Pricing for Profit: How to Command Higher Prices for Your Products and Services

Pricing for Profit: How to Command Higher Prices for Your Products and Services

by Dale Furtwengler

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Do you feel trapped by “industry pricing”? You don’t have to be! You can make far more money than you currently are making with less effort. How? By accurately quantifying the value of your products or services and effectively communicating that value. And, contrary to popular belief, higher prices don’t drive customers away; they actually

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Do you feel trapped by “industry pricing”? You don’t have to be! You can make far more money than you currently are making with less effort. How? By accurately quantifying the value of your products or services and effectively communicating that value. And, contrary to popular belief, higher prices don’t drive customers away; they actually attract buyers, driving up your revenue and profits.

Pricing for Profit not only gives you the crucial number-crunching skills you need to determine your ideal price, it looks at both the tangible and intangible elements that affect what people are willing to pay—even in a poor economy—and gives you tips for tapping into the values and emotions that motivate people to spend more.

Along the way, Pricing for Profit picks apart some common misperceptions about why you can’t change your price, such as “My company lacks name awareness,” “My competitors won’t raise their prices,” or “My customers only care about price.” Don’t let these excuses deprive you of the profits you so richly deserve. Pricing for Profit then gives you easy-to-use formulas, sample scripts, clear examples, and instructive exercises to help you:
• Understand how the attitude of your salespeople and managers toward pricing affects your ability to command higher prices, and use that information to align your hiring practices with your business strategy.

• Figure out the one or two aspects of your product that have real value to your customers, and calculate that value in dollars and cents.

• Walk away from prospects that don’t value what you’re offering—and spare yourself the hidden costs of selling to the wrong buyers.

• Get a quick reading on what each customer values the most—image, innovation, or time savings—and tailor your message to appeal to each.

• Bundle your products or services in ways that sweeten the deal for your customers and significantly increase your average sale.

• Close more sales by selling down, starting with a higher-priced offering and working your way down to the lower-priced options.

• Craft your marketing message to appeal directly to the customer—and avoid the common trap of talking about what you do.

Only 14 percent of the buying public considers price the primary criteria in their buying decision, while 86 percent prefers value over price—and so should you. Pricing for Profit is an essential, accessible guide that helps you break out of the stranglehold of industry pricing and quickly improve your profits, your customer base, and your business.

Dale Furtwengler is President of Furtwengler & Associates, P.C., a consulting firm dedicated to helping businesses increase profits without adding resources. He lives in High Ridge, Missouri.

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I can’t raise prices; I won’t be competitive.” This belief represents one of the greatest frustrations business owners experience. One homebuilder spent 45 minutes telling me why his homes were better than his competitors’. Yet he didn’t feel that he could raise prices, even though his prices were 10 percent below market.

How does this happen? Why do businesspeople feel trapped by industry pricing even though they know, with absolute certainty, that their offerings are superior? They don’t know how to quantify value.

During my 19 years as a business consultant helping clients increase profits, I’ve found that this is the single greatest challenge they face in increasing revenues. The inability to quantify value makes it impossible to communicate that value. This, in turn, leaves customers with the impossible task of trying to decide which offering really has the greatest value.

As a CPA, I’ve been taught to quantify all sorts of things, including the value that client offerings have for their customers. Once my clients understand how to quantify value, they have no problem communicating that value and distinguishing their offerings from those of their competitors.

Pricing for Profit provides the tools – formulae and sales scripts, as well as an understanding of buyer and seller psychology – to help you command and get higher prices.These tools will give you the confidence you need to stand firm on your price.

Confidence comes from knowledge.When you know how to quantify and communicate the value of your offerings, when you know that you’re charging a fair price, when you know how to bundle offerings to meet a variety of budgets, you’ll have the confidence you need to:

*Attract customers who value what you provide.

*Gracefully walk away from prospects who don’t.

*Avoid the scarcity mentality that plagues many business owners.

The goal of Pricing for Profit is to help you get compensated well for the value you provide. In subsequent chapters, I’ll share the approaches that I’ve used to help my clients raise prices and increase the number of customers they serve.

While that may seem improbable or even impossible, the reality is that when you can quantify and clearly communicate the value your offerings provide, buyers feel more comfortable buying from you. That’s how you attract more customers while charging higher prices. That’s how you overcome the fear of losing sales.

My consultant friends jokingly label me “the leading cause of inflation” because I help so many business owners raise their prices. The reality is that I’m simply helping my clients get compensated well for the value they provide. What isn’t so obvious is that I’m also helping their customers and prospects make better buying decisions.

Buyers equipped with a clear understanding of value make better buying decisions. They are not as easily swayed by emotional arguments because they have facts.They are also not as likely to postpone decisions. Often, we can trace buyer inertia to their uncertainty about the value they’ll receive. Poor decisions and no decision are costly to both you and your customers. How expensive can this be?

In Chapter 1, you’ll discover:

*How low prices created the subprime debacle and how costly it is for consumers.

*The hidden costs associated with attracting a WalMart store.

*How costly American Airlines flight cancellations were to passengers.

Once you get a sense for how costly low prices can be in Chapter 1, subsequent chapters will provide answers to such questions as:

*Why can’t my salespeople sell value the way I do?

*How do I attract more of the right customers?

*How do I generate more dollars on each sale?

*How can I improve my sales close rate?

*How do I price in a down economy?

*How do I make more money without working harder?

Not only will I provide the answers to these questions, I promise that the answers will be simple, easy to implement, and inexpensive. Here’s the kind of result you can expect:

After only six hours of coaching, a horse trainer learned how to bundle her offerings and communicate their value. In doing so, she was able to increase the price of her core offering 33 percent. Within 60 days she went from a 95 percent vacancy rate to 5 percent.

How was she able to effect such a dramatic turnaround? She knew how to communicate value to her customers and prospects. Her knowledge, and the confidence it afforded, instilled confidence in her customers and prospects, making it easier for them to buy from her.

Another client’s change-order revenue losses were eliminated with a two-paragraph memo. Not only did the memo increase revenues, it reduced the age of their accounts receivable by 15 days, freeing up more than $350,000 in cash.

Free yourself of the chains of competitors’ pricing. It’s time to be compensated well for the tremendous value you provide. Develop the confidence you need to command and get higher prices so that you and your customers can avoid the high cost of low prices.


Excerpted from PRICING FOR PROFIT by Dale Furtwengler. Copyright © 2010. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission.

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