Your pricing matters. When you’re deciding what to price your products or services, the natural inclination is to set things lower than the competition, so that people want it. Today, I make the case for why you may be hurting your sales and turning people away by pricing too low.
In a book called “Influence: The Psychology of Persuasion,” the author, Robert Cialdini, shares a great story of a crystal shop that was struggling with sales. The owner wrote a note to mark everything down by half, but the handwriting was so bad that the manager misread it and doubled the price of everything, instead of marking them down. And what do you think happened? Their sales took off! Everything was sold out, and for twice the initial price.
The perceived value of things matter. When the price of something is low, we assume the quality is too. And when things cost a lot, we justify it. We slow down and enjoy it. We treat it as a delicacy. It’s the same with wines. Cheap wine can sell for $5, while the most expensive wines can sell for thousands. Are they that exponentially better? No, but they are valued at that price because they justify it.
Too many people don’t value themselves enough to price what they are worth. They price lower thinking it will help their sales and it comes back to bite them. Don’t fall into that trap.
You have to consider
You’re Going To Hear About:
- When raising prices leads to higher sales
- What happens when a product costs more
- When you can justify higher prices (and when you can’t)