Monday, January 16, 2017

7 Reasons To Sell High-Priced Products

The high-end market can be intimidating. Many entrepreneurs are hesitant to sell expensive
products or services for fear that people won’t buy. Besides that, we often assume that a product that costs a lot to purchase cost a lot to produce. That means bigger, riskier overhead. But is the fear of pricing customers out justified? Is a product’s price determined exclusively by its production costs? What if there’s a way around these supposed obstacles? What if the rewards are well worth navigating them?
The truth is that high price tags can be a huge boon to businesses, even small ones. While the extra digits may result in fewer customers, they can also mean greater revenue and lower operating costs. And while many products’ hefty prices are necessitated by high production costs, that’s not always the case.
The key is to be sure that the higher price reflects one thing and one thing only: the product’s value. Not its production costs, not its prestige, not even your own revenue goals, but its value to the customer. Is it worth it to the customer? If the answer to that question is yes, no price is too high. And a high-price business model has advantages that mass sales lack.
Reason 1: Customers retroactively value expensive purchases.
Meaning once they’ve spent all that money, they’re gonna love the product if only for that reason. The customer has invested hard-earned money into the purchase, which essentially means they’ve invested their most valuable resource: time. Look at high-end cars. They’re never dirty or neglected. They’re immaculately clean. They’re parked far away from other cars in a given lot. The maintenance schedule is followed to a T. Their perceived value is almost a self-fulfilling prophecy.
Warby Parker provides a more specific example. Their stylish glasses are inexpensive to produce, and were originally sold at bargain prices by market standards. Eventually, though, it became clear that the low price tag was actually keeping away the fashion-minded customers the company wanted! Their solution? Charge twice as much, and donate a pair for every pair purchased. Customer perception was realigned, sales went through the roof, and disadvantaged people got glasses they couldn’t otherwise afford. Everyone wins.