I discuss with you the price to pay for a product that you can offer your customer from the first sale. You are going to offer a product at the highest price your market can accept. This approach may seem counter-intuitive to its discovery but it brings several advantages. The main one being to make your business profitable as soon as possible.
Don’t succumb to the temptation to sell out…
Charging the lowest possible price is the most commonly used technique to attract your first customers as quickly as possible. By adopting it, you will start by working for free or cheap to “get your hands dirty”. That is to say the time to train for a given task. Then you will gradually increase your rates as you gain experience and credibility.
Charging low prices is as inefficient as it is dangerous
This strategy makes no sense because you are selling off your service or product. You simply haven’t tried to exploit other launch strategies.
The problem with starting the sales funnel from the bottom (a price to pay for your lowest product) is that it is incredibly time consuming to set up. It’s an enormous amount of work, time, financial and marketing effort to set it up.
Imagine if we asked a doctor :
- How many patients have you had before me ?
- How long have you been graduating ?
It would undoubtedly be a great moment of solitude and a great atmosphere in perspective! All this to finally say :
- Ah, so you only graduated a year ago! The consultation shouldn’t cost any less, should it ?
No doubt you’re mistaken. No one questions the experience of a doctor, surgeon, etc, simply on the basis of your experiences. Then why start from that principle ?
To that, there are two things :
- It’s easier to start by making a small and cheap digital book and offer free or inexpensive coaching sessions to make yourself known than to assert yourself as soon as you launch your business.
- This self-assertion will almost systematically provoke resistance from you.
Instead, you will practice what is called “skimming”. You will start from the beginning by offering a high-end product by exclusively targeting among your customers those who can afford to buy more because they are easier to convince.
Most entrepreneurs are mistaken in thinking that “high-end” customers are too demanding and difficult to convince.
Here are 8 advantages to adopting this strategy :
- You’ll have less competition.
- You will have a more pleasant, responsive and investment-minded clientele.
- You will have more margin per customer.
- You will have fewer customers at the same time and therefore lower fixed costs (no need for after-sales service for example).
- You will have more time to devote to them and you will be able to provide a better experience and quality of service.
- You will have a more loyal customer base and be more likely to recommend you to other customers.
- You will have a small number of customers (sometimes even just one) and that will be enough to keep your business going.
- You will find it easier to make your business profitable quickly.
Now you understand why you have to start with the highest price your market can accept.
If you earn little when you could be earning a lot more. I’m not gonna beat around the bush. You’re just being selfish. Just as if you could work less and still get the same results while you work tirelessly. Without realizing it, you’re just as selfish.
It is not enough for the contractor to be satisfied with the union minimum such as :
- Just display a product and give its price.
- Just give discounts and rebates that pull your margins down.
- Staying chained to a computer to try to get a few extra euros in.
- Make do with a miserable income that is quickly consumed in rent, loan repayments and other bills.
The limit is in your head, not in your wallet
If you’re struggling to sell your product. How is it that this person cannot find XXX euros for your product when he or she can collect XX XXXX euros for something else ?
It is difficult to overcome our blockages with money. You may ask yourself :
- Who am I to dare to ask for more than I need ?
- How can I justify earning more than this or that ?
Click HERE to find out which category you belong to ! Come and ask yourself about your relationship to money and reflect on your life “In your relationship to money, which manager are you ?“
Know that you can and must dare to earn much more than you “need” to. If you bring value then you deserve it. Be comfortable with this principle of earning well and having time. Abundance will allow you to enjoy your hobbies and be in the sharing with your loved ones without looking at the expense. You will develop a positive and dynamic work environment.
Defining the ideal price with the “skimming” technique
You will always use the sales funnel or sales tunnel. It consists of selling a series of products at different prices. It is represented by a staircase that your customers can climb. Except that instead of proposing a price with a rather low price to pay, you will do the opposite. You are going to propose a “top-of-the-range” product.
This strategy is called “skimming“. You see the cream that rises to the surface of the milk on its own! This practice is aimed at a small number of customers ready to spend more and more for 2 reasons :
- Either because he’s more involved.
- Or because he is able to spend a certain amount of money.
To find out what rate you can charge, you will find the answer through your market research.
Click HERE to focus on the sixth question that probes the price to pay that your market is capable of paying “The price to pay for your product for your fair value“
Once you’ve identified the most profitable price range, it’s quite simple, you take the top one.
|Price range||Number of Responses||Your theoretical turnover||Your theoretical profitability (minus your fixed cost)||Conclusion|
|50 € – 100 €||19||19 x 100 = 1900||19 x (100 – 5) = 1805||Here is the most profitable price range in theory, the following is chosen|
|100 € – 150 €||11||11 x 150 = 1650||11 x (150 – 5) = 1595||This is our ideal price range|
Why didn’t we keep the price to pay that had the most customers ?
Since we are in the seller’s position, the question is asked directly to our client regarding his budget. The latter will have the reflex to leave himself room for manoeuvre, as when you negotiate a price with a seller. This is why we do not select the price range with the majority of answers.
To sum up, you have discovered the technique of “skimming” where you start by offering a top-of-the-range product. As a reminder, here are its 8 advantages :
- Less competition
- A more qualitative clientele
- A better margin
- Less logistics to manage
- Saving you time
- You are likely to increase customer loyalty and word-of-mouth among your customers
Finally, set the highest price your market is willing to pay. To do this you need to survey your customer base, using the “skimming” technique you used in your quick market research.
To go further…
Sébastien Night In : Profession : entrepreneur libre [Online] Paper book format available in French on : < https://amzn.to/38w0HcA >