How to structure your product and services for maximum profit
written by john c ashworth
You should always sell Good, Better, and Best. Never sell yes or now. Especially when times are tough like the recession we’re living in right now.
You’ll make more money.
At least 20% of your customers will choose Better or Best regardless and 5% will choose Best by default every time. So, take your current product or service and label that as your Good Version. Then, get to work creating a story about what Better and Best could be and charge more for those versions. Typically, this won’t be hard for you to do, because it’s very likely you’re already doing it for your better and more demanding customers. It’s just that you might not have every thought of taking advantage of it.
Many will fear that showing a Better and Best options at higher price points will scare people away. This almost NEVER happens because most of the time, you have under-priced your offerings.
Second, and this is important, price elasticity is a very very important idea and concept to understand and embrace. There is always a limit to how much you can charge for what you do, but most of the time, you have not even come close to reaching that limit and you won’t actually know until you push that price elasticity theory farther and farther until you reach a clear point of distinction where it does in fact start to affect your ability to sell.
The worse place you want to be with your pricing is in the middle so that leaves you the choice of being the lowest or the highest priced product on the market and the latter will not only bring you a lot more money, but it will also bring you a lot better customers.
PS Spend some time running these numbers in your business and you will quickly see that the affect on your bottom line is dramatic.
PPS Please, Please, just because the economy is struggling do NOT lower your prices. This will only hurt you in the long run and might just lead to your demise. Think different. Think more strategically and really take a close look at your numbers. And when you run into the fear associated with making this kind of fundamental change inside your small business, please also remember that the reason you feel you might not be able to get there is that you don’t have the marketing and sales system yet that will generate these results. It’s going to take some work, but you can certainly build one. I can help.