We’ve all experienced it. We’ve all gone through it. That customer or vendor that’s causing us all that grief. That person that we would do anything to have never met. It’s an inevitable part of being in business; it’s something that cannot be avoided.
Or can it?
Not all customers are created equal.Tim Ferriss
It seems like all of us in small business get sucked into the same problem. We lack confidence in our product (and in ourselves) when we start our business, so we feel scared to ask our customers to pay a premium price for our product. We look around at what our competition is doing, and we set our prices right in line, or maybe a bit lower, than everyone else.
We reason that it’s what we have to do.
Certainly, no one’s going to pay me more when they can get it cheaper somewhere else.
I’ll just be cheaper than everyone else; it’s the safest way to get business.
I’ll start out here, and when the time is right, I’ll bump my prices up.
Sounds familiar, doesn’t it?
The timing is never right.Tim Ferriss
Don’t feel like you’re alone in this; it’s what we all do. We tell ourselves that we can’t simply be worth more money that our competition. We’re just not good enough to command a premium for our services. Imposter syndrome sets in, and we bring ourselves down to the level of the masses.
It’s who we believe we are: average, at best.
It’s what our business then becomes: average, at best.
And most importantly, it’s the type of clientele we attract: average, at best.
And with below-average clients comes more than an average amount of problems.
Wow, didn’t see that coming…
Those are usually the clients and vendors that we wish would just disappear. They’re the people that stress us out the most, give us the most grief and cause us to lose the most sleep. You know who I’m talking about: the ones we’d gladly offer a refund to if they’d just go away. The ones that make us question why we ever got into this business in the first place.
Those who spend the least and ask for the most before ordering will do the same thing after the sale.Tim Ferriss
If we stop to think about it, who’s really to blame for this situation? It’s easy to blame the client or vendor.
Well of course, they’re the ones causing the problem.
Why shouldn’t I blame them?
Yes, they’re certainly the ones who are directly responsible for our grief. They’re ringing our phone, sending us nasty emails, leaving bad reviews and threatening legal action. Of course, they should shoulder some of the blame.
But, let’s look a little deeper. Let’s go back a minute to stop and think about why they’re in our face to begin with. Why is it this client or vendor on our radar in the first place? Why aren’t they darkening the door of our competitors? Why aren’t they disrupting the sleep patterns of our rivals?
But we already know the answer to that question, don’t we?
We’re attracting a low-end clientele because we’re charging low-end prices. It’s really that simple. The quality of our clients is directly related to the (perceived) quality of our product offering. If we’re offering a low-end, baseline product, and charging bottom of the barrel pricing, who do we think we’re going to attract?
Even if we’re offering a good (or even great) product, but it’s priced like a low-end offering, what kind of response do we think we’re going to get?
Think about the last time you went shopping. If you’re like most people, there is some product that you go out of your way to buy. Let’s use bourbon, for example. You have your favorite brand of bourbon, and you know exactly what a bottle costs. It’s a bit pricey, but you know what you’re getting, and it’s worth every penny. Now imagine you go into the store and there, right next to your favorite bourbon, is a competitor’s bourbon that costs half as much. And, on top of that, they have a big sign that says “Just as good as your bourbon, but much cheaper!” Odds are that you aren’t going to be swayed. If you’re like most consumers, you’ll reason that because it’s cheaper, it can’t possibly be as good as the bourbon you usually buy. Maybe you’re right and it really taste like horse piss! Maybe you’re wrong, and it’s one of the top-ranking spirits ever made. The point is that you’ve come to a conclusion about the quality of the product without ever tasting it, based solely on how cheap it is.
See where I’m going with this?
We’re not really doing ourselves (or our clients) any favors by undervaluing our products. Higher quality products deserve, no they demand, a higher price point.
Yeah, that sounds great.
How do I get that to happen?
Let’s look at what other business owners do to get their clientele. If someone runs a white tablecloth restaurant, they’re putting their business in the high-end part of town and charging a premium for their food. There’s a reason that you probably won’t find a Fat-Burger joint next door to that 5-star restaurant. They’re targeting an entirely different client base.
They have a solid business plan:
- Offer a high-end product
- Charge a high-end fee
- Attract a high-end clientele
They’re not pretending to be something they’re not. They’re putting it all out there for everyone to see.
We’re a high-end business.
If you want top quality, come on in.
If you’re looking for bargain-basement prices, you’ve come to the wrong place.
Fat-Burger is three blocks down the street.
Keep on walking.
Those types of businesses dictate who their clientele will be by what they offer, how they present it, and the price they charge for it.
Here we are. If you want it, come and get it.
Be who you are and say what you feel; because those who mind don’t matter and those who matter don’t mind.Dr. Seuss
It’s hard to take that leap. And yes, it’s a leap of faith. We’re trusting that by putting ourselves out there, by marketing to a specific audience, by targeting a smaller niche, we’ll find success. We’re taking a chance all right. We’re telling the low-end clients that they’d be better off if they just kept walking.
It takes some big chops to take that chance; betting that, yes, my business is worth it.
The job I do is high-end, and it’s worth it.
I’m worth it.
I’m going to leave you today with two more quotes by author and entrepreneur Tim Ferriss. The first explains pricing in easy to understand terms:
Pricing low is shortsighted, because someone else is always willing to sacrifice more profit margin and drive you both bankrupt. Besides perceived value, there are three main benefits to creating a premium, high-end image and charging more than the competition. 1. Higher pricing means we can sell fewer units- thus manage fewer customers… 2. Higher pricing attracts lower-maintenance customers (better credit, fewer complaints/questions, fewer returns, etc.) It’s less headache. This is HUGE. 3. Higher pricing also creates higher profit margins. It’s safer.Tim Ferriss
This last quote is here just because it’s exactly what you and I both need to hear:
Usually, what we most fear doing is what we most need to do.Tim Ferriss
Don’t be scared.
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