Thursday, 10 October 2013

"Don't run away from price." - Dan Kennedy

If you're not familiar with Dan Kennedy, I advise you to do a search on the internet, your favorite MP3 search engine, or a well-known video sharing site, and prepare yourself for a lot of research.

The man is a genius, and even if he admits to borrowing a lot of his wisdom from the observation of the way that markets work, and the marketing that professionals in those markets do, it take a special kind of intelligence to join up all the dots.

That's how he can charge upwards of $1,800 per day. Per day. Upwards of.

One of my favorite quotes from Dan Kennedy is "Don't run away from price." Even in a recession, you should never try to be the cheapest, because there'll always be someone cheaper. The reason why is very interesting.

Why People Get Hung Up On Price

One reason is simple enough - to appeal to as many people as possible. Your potential market may well feel bigger if you're cheaper, as more people ought to be able to afford your goods or services.

That's only true if everyone in that market is shopping on price, which isn't true. Very few people in that target market shop on price, and those people will be the ones that cause the most problems.

There's a saying - if you pay peanuts you get monkeys. You can flip that around and say - if you charge peanuts, you'll get monkeys.

Two Ways To Charge More

That's the first way to charge more. Just do it. You'll become attractive to a market that expects to pay a high price, simply because they have the money to spend. They're also the clients who are less likely to cause problems, as long as you deliver to the value of what you are charging.

That deals with the willingness to spend money. But you still have to make the product or service attractive.

Doing that requires that you are different from the other offerings on the market - usually at all levels. In other words, you need to differentiate from the cheaper products as well as the same-priced or more expensive products.

This means having a good USP (unique selling point) or EVP (extra value proposition.)

That USP needs to fulfill a need or (better) solve a problem, offer a guarantee, with a specific limit (time, cost, etc.) This was made famous by Domino's Pizza, who nailed it with their slogan offering freshly cooked pizza, delivered, inside 30 minutes, backed up with the guarantee that if they failed, you got to eat it for free.

Any mention of price? No. They don't need to, because their USP is so strong and specific that they can charge pretty much whatever they want, within reason, and will only attract the least painful customers.

So, work on these three principles - not getting hung up on price, raising prices, and developing a great USP - and you'll build a better business.

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