When I took the One Funnel Away Challenge, one of the things they reminded me was the importance of adding value rather than lowering your rates. Think of the old ShamWow commercials; this was a company that sold millions of glorified hand towels you can buy wholesale for 3/$0.50 at 8/$19.95.
The Difference Between Marketing and Lowering Your Rates
ShamWow's commercials added perceived value and added in urgency to sell more of their products through clever advertising.
“Call in the next twenty minutes, and you'll get x, y, and z for FREE!”
They sold those glorified hand towels at a much higher price than their competitors because their customers felt they were getting a lot more for their dollar. The product did pretty well what they said it would do, but so did their competitor's stuff. The value they added was in the marketing.
There's a difference between marketing genius to show a discount with an urgency that gets your customers to buy today and lowering your rates, though.
You should absolutely give your customers an incentive to buy your stuff today, but don't drop your prices to the point that you aren't making any money. These guys were marketing geniuses because they were selling a couple of dollars worth of product for $20.
If you look in our store, you'll see inexpensive stuff on sale all the time. But many of those items are digital! We made them once, and now we're selling them over and over. Our costs are in advertising and hosting fees, not in the product itself. Even though something might be a low price, we still make money.
But those low-end items don't pay the bills, it's the higher-end stuff like business consulting or referring people to the One Funnel Away Course at $100 a pop that helps out there. And by the way, if you take that course, you can refer others to it too to make your money back so you can essentially get a master course in marketing for free.
The Biggest Change for Her Business
I asked a professional photographer who is highly sought after once what made the most significant change for her business.
“I used to think that I had to lower my rates to be competitive, that being inexpensive was why I was getting business.
Then it hit me.
I wasn't competing against other professional photographers. With everyone having a cell phone these days, I was competing against free.
That realization set me free, and I stopped cutting my prices and started adding value. The people who use professional photographers want mementos they can pass down to their children and grandchildren. They want the framed masterpiece to put above the fireplace.
Adding value rather than competing against free is what made the most significant change in my business.“
Stop Competing on Price
I'm reminded of the need to add value frequently in my own business when I'm tempted to compete on price.
If I'm trying to compete against teenagers, courses, books, or free stuff that people can find on the Internet, being a business coach/consultant/advisor/whatever you want to call it isn't worth my time.
The value I bring is being able to look at someone's business objectively, listen to everything they've got going on, and point out those little things they need to change to get their life back while still growing their business.
A book or course isn't going to look at your unique situation and give you tailored feedback.
That's the value I bring to my customers. How much do you think an overwhelmed yet otherwise highly successful business owner would pay to buy back their time while still growing their bottom line? You might be shocked to find out.
Three Questions to Ask Yourself to Increase Your Income
If you want to increase your bottom line, there are really three questions you need to ask yourself.
1. What value are you bringing to your customers or employer?
2. How can you increase that value?
3. How can you deliver the same value to more people without significantly increasing the amount of time you invest?
Answer those questions consistently, and I think you'll find that you are no longer competing against free.