fbpx

Stop Lowering Your Rates. Start Adding Value.


by Don Smith

All products and services featured on this site are independently selected by our authors and editors. If you buy something through links on our site, we may earn an affiliate commission.

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 repeatedly. 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.

Pro photo - three ladies. Adding value to your business.
“My clients want framed masterpieces they are proud to put above their fireplaces.”
Image by TréVoy Kelly from Pixabay

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.

As a business coach, I stopped trying to compete on price long ago. Virtually everything I teach people is also available in a book, a course, or a free video.

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 course isn't going to do that.

A book or course isn't going to look at your unique situation and give you tailored feedback.

Don & Wife Pamela
Don & Pamela enjoying time together while business continues to grow

That's the value I bring to my customers. How much would an overwhelmed yet otherwise highly successful business owner 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.

About the Author 

Don Smith

Happily married with five kids, Smith owns a technology company, is the founder of this site, has served on the board of directors for multiple companies, and loves playing soccer, hiking, and mentoring.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

I spend at least 8-10 hours in bed daily. Why? Rest is as important as work. I publish 10 or more blog

Read More
Why Rest and Reflection Are As Important As Work

PEO stands for ‘professional employer organization’ and is also known as a co-employer. PEOs perform a range of tasks including managing the

Read More
Streamline Your International Expansion by Collaborating with a PEO

I observed 2 high school superstars travel differing trajectories. One star chose to develop his skills and became one of the most

Read More
Do You Rely on Sheer Physical Exertion or Skills?

This month's personal development book selection is “The Answer Is…:Reflections on my Life” by Alex Trebek. The host of Jeopardy! for over

Read More
The Answer Is by Alex Trebek: Book of The Month

I sometimes @reply my followers a greeting on Twitter. I tell them to have a great week, to enjoy the weekend, or

Read More
Be Open Versus Closed to Make Life Easier

I am starting to develop a little tick anytime someone tells me they are too busy to invest in their own personal

Read More
Let’s get real. You’re not too busy. It just isn’t your priority!

I turned 41 today. I'm still young enough to feel like I'm in the prime of my life, yet old enough to

Read More
Grateful: Reflections on My 41st Birthday Plus a Challenge For You Today

I spent the past week unfollowing 1000's of people through Twitter and Instagram. I also unfriended some folks on Facebook. Why? I

Read More
Who Do You Follow and Friend on Social Media?

I firmly believe that “Powering Up”, i.e, doing your homework, is critical to your success.  I also think it can be one

Read More
Power Up! Just don’t take too long!

Life happens for me. Life never happens to me. Life happening to me suggests I am a victim. Victims lend their precious

Read More
Does Life Happen To You Or For You?

Imagine if you engineer your entire life to be comfortable. Work an easy job. Get a paycheck. Relax in front of the

Read More
Why Always Seeking Comfort Leads to Chaos

Change is the only constant in life. Life presents you with two clear choices. Either grow through change to become free or

Read More
Either Grow and Become Free or Resist and Suffer

SUBSCRIBE

Get new articles and course discounts from leading providers every Friday in your inbox with your free subscription!

>