than you have before and strongly emphasize how you and your company are going to support, service, and stand behind your products, services, and proposals. This doesn’t mean you give anything away nor should it be confused with using the second-sale strategy. However, it does mean that you’ll need to highlight the other services that are included with your offer that don’t cost the company or your client money.
The more unique you can make the proposition appear, the more success you will have in overcoming people’s tendency to delay making a choice. The value-added proposition should increase revenue without costing your company any additional money.
Promote and show excitement about your products, services, company, and yourself in a manner that adds value to each of these things and makes them unique in the market.
Hope that helps,