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

Overview

Pricing is one of the most essential, yet least understood, aspects of running a profitable business. Many business owners treat pricing as an afterthought, assigning a hard figure to a vague idea about what the market might bear, or they’ll mimic their competitors’ prices. But the cost of these pricing strategies can be more than just lost revenue—it can spell financial disaster.

 

Pricing for Profit opens your eyes to the “high cost of low prices” and equips you with the ...

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Overview

Pricing is one of the most essential, yet least understood, aspects of running a profitable business. Many business owners treat pricing as an afterthought, assigning a hard figure to a vague idea about what the market might bear, or they’ll mimic their competitors’ prices. But the cost of these pricing strategies can be more than just lost revenue—it can spell financial disaster.

 

Pricing for Profit opens your eyes to the “high cost of low prices” and equips you with the knowledge and confidence you need to charge more for your products or services by focusing on their value. If you’re offering superior value, you can charge a higher-than-average price that will drive your sales and increase your profits. It’s the small business owner’s most powerful strategy for making more money with less effort! Pricing for Profit gives you the tools you need to make it happen, including:

• buyer profiles to help you distinguish between price buyers and value buyers, and create a profile of your ideal customer

• formulas for calculating the true value of your offerings

• scripts for helping your customers discover that value

• bundling strategies to sweeten the deal for your customers and increase your profits

• sample marketing messages that communicate value to your market, and much more!

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Product Details

  • ISBN-13: 9780814433003
  • Publisher: AMACOM
  • Publication date: 9/2/2009
  • Pages: 240
  • Product dimensions: 6.00 (w) x 9.00 (h) x 0.50 (d)

Meet the Author

DALE FURTWENGLER (High Ridge, MO) is President of Furtwengler & Associates, P.C., a consulting firm dedicated to helping small businesses increase profits without adding resources.

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Read an Excerpt

Introduction

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 in¬dustry 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 com¬municating 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 ap¬proaches 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 cus¬tomers 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.

All rights reserved. http://www.amacombooks.org.

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Table of Contents

Contents

Acknowledgments

Introduction

1 Ignorance Isn’t Bliss: It’s EXPENSIVE

2 Know Thyself . . . and You’ll Know Others, Too

3 Elementary School Math: Quantifying Value

4 Customers’ Delight: Discovering the Value

5 Icing on the Cake: Bundling for Greater Profits

6 Avoiding No: Using Options to Close the Sale

7 Value as a Marketing Tool: Attracting the Right Buyers

8 The Value Trap: Avoiding the Pitfalls of Change

9 The Economy: It Just Doesn’t Matter!

10 Make More, Work Less

Notes

Index

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