About a month or so ago I decided to completely ignore my own advice. For some reason I thought that I could do things differently and that the laws of the jungle didn’t apply with my own projects.
…and even though I thought one thing,
the right thing, when it came to what I
was doing, for some reason I thought it
would be a brilliant idea to go the other
direction.
Boy was I wrong!
So, you are probably saying “ok Josh,
get to the point. What did you do?”
Well, I committed a huge mistake that all
boils down to ignoring one of the major
tenets of pricing strategy.
I developed a solid business model around
low-cost information products designed to
help bootstrapping small business owners.
Then about a month ago I decided to raise
the prices on all of my products, in order
to closer reflect their true value.
Well, this is where I made the huge mistake
and this is where you can benefit greatly
from my mistake.
NEVER raise prices unless the demand for
your product is so rabid that you can’t
possibly fulfill all of your orders.
Always start HIGHER than your target and
work your way DOWN when trying to develop
the perfect price point.
I raised prices after everyone in my market
was used to a certain price point. In some
cases I tripled the price of a product.
Wow, was I wrong!
How wrong was I? Well, you voted just like
the rest of the Underdog Millionaires. I
went from a steady stream of sales that ran
like clockwork to almost NOTHING, overnight.
That’s how wrong I was. I may have even
damaged my business for quite some time in the
future.
But instead of sitting in the corner, crying
myself to sleep and rocking back and forth
I decided to use this to help you instead.
I now know that I will never ignore my own
advice again and I decided that it was best
to air out my dirty laundry instead of
pretending like nothing happened.
So, here’s the takeaway, so that you don’t
have to light your own business on fire the
way I did, and have it come crashing down like
a bag of flaming poo:
Be confident in the work that you are doing
and charge a price that reflects the true
value of the work that you are doing or the
product that you have created.
Charge that price from the beginning and lower
it when you need to, but raising it will kill
your business flat, like a dead deer on the
highway.
Remember that your customers are the ones that
get to vote on the perception of the value and
price that you have developed.
This also doesn’t mean that you can charge
exorbitant amounts of money for something with
little or no value, either.
Your price must always reflect the perception
of value that you have created around your product.
If you want to know EVERYTHING that you need to
know about creating the right pricing strategy
for your product or service, then click here:
http://www.product-pricing-strategy.com
Also, I have gone through and lowered the prices
on all of my products back to their original
levels and in one case, even lower.
I wish I could say that this is a pricing
stunt on my part, but it is an error correction
that I will not repeat in the future.
Pricing strategy can make or break your
business, as I have found out in the past month
or so and I hope that my huge mistake can
help you out in the future so that you
don’t repeat what I did.
Until Tomorrow,
Joshua Black
http://www.product-pricing-strategy.com
P.S. After reading through this I don’t feel like I was very clear on one point, so I will try to explain it here. It’s OK to raise prices if your customers expect you to, or that they feel you are charging too little.
Things like cost of living, cost of materials, and charging much too little for services are all reasons that are totally acceptable to raise prices. However, once you have established a pricing niche for yourself it could be business suicide to raise your prices if those factors don’t exist.
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Copyright 2010, Outer Limit Productions LLC.
All rights reserved.
Download these other great products to help
your business earn huge piles of moolah:
http://www.product-pricing-strategy.com
http://www.how-to-business-network.com
http://www.ranking-higher-seo.com
http://www.UnderdogMillionaire.com/blog
http://www.sales-letter-system.com
http://www.closing-the-sale.com
http://www.information-product-report.com
http://www.UltimateUSPcreator.com
http://www.underdog-success-formula.com
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{ 5 comments }
Josh:
Wow, this mistake really sucked. I would like to thank you for sharing your story and for the transperancy so I can learn. It is a breath of fresh air, after the bag of flaming poo has burned out (this reminds me of Halloween pranks when I was a kid), that you can be so open and honest even with your mistakes. We as humans do not like when we have to admit our mistakes.
This just continues to show me that you are someone I can really trust and rely on.
Thanks buddy!
- Rick
Hey Rick,
Thank you for that comment. I really needed it. I try to be as transparent as I can. No one is infallible and I can’t stand when people give advice that they haven’t tried themselves. Your message came just at the right time, because I got a poo grenade today on top everything else… my web host’s server was down for 4 hours, so my mini-empire was at a standstill as well.
I appreciate that I have your trust. It’s very important to me. I am now putting my crash helmet back on and getting my cape out of the garbage can and I am ready to face another day of customer help, head-on! To Infinity and Beyond!… or something.
-Joshua Black
Hi Josh,
Thank you for sharing this. I don’t think you should be ashamed of what happened.
By talking about things that you have one wrong, you gain trust from your visitors.
For me I always start high and then lower it to the minimal margin. A lot of online products does it this way, and people online tend to walk away from expensive products, as the majority of us are average earners.
I’ve been in IM for a very long time part-time, and I have made my fair share of mistakes along the way. But you have to learn from your mistakes for better things.
Louis
Louis,
Thank you for stopping by. I think it’s really important to keep a certain level of transparency with your customers. It’s one of the things that can make an internet business really stand apart from other businesses. Pricing is a tricky business and I think that it’s definitely an art to get things to a level that bring in the most possible revenue with the least possible headaches.
-Joshua Black
The negative effects of raising your price could have also been amplified by the down economy. In a bullish economy loyalists and fans of your products would continue to purchase. Finding the right point on the bell curve is always a challenge as the bell curve will change according to past history and expectations. Sam Walton would probably go with side that says take a little less and sell a little more.