10 Effective Ways to Get Customers to Pay More

Some companies just have the whole "pricing" thing down, don’t they.  Let’s just think about those brands where price just doesn’t seem to be an issue:

• - Starbucks.  We don’t think twice about slapping down $3.50 for an 8 oz. beverage that costs no more than $.10 including the cup.  You can argue that it’s all about the Starbucks experience.  The funny part is that I caught myself paying that ridiculous price and going through the Drive-Thru!  What’s up with that?!
• Lexus, Mercedes, BMW, etc.  People who drive these cars aren’t really buying transportation.  They are not asking about price or complaining about a couple thousand dollars here or there.  They may do that for other products – like maybe Starbucks   – but not when it comes to their cars.

You get the picture.  There are products, services, companies and brands where price just doesn’t seem to be that much of an issue.

But what about the rest of us who don’t have multi million dollar marketing and brand building budgets?

Price is only an issue if you make it one.  The way you make price an issue is by NOT understanding what the customer is really buying.  It’s the shovel and the hole analogy.  A customer wants a hole, so he goes and buys a shovel.  So what is the store selling?  Shovels or holes?  I bet the store that sells quick, easy, clean holes is making more money.

1. Find out what your ideal customer really wants.  Wants are different than needs.  We pay more for wants than we do for needs.  If I want to get my e-mail in 30 seconds instead of 5 minutes – then I might pay $300 for a special software or an additional feature on my computer.
2. Sell what the customer is buying.  For inspiration, look to the luxury markets, McDonald’s, and all your favorite brands.  Think about the last time you happily paid more than something was "worth" (like the Starbucks) what were you buying?  A treat?  A no-mess, quick and easy dinner? A car that tells anyone who cares that you’ve made it?  The key question here is what is the "opportunity cost?"  What does is cost your customer NOT to do this?  What is your customer’s next best alternative?  What does that alternative cost them or mean to them?
3. Be there when they are ready to buy.  Sometimes just being there is good enough.  Giving customers fast, care-free service done right that they don’t have to think about or follow-up on is worth more than you can imagine.  Think of it as the difference between first class and coach.  Sometimes your customer is willing to pay more for having ACCESS to you, your product or service.
4. Focus on the experience.  No matter how the buying process happens, it’s all about the experience that your customer has with you.  Map out the quality of their experience from the moment they think about needing what you have, to the shopping, buying, delivery and enjoyment of your offering.
5. Build a community.  People want to be part of a community of users.  They may not always be active in the community, but they want to belong when they are ready to belong, or share their experiences with your offering. There are so many tools you can use to do this.  Start with e-mail, then blogging, newsletters, sales letters, discussion groups and forums and events.
6. Adjust your business model.  Look at a variety of ways to sell what you’re offering.  If you’re selling by the piece, think about bundling.  If you’re bundling, think about a la carte options.  Can you sell your customers something monthly or seasonally?  Take a look at other business models and see how you can make them work for you.
7. Take something away or add something If you are offering several products and services as part of a package, think about taking something away and adjusting the price slightly downward.  Or think about adding something which doesn’t cost a lot, but brings a lot of value, then adjust the price upward.
8. Quantify improvement value.  All this means is to hang some dollar bills on the improvement your customer will experience after their experience with you and your offer.  I paid more for high-end springs and shocks on my husband’s truck and he was able to double the load that he could carry in the back. That saved him about an hour per trip.  Often, an upfront investment in equipment or research can save thousands of dollars on an on-going basis.  Do that math and you’ll be amazed.
9. Benchmark your price against other purchases.  Value is funny.  While we all like to complain about the price of gas at $2.75 per gallon.  We don’t think twice about paying $1.00 for 16 oz. of water.  So which is more valuable?  When we think about price we often compare like expenses.  But amazing things happen when you start comparing one expense with another.  Public radio stations are really good at this.  They justify a $365 per year donation by saying, "it’s a penny per day, isn’t your news worth more than that to you?"
10. Explain tradeoffs. Penny wise and pound foolish is a saying for a reason – we all do it all the time.  We get too wrapped up in the pennies saved and lose track and perspective of what we are trading off in the process.  Your customers are no different.  Be sure that you don’t have an offer at a given price and then reduce the price without CHANGING the offer.  When you reduce the price, something must GO AWAY.  I like to tell my customers that they can pay anything they like, they will just get different products and services and different results.  That’s how the world works. 

Pricing is the stepchild of the marketing mix.  It’s one of those unpleasant topics.  Customers want the results without the cost.  Providers want the money without the justification.  Or worse, providers give margins away because they want the customer to say yes.

What are some of YOUR strategies for pricing for profit?