How do you make more money for your business and multiply your profits? Well, it’s very simple—you need to charge more for what ready doing or selling. I know this might sound kind of
strange but, I’m telling you, raising your prices is actually an excellent strategy to boost your profits.
Before you brush off the idea of changing your pricing structure, let me explain. The fact is that the average business can charge anywhere between 20% to 30% more without losing any customers at all. Most of the time, your customers won’t even notice that you raised your prices. You could simply increase the price of your product right on your website, and nobody will likely bat an eye.
Many people think that charging less than competitors allows them to make more money by getting more sales, but that’s actually a myth. You simply don’t gain more profits by charging less. Reducing your prices, in fact, decreases your profit margin.
Doing this leads to a 50% decrease in profits, assuming costs are the same. If the cost of making your product is $80 and you sell 50 items, then you’d earn a total income of $5,000 with your previous $100 price and $4,500 with your new $90 price. This means a $1,000 profit with your old pricing and only $500 profit with your new pricing.
You might think that you’ll get more sales anyway, and that would make up the significant difference in profits. However, you actually need to double your sales from 50 to 100 just to earn the same $1,000 profit. You need a whopping 100% increase in sales when cutting the price by only 10%. Plus, you might have to increase your costs for customer service and hire more staff once you gain more customers, leading to much lower profits.
Do you see my point? Doubling your sales, even with a lower price, is extremely challenging. So, in the end, reducing your price negatively affects your business overall.
On the other hand, raising your prices can actually increase sales and your total revenue. You might be wondering, “How can that happen?” Well, pricing tells a story about your business, and raising your price lets you focus on your value. When you review your pricing, you get to find out what your business is truly good at and confidently charge what your target market will pay. And you shouldn’t worry about losing business. As I said earlier, increasing your prices isn’t going to drastically affect your conversion.
As long as your product or service offers real value to your market, you’ll be able to retain quality clients and gain more customers who know your worth. Raising your prices can even be a good opportunity to lose bad customers. You know what I mean, the ones who demand a lot of time and resources but aren’t willing to pay more. At the end of the day, you’ll make more money and get the right clients for your business.
There’s another major reason why raising your prices actually benefits your business—it sets expectations and improves your reputation. People
look at you differently, and they believe you truly offer something valuable because your prices say so.
Okay, let’s say there are 10 businesses in your market, so people have 10 different options to purchase a particular product or service. There will be one business owner at the bottom charging the least, thinking that they will get more customers by offering the lowest price.
Then, there will be one person at the top charging the most money. Now, does that mean they have the best product or service? Not necessarily. But among all those choices, people will immediately think that the more expensive options are definitely better than those with the lowest prices. Why? Simply because people tend to associate price with quality, meaning a higher price means better quality.
So, by charging more money, you instantly change the way people perceive your brand. If you play your cards right, you can improve the way your customers view your brand and ultimately gain more sales. Your profits will skyrocket even with just a 10% increase in pricing.
Let me explain this with an example. Let’s say we have two cars—a Volkswagen and a Mercedes—both of which are German-made and almost similar in looks. One costs $30,000 and the other costs $80,000. Now, because of the glaring difference in price point, we automatically assume that the $80,000 car is undoubtedly better.
You see, people instantly decide which product is better solely based on the price before anything else. Of course, after doing more research, customers are able to make more informed decisions. But the point is that price often affects expectations, creates a strong first impression, and plays a role in getting sales.
Even if you’re not at the top of your market as far as price points go, people will think you’re a little bit better than others with lower prices. So, it’s not too hard to make more money by raising your price. Your price reflects the quality of your product or service, and people will perceive you to be a little bit better than your competitors.
Now, imagine this. What if you increased your price by 20% in the next couple of minutes? You can simply go to your website right now or wherever you charge your customers and increase your price by 20%.
Think about what could happen. If you’re earning, let’s say $500,000 a year in profits, then you could make another hundred thousand dollars by doing this. How easy is that? It can definitely happen if your business offers something your target market wants.
So, don’t be afraid to raise your prices. Stop and think about this for a minute. What’s holding you back? Stop worrying about losing business! You can raise your price by 10% or even 20% or 30% and earn significantly more by the end of this year.
That’s all you have to do to make more money. I promise you—raising your prices will make a huge difference in your overall profits. Go ahead and do it. You’ll be thanking me!
