Aim Higher than You Think

I give you this heading slightly tongue in cheek. But the truth is that most people worry about how low they should start, rather than how high they should aim. 'Aim higher and you will come out better' - all the trainers say that. 'How much higher?' is the age-old question. 'Test it' is the answer. You will never know whether you could get more until you have asked for more.

People often ask me, 'How much should I charge for my time, my product, my service?' There are some simple tests you can run, to check the impact of price. You compare with other similar offerings in your market, you ask yourself about your own confidence in your pricing levels. Ask yourself if there is some way in which you can package your product or service to make it appear in a different league.

You can test with direct mail. Send out an offer with tests on, say, four different prices. Monitor the response and see what percentage return you get with each test price. You may find that all four yield the same return. That would indicate that there is still more room for price movement. You may find that price 4 - the highest - yields just half the response of price 2, which is exactly half the price. Then you have a value judgement: do I want fewer customers at the higher price - maybe less invoicing, less administration. Or do I want more customers at a lower price because I have other things I can sell them?

Make sure you have a clear rationale for the price you ask, and communicate it with strength and conviction. Here again the USP (or the more developed MDSA©) will work for you. The stronger it is, the more measurable its effect, the better your chances for higher pricing. At least by aiming high you give yourself maximum room to negotiate.

If a buyer presses you on price, it may be because they are not convinced that your service is worth what you are asking. That means that your USP is not clear, not relevant or mis-communicated. Alternatively, if they think your services are very valuable, they may be willing to pay a great deal more for it than they tell you they are.

If you are in buying mode, it often works well to ask for a shocking discount, well over what any reasonable person would expect. Give yourself room. Whether we are buying or selling, remember it is very difficult to trade up. If we aim higher than we think, it is very easy to trade down.