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5 Great Reasons Why You Should NOT Be Charging Premium Prices

Premium pricing.

Depending on which stage of business you are currently at, or what business model you follow, this term is sure to create a very strong, almost visceral reaction in you.
Either you leap out of your seat screaming, hell, yes!

Or, you get the feeling of dread creeping inside your tummy. Oh no, here we go again, you roll your eyes and sigh.

Pay attention to this post and this is bound to change your mood, especially if you find yourself in the ‘OMG – how can I ask for these prices’ camp.  This will cheer you up, for sure.

Now, I am not saying sell your products or services for cheap, rock bottom prices, not at all. You are not Kmart or Walmart to make use of economies of scale. You will end up attracting cheap clients who are often more trouble than they are worth. Don’t do it.

On the other hand, you don’t have to ask for $600 for your coaching session, or sell $5000 website design/branding packages, or ask for $199 for an ebook.

Forget what you have been told by the marketing gurus, especially the ones that sell programs at 2K+ price range.

You don’t have to charge premium or unbelievably high prices if you don’t want to. Not only do you not have to do if you don’t want to, I can give you five other reasons why you shouldn’t be charging high end rates because it just doesn’t make sense.

 

Reason#1 You are brand new to business

If the only reason that is holding you back is that you have been given advice to charge premium prices from day 1 then you have my permission to dump this advice as soon as you possibly can.

No, you don’t have to charge high prices from day one, in fact you shouldn’t. Unless you can justify them (will talk more about that in my next point.)

When you are starting out, you most likely don’t have the experience under your belt, unless you do, you don’t have the credentials, unless you do and you don’t have the authority (or clout) to demand such high prices, unless, you guessed it, you do.

If you are starting a business in an area where you have years of experience, you already have connections in place, you have enough people singing your praises then maybe you can start out on a high note.

Most people don’t. They don’t have anything to back up really high prices. If you are like most people then I’d like to reassure you at this point. Look at what others are charging in your industry and then charge what you are comfortable charging. Offer to work with people with highly discounted prices to get people in the door and build up a folio of  highly satisfied clients. Work on your craft. Get better at you do, better than most people in your industry. Then ask.

 

Reason #2 You don’t have the brand to support your prices

Let’s say you don’t feel like cooking tonight. It’s the weekend and you deserve some time off. You feel like Chinese. You have a few options, you can pick up some takeaway from your local Chinese shop or you can make a call, cross your fingers and hope that you get a table at this fancy restaurant in the city. Depending on where you decide to go, you will be prepared to pay a totally different price for an entrée, a bowl of hot and sour soup and some Szechuan Chicken with fried rice.

Same is the case with a potential client visiting a website and shopping for an ebook designer. Apart from the skill and the aesthetics, of course, the designer charges you based on the brand they have created for themselves.

Do they only work with high end clients? Do they have an expensive website with graphics and branding to die for? Do have endorsements from celebrities? If so, yes they can charge more. However, it is totally fine to have a professional looking website because the designer offers ebook design packages for content based professionals who don’t need documents with heavy visuals. They can have prices somewhat in the mid range.

If you want to ask for a lot of money, be prepared to spend money upfront on the branding and packaging. You can’t ask $40 for stir fry beef if you operate a Chinese takeout.

 

Reason #3 You can’t provide a premium experience

People not only expect you to look like money if you are asking for big money, they also want to be pampered and taken care of. Buyers have great expectations.

They want a launch with super sleek videos. They want prettier PDFs. They want a totally professional-looking dashboard for your online course.  They need super quick customer service – like right now. They have paid you lot of money and they won’t settle for anything less.

If you don’t have the resources to give people the experience they expect from a luxe brand, you would end up with a lot of unhappy campers, and even more requests for refunds. Not pretty.

 

Reason #4 There is no access to you

What you are offering doesn’t have any form of direct access to you. No live calls, group calls or one on one offers.

Be definition, you can charge more when you are working with people directly. You can charge $37 for an ebook but you can charge $99 for an online class of 90 minutes with recorded presentation, Q/A at the end and handouts, even when you are starting out.

It’s not about charging high prices just so you can be taken seriously. It’s about charging more because you are giving people time and attention, and working closely with them to help get them results based on their unique situation.

 

Reason #5 Your ideal client or customer cannot afford your prices

Lastly, and the one thing that most new business owners tend to forget is this: Your average client or customer simply can’t afford what you are asking them to pay.

Say you are a copy editor for upcoming writers. Most writers are not people with deep pockets. You could ask them a fair fee for your editing services but if you want to charge top of the range prices for your service, maybe you need to target a slightly different market. Maybe you could offer editing services to already published authors or change your service entirely. So you start offering services where you do the same for a different kind of writing, say business writing, or copywriting.

Yes, think about the value you bring to the table but also keep in mind what the market will bear. You want loyal, repeat customers. Don’t burn them out. If you are hell bent on charging more, go after a different target market.

 

Remember, you want your prices to closely match people’s expectations.

You want people to look at your prices and don’t think to themselves, ‘they are so cheap, what is wrong with this person.’, nor do you want them questioning your sanity, ‘You want to charge me… what. Are you out of your mind?’

People expect certain prices from a newcomer in town and they expect to pay differently if they are consulting with someone who is a business coach to Oprah.

You want your prices to be just right, the most reasonable thing. Now they might be higher than what a person could afford right now, that’s totally fine. As long as they are not thinking you are a rip off.

 

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8 Comments

  1. Eme Says :
    Posted on July 3, 2014 at 7:31 pm

    great post. needed to hear that TODAY! Its great when someone goes “there” and says what we are all thinking and wondering. Pay attention beautiful people!!! read this again.

    I am a fan of the “charge what you are worth” battle cry but this is so right…

    Again one of those “giving you permission” blog posts. Thanks Marya!

    • Marya Jan Says :
      Posted on July 4, 2014 at 1:48 am

      Thank you, Eme. Glad to know that there are other small business owners operating with common sense! 🙂 Thanks so much for your kind words.

      Cheers.

  2. Saiisha Says :
    Posted on July 4, 2014 at 2:53 pm

    Hey you got a new picture up – love it! And I like your new tag line as well 🙂

    • Marya Jan Says :
      Posted on July 5, 2014 at 2:54 am

      Thanks Saiisha. 🙂 Glad to know you noticed and more importantly – approve!
      And I am really excited about my new tagline. Came to me literally at 5 am. I think it captures my core message perfectly. Truly grateful for your vote of confidence.

  3. William Ballard Says :
    Posted on July 6, 2014 at 12:31 am

    Great advice Marya!

  4. Sagar Says :
    Posted on July 8, 2014 at 7:57 am

    I truly agree that selling your products at very low rates will end up attracting cheap people and re very tough to handle.But this does not mean that posting high prices is a safe plan.The above reasons mentioned are absolutely right.Especially the points like “being new to business” and “cannot provide the premium experience” are major reasons people would think about very carefully.

    In the mean time, the other marketers would be gaining the opportunities. So planning well and organize in such a way that you reach out to people’s expectation is the initial step to raise in the market for beginners.

    Thank you for sharing such informative post.

  5. olga@vidéo mariage Says :
    Posted on July 21, 2014 at 8:20 am

    c’est un excellent article.
    j’aime tous ces informations.
    merci pour le partage.

  6. Worli Says :
    Posted on March 16, 2015 at 10:16 pm

    I think this is the most popular question among most entrepreneurs and professionals is whether their prices are competitive. if you can add value and deliver your service in the manner you customer most desires, it is quite possible that you can raise your price while your customer gains more satisfaction from the transaction.