Could You Charge Higher Prices?

I’ve just started reading for the second or third time Robert Cialdini’s famous book “Influence, Science and Practice”.

He opens by talking about a friend who had an Indian jewellery store.  She was having trouble selling some turquoise jewellery despite it being good quality and there being plenty of customers in the store. She had even moved the jewellery to a prime location in the store.

Finally, before leaving on an out-of –town trip, she left written instructions to her staff to sell it all at “price X ½ “. In other words, “half-price”.

When she returned after a business trip she was therefore not surprised to see that all the items of jewellery had been sold.  She was surprised though, to discover that because the employee had read the ½ as a 2, the entire allotment had been sold at twice the original price!

At first it seems incredible that INCREASING the price actually increased sales.  It seems to run counter to basic economics. However if you look at the psychology behind it, it follows our natural inclination to believe that “you get what you pay for”.  In this case her customers, mostly affluent holiday makers with little knowledge of turquoise, were using a standard principle to guide their buying decision, i.e. “expensive = good quality”.

Thus the holiday makers, who wanted “good quality” jewellery, saw the turquoise pieces as more valuable and desirable when they were twice the price.  The price alone indicated quality, and a dramatic increase in price led to a dramatic increase in sales.

We usually believe that lower prices will mean more sales.  A few years ago, one of my former employees started his own carpet cleaning business. I’ll never forget what a common friend told me when we met – “Now you’ll have to lower your prices”. Yet as far as I know, he’s still cleaning carpets..and we’re still at least double his prices!

Of course, people don’t buy on price alone (usually)…they buy value. Otherwise there would be no Mercedes, BMW’s and Audis on the road. And we’d all be wearing the cheapest clothes. Certainly NOT designer label.

However, getting a Ford or Vauxhall and slapping a premium price on it is not enough. You can put lipstick on a pig…it’s still a pig!

So if you want to get higher prices…give greater value! And that can include PERCEIVED greater value. Provide exceptional customer service, send a newsletter that positions, informs and educates, send thank you cards. Even send gifts occasionally. Ask yourself…  “Do I look like a Mercedes business or just a Vauxhall business”

I have a friend who many years ago had written on his business card: “I have no quibble with those who charge less. They obviously know what their work is worth.”

Indeed if you are not losing at least SOME of your business based on price – you are too cheap!

Better to seek out high-quality seekers, charge a higher price and use the extra profit to deliver exceptional value.