Have you ever thought about raising your rates in your current line of business? If you’re just starting a business are premium rates or lower rates the best way to go? What would premium rates mean to your business both short term and in the long run? Would your business be able to survive in its industry if it charged premium rates? Are higher rates or lower rates the best way for your business to maximize profits? These are all excellent questions you need to ask yourself if you’re going to start a business. Higher rates means better quality customers, but at what price? There are several prospects out there that will go for the cheapest price. They can be deceiving, their money is actually like crap covered in whip cream and sprinkles, it may look good but it’s still crap. Often times you’ll find you don’t even want to deal with your lower quality customers. They tend to be headaches, always pushing for more and reminding you they’re a valued customer. Additionally, what happens when these customers paying lower rates find someone that will give them an even lower rate with a similar product or service that will fulfill their needs? They’ll push you to lower your rates substantially or stop using your product or service.
Benefits of a Quality Customer
Higher Quality Customers mean a lot to your business and you should treat them like royalty. If you are fortunate enough to have a group of higher quality customers using your product/service try to provide them with excellent customer service. The best high quality customers don’t complain and are very easy to work with making them ideal clients. Ask these customers for testimonials, this can be vital to your business and help it grow exponentially. You may be able to get like minded clients and sometimes even their competitors. Pursue high quality customers in creative ways, using sales and marketing tactics that will pay off. For example, sending out cards or novelties asking your high quality prospects if they would like to see their sales multiply is an excellent strategy. A friend of mine was able to build his business substantially by sending his top 100 prospects calculators with a question asking the clients if they would like to see their business multiply. There are all kinds of ways to attract top quality customers, these are the most important for your business.
Keep Prices as Stated
You’ll find almost everyone wants lower prices, don’t give in to their demands. If you do, you’ll soon find yourself “giving in” to all of your customers. Even the high quality customers want price breaks every so often. Keep in mind that there is nothing wrong with the word “no” and that it’s not a dirty word. What’s the worst that can happen to your business if you refuse to give in to a prospect or customers demand for lower prices? The worst thing that can happen is you might lose the customers business, if they want to take their business elsewhere they probably weren’t an ideal customer to begin with. Premium rates will attract quality customers, the type you want to do business with on a long term basis. Make sure you’re providing premium products/services and the demand for your products will increase regardless of whether you charge premium rates. An excellent example is Apple, who puts out excellent high quality products there is always a high demand for. Do you ever hear people complain about Apple’s prices? Sure, I hear people complain about Apple’s prices all the time and I’m guilty of it as well. However, I bet you a lot of these same people and the rest of the general population buys their products because they are excellent. Price is not everything, your products/services will sell themselves, especially if they’re remarkable.
Cutting Prices to Increase Company Profitability
Have you ever cut prices in order to increase your company’s profitability? A lot of places do and I’ll be the first to say it’s an excellent short term strategy to boost company profitability and sales. However, if you keep cutting prices for customers how long does it take you to realize it’s not profitable for you to keep doing business with that customer? Will you ever be able to get that customer back to the “full” price they were paying? In most cases, this is highly unlikely. Why cut prices at all then? This is a great question, why cut prices at all. If your business is in danger of folding, and you need to cut prices to stay in business this is acceptable as much as we’d like to avoid it. Your business shouldn’t be in this position in the first place. Try to avoid cutting prices, always have cash reserves on hand for slow business seasons, recessions, and times of economic uncertainty. You don’t want to have to deal with low quality customers who want the lowest prices on goods or services because they’re the most difficult to deal with on a regular basis. Just remember, higher rates means better quality customers and great clients help a business thrive on a long term basis.