Pricing Strategy for More Sales and HUGE Profits

Let me ask you a crazy question.

Are you in business to make money?

If this is a crazy question to you...good! That means we're on the same page.

If you say, "No, I'm in business to do good." I would push back with, "You can't do much good if you don't make money."

Then I'd whip out my handy pocket Merriam Webster's dictionary and show you the textbook definition of an entrepreneur, which is defined as “a person who starts a business and is willing to risk loss in order to make money.”

But, I get it.

It's not all about money and frankly, I'm definitely more motivated by improving people's' lives and making the world a better place. After all, as an Enneagram 1, I am passion personified. I live by my values and am driven by my higher calling. But I've become an expert business consultant and copywriter because I also want to live well and provide well for my family of 7. And I get filled up by helping visionaries make more money to share their solutions with the world.

If you want to do the same, then you are going to have to seriously consider the pricing strategy of your products and services.

Here's the Problem...

If you set your prices too high they won’t buy. If you set your prices too low, you might sell yourself right out of business!

How do you know where to set your prices so that you maximize conversions AND profit potential?

That’s what we’re going to discuss.

Pricing Strategy Way Back in the Day

Back in our early 20s, we operated two offline, local service businesses. One was a carpet cleaning franchise and another was a janitorial cleaning franchise. I remember having a pricing meeting with Crystal (probably more of an argument), where I wanted to charge $60 for cleaning a room and she wanted to raise prices up to $66 a room.

We were spending over $2,000 a month in advertising and put the prices in the ads that were being mailed to residents in our targeted zip codes and I was afraid that we wouldn’t get response if we raised the prices. 

But, to Crystal’s point, if we didn’t raise prices, we wouldn’t make any money and would drive ourselves out of business. We went with her recommendation and raised prices!

And guess what? 

To my utter surprise, we sold more than ever! Raising our prices did NOT hurt sales in any way.

I remember Crystal suggesting that we raise the price of an ebook we were selling on a niche affiliate website that we had built in the early 2010s, from $17 to $37. 

We raised it and, again, I was shocked to see that our sales only increased without skipping a beat as our traffic on that site increased, with zero price resistance!   

In the first case of selling carpet cleaning services, pricing proved to be more elastic based on who we targeted. We targeted high-income, affluent zip codes, and sold more. We also noticed that customers who had found us through the newspaper, where we did full page flier inserts, tended to upsell easily to higher prices. 

So, these customers could be far more easily upsold from a $135 service order to $200, $300, and sometimes even $400 in services on that same visit! On the other hand, we noticed that our ValPak customers tended to be deal-seekers and were far more price resistant to our face-to-face upsell offers.  

What are some takeaways from these two cases?

1: Sell to the Affluent

Since affluent consumers have more financial margin, they are less price conscious and more value conscious, while low to middle class consumers are more cash-strapped, so they tend to be bargain shoppers and more concerned with buying low-priced goods and services rather than high-value goods and services.

You may say, “But Anthony, I am cash-strapped myself! How can I sell to the affluent when I’m not even affluent?” 

If that’s a concern for you, let me encourage you to remove your ego from the equation! Most multi-millionaires and billionaires weren’t born with silver spoons in their mouths. The Forbes list is filled with immigrants who arrived to America, penniless. 

Successful entrepreneurs, marketers, and salespeople rise to the top by focusing on solving problems for their target audience, not by focusing on their personal shortcomings. Focus more on your audience and the problems you can solve for them and less on yourself and you’ll sell a lot more!

2: Raise Prices the Smart Way

One of our past clients has pretty high-level visibility - keynote presentations at big industry conferences, great PR from major news outlets, a big following on social media, high-level contacts, and more. 

Still, all this enviable exposure failed to translate into sales conversions and profits on their courses and programs, which means they were financially starving. 

They hired us and we helped them generate over five-figures, where they were before generating just hundreds of dollars in sales, within just three days of the sales funnel being published online. Needless to say, we helped them generate hundreds of thousands of dollars within the first 12 months of systematically building their sales conversion and profit systems and now they are awash in cash. It was amazing to see.

The first thing we did was build a solid sales funnel and raise their prices. 

However, I don’t just wholesale recommend price hikes for every business and every situation, especially when crossing pricing thresholds. 

For instance, when we went from $60 to $66 per room of carpet cleaning, we didn’t experience any price resistance. This was an easy win for us - nobody even noticed. 

But if you’re at $997 trying to go to $1,597, two things happen.

• First, you just went from a 3-digit price to a 4-digit price, which adds to the sticker shock.
• Secondly, you just crossed the $1,000 threshold, which feels different in the psyche of buyers.

How it ‘feels’ is everything in selling because people buy emotionally - not just some of the time but all of the time. So I would give more caution in this pricing strategy.

I heard a business coach tell his coaching client that her $25,000 program was too cheap, and that she should raise the price to $50,000+!

Sometime after that recommendation, we saw this coach eliminate that ultra-high-ticket program almost completely and double down on their super-low ticket coaching program that the coach started leading herself - whereas she used to have other coaches leading that low-level program.

What happened?

My guess is that she got such great pushback at those super-high prices and the outcry was so fierce that she was forced to take back the reins of the business to save it in fear of partial or total collapse. You have to be extremely careful when you are taking high priced offers to even higher priced offers.

I don't know for sure but I guestimate that the coach that recommended this price hike didn't see any other way to add real value to the client other than suggesting that she raise her prices, which she did and experienced the wrath of her audience who felt price gouged. This scenario goes to show that while pricing is elastic in many instances, there's always conditions and caveats that must be considered.

However, if you wanted to take your course from $997 to $1,497, you could keep the core price at $997 and create an upsell offer that was an extra $500, to give people the opportunity to get the upgraded value. 

That’s a great way to test your higher prices when crossing a threshold (for example: from a 3-figure price to a 4-figure price).

3: Track the Performance of Lead Sources

You should track the performance of the various lead sources - media - you use in your marketing. You should be tracking leads that come in from Facebook Ads vs Youtube Ads. You should be tracking organic leads that came to your site from website SEO vs organic posting on LinkedIn, for instance.

Then you should study the buying trends to determine which leads are the most valuable to you so that you can double your marketing efforts on that media. 

Next Steps

As you can see, pricing strategy is a giant conversation. It’s a critical consideration in your business, that can determine whether you sink under an ocean of COGS (cost of goods sold) or swim in an ocean of Ben Franklins! 

That’s why you should consider our VIP Consulting service. With one or two video calls that will be recorded, and with our written recommendations and strategy, we can help you think through your pricing strategy so that you maximize both sales conversions and profit margins and build a high-profit, low-stress, lifestyle business.

Learn more about our VIP Consulting service and book your complimentary Discovery Call today.