7. High Perceived Value Rules!

Pricing sounds so easy in theory, but ever so difficult to do in the real world. Actually, up to now, it’s been impossible for small-to-mid-sized businesses to do it in the same manner as the Fortune 500. (Of course, Make Your Price Sell! changes all that!)

Perfect pricing does more than just maximize profits -- it leverages them. Here’s how...

Let’s say that you have a net profit margin of 10% (i.e., after all expenses, including overhead, etc.). If you could increase the price by 10% without losing a single sale, you would obviously increase gross income by 10%. But that 10% increase in price increases your net profits by 100%!

And you’d still keep a happy customer who will return again and again. Talk about a win-win situation!

 

But there are two big ifs in there...

 

... If you don’t lose a single sale

 

and…

 

... If your customer is still thrilled with your product.

 

How can we be sure of those ifs? Where do we find the Perfect Price?

 

Simple… with the customer.

 

Picture this...

You have a glass of water to sell. Imagine yourself selling it next to Niagara Falls. Now, put yourself selling the last available glass of water in the middle of...

... the Sahara Desert. No rocket-science here...

 

The most important determinant of price is what the product is worth to the customer.

 

So many companies forget this nowadays. So let’s return to good old Sam P. just one more time...

The successful producer of an article sells it for more than it cost him to make, and that s his profit.

But the customer buys it only because it is worth more to him than he pays for it, and that's his profit. No one can long make a profit producing anything unless the customer makes a profit using it.

Let’s say that Product X costs you $20 to make, market, sell, and distribute. But let’s say that your customer is only willing to exchange $10 for it. This is obviously not a profitable thing for you to be selling! Contrary to what we are told by used car dealers on TV, you cannot “make it up in volume!”

Naturally, for every product that you sell, you know your cost of production. So all you really need to know is “what it’s worth to your customer.” Remember, if your customer does not “make a profit” on your product, s/he won’t be back.

Since any business thrives on lifetime relationships and not one-night stands, you must, must, must...

 

Know that price point at which your customer makes a profit by buying your product. The key word in the preceding sentence is, of course...

 

Know. Not “guess” or “ball park” or “gut feel”... know.

What does knowing what your customer will (and won’t) pay mean to you? Simple... you’ll know how many widgets that you will sell at every single price point. That means that you’ll be able to set your most profitable price… a price with the best profit for both you and your customers.

I have a sneaking suspicion we could price SiteSell’s flagship product, SBI! at $1,000. But our goal is to make as many SBI! users as profitable as possible and as quickly as possible, and we have no need to price at the levels that SBI! is really worth.

That is the big advantage of building all our own technology -- no third party partners to shoot the price up, or dilute quality. So we can OVERdeliver on quality and price.

Win-Win-Win.
Where does the third “Win” come from?... Our customer.
And here’s further proof of overdelivering…

SiteSell.com now is ranked in the Top 250 sites on the Net, according to Alexa.com. Companies just don’t grow steadily (passing companies like bCentral and IBM along the way) unless they offer tremendous value. For a visual representation of SiteSell’s growth, take a look at this Alexa comparison chart provides...

http://hardgoods.sitesell.com/img/sitesell-bcentral.png

 

We used MYPS!’s scientific survey technology to pinpoint our current price for SBI!. The bottom line conclusion of that survey indicated that our current price is an ideal price point, with a very high perceived-value by the customer.

SiteSell goal has never been to “milk” maximum dollars, to “upsell” or to play any other “sales games” with our customers. Instead... we simply provide value. We likely would make greater profits with less effort at a $995 price, but that has never been our mission. We know SBI! is still under-priced, but it gives us enough breathing room while still making it as accessible as possible.

http://buildit.sitesell.com/

 

And that brings us to how you can figure out the value of your product… and price it profitably for you and your customer…