How to increase prices – part 1
You may be able to increase your price by one or two percent without losing any customers. But, if you want to increase your price 10% or 20% then it is probably worth taking actions to reduce the chances of losing customers.
You can do this by re-launching your service, product or brand in a way that takes the focus away from just the price.
If you are going to be more expensive than the competition, you need to give people a reason/s to pay the extra. This can usually be done as a package with new guarantees, safeguards, higher service standards and more benefits because when you do that you can justify a new higher price.
Let’s take the example of a roofing company.
Most construction businesses usually turn up in filthy vans and roofers are normally covered in black tar. They turn up at your house unannounced, saying they have some spare materials from another job , asking to take a look at your roof.
Let’s imagine that a typical roofing company struggles to charge more than £5,000 for a certain type of job.
Now, let’s think about a business that positions itself as a “professional” roofing constructor with guarantees. When the owner turns up he says “I know that some people in my industry have a bit of a bad reputation for going on to the roof and kicking things off and telling you that they need to be replaced. Well, we don’t operate like that, but I don’t want you to take my word. So, on our Website we have video written testimonials from people in the local area about the service we provide”.
Then he bring out a leather folder and says “here we have some of the most recent client surveys because we carry this out at the end of every job”. You can see surveys with people saying how wonderful they are.
He could then goes on and says “I guess you would like to be comfortable that we will provide exactly the same kind of service to you and that why we have a range of guarantees built in.
First, you have a guarantee that we call the turn up and clean up guarantee. If we don’t turn up when we said we would turn up and if we don’t clean up at the end of each day to your satisfaction we will deduct £50 pounds off the bill. We will do that for every single day that if we don’t turn up on time or clean up at the end of the day.
Our second guarantee is you don’t pay for the job until it is completed the way you liked it. In other words when we think we are finished we give you an opportunity to check and if you’re not completely delighted with the work we have done for you simply don’t pay us, until you are delighted.
Now, we will ask you to tell us why you are not delighted so we can put that right, but you don’t pay until you are delighted. This means you will not feel ripped off because you always get exactly what you want. You will not pay until you get exactly what you wanted.
Our third guarantee is this when we leave we guarantee that roof wont leak and if does leak within three years we will come back and fix it for free. And, we won’t hide in the meantime; we will contact you each year to ask how your roof is and after 18 months we will do a site visit to check that it is showing signs of leaking. That’s how strongly we believe in what we do”.
Those kinds of guarantees will already make you think well this roofing contractor is really different, but that’s not it.
They also set a new service standards because he goes on to explain; “as you notice we all wear this uniform” and he points to his clean overalls blue with a very stylish logo with the name of the roofing contractor firm on the chest. He tells you that “every single one of our team is wearing this because they are employees, not just some cheap contractors that we sub contracted the work out too to sell you short.
He says “we all want to feel good about the people who are working in your premises. You want to trust them. This is part of our way of showing you.” He says “we asked customers about their concerns about roofing companies and they said that they are a bit nervous about working with a contractor because you have to take their word because not many people want to go up a ladder on the rook and have a look at the damage.
So, we take a video recorder up the ladder and film the damage and show you exactly so you know we are telling you that truth. And, then when we have done the work will take the camera back up there and film it again, so you can see that we have done what you have paid for. You know you’re getting exactly what you want exactly what you are paying for and that’s not what we all did because our job finishes at the end fixing the roof”.
How do you think that compares to the other roofing contractors?
Could they charge £5,500 instead of the normal £5,000? What about £6,500 for the additional service standards and guarantees?
This is just about:
- Cleaning up
- A check up
- Wearing a clean uniform
- A video
- Developing a script
If you think about it, putting right work that is faulty is what the business needs to do anyway!
What about referrals. Do you think the customers are more or less likely to recommend this type of business?
The vast majority of people will pay a little extra if they get a lot more. That’s the point when you create guarantees, safeguards, new service standards and benefits.
When you re-launch what you currently do most people, not everybody, will say OK. They’ll pay you 10%, 20% or even 30% more.
Remember, you maybe able to afford to lose 20%, 30% or more clients and still make more money.