How To Charge 10x More Than Your Competitors
Most entrepreneurs think that if they charged more, they'd be less likely to get new clients.
And so they keep prices low. Then they burn out, having to find and support way more clients than they are capable of.
The better approach, in my opinion, is to be the premium provider in your niche.
The nice thing about this approach is that you end up attracting a higher quality client. It's like the classic meme (not sure who made it):
But you can't just raise your prices and call it a day.
To help you pull this off correctly, I need to tell you a story.
Last month, I went looking for a photographer. I'm redesigning my website right now and I needed new headshots.
Here were my options:
I could either get them done by a local photographer for $400.
Or, I could get them done by an out of state photographer for $5,250.
Believe it or not, I chose the second one.
The question is, why would I drive 4.5 hours and pay over 10x as much for headshots
There are three reasons. In this post, I'm going to explain what they are and how you can use them to charge 10x more. Let's dive in:
1. Relevance
I had acne as a kid. It wasn't terrible, but I was still self-conscious about it. I remember the first time I went into a drug store looking for something that would help.
There were all these brands of general face wash and it was totally overwhelming. I didn't know what to buy. Then I saw this little orange bottle that said "Acne Wash."
Done. I didn't even look at the price. I just grabbed the bottle, paid, and left.
It's the same thing with any type of business. If you solve one specific problem, you'll be more attractive to people who have it. They'll naturally assume that your solution is more relevant for them.
Which brings us back to the headshots.
The local photographer I found shoots weddings, graduation photos, and business headshots. But the photographer I ended up hiring, Stephanie Ewens, specializes in personal branding portraits.
That's what she does all day.
And because she does it all day, she's developed a specific approach.
First, you create a mood-board and meet with her to talk about your brand.
Then, you speak with her wardrobe stylist to decide on what outfits will look best on you.
Finally, you show up to her studio for the shoot. It's a beautiful studio. There's a hair and make-up person there. And you get your headshots done.
She can invest in all this because there's enough money to go around.
Specializing isn't just some marketing trick. When you do it right, specializing allows for a better solution.
Which brings me to my next reason for hiring the expensive photographer...
2. Results
We've all heard the phrase, "You get what you pay for."
The biggest argument for raising your rates is this: it allows you to invest more in your solution. This is what we saw in the photographer example. Here's one of the 30 images that I got back:
It's a fantastic shot. And it's not just her skill that makes it great. It's also the fact that she has a nice studio, with expensive equipment, and a team.
But what if you don't sell something that requires you investing a lot of money? What if you sell something that requires your clients to change their behavior? In that case, higher prices get your clients more invested.
Coaching is a great example of this. You can be the best coach in the world. But if your client doesn't do anything between sessions, they're not going to get the results they want. And people work harder when they have more skin in the game.
And pricing psychology gets even weirder than that. Because humans are not robots calculating the actual value of things that they buy. No. we're irrational creatures who create stories based on what something costs.
There's a Caltech and Stanford study where volunteers tasted five wines, ranging from $5 to $90. When volunteers could see the prices, they rated the $90 wine as their favorite. The researchers also did brain scans. They could literally see that the volunteers were experiencing more pleasure from that wine.
But then they made the volunteers taste the five wines again. This time, it was a blind taste test - no visible prices. And the volunteers chose the cheap $5 wine as their favorite. Something to think about.
3. Recommendations
You can have a tight specialty and great results to share, but there's a third thing you need if you want to charge 10x more than other people. Recommendations.
To explain what I mean, let me tell you about an app I use called "Find Me Gluten Free."
I have celiac disease, and it used to be a huge pain in the ass to travel because I'd constantly be trying to explain what gluten was.
One time, in a highway diner in Pennsylvania, a waitress asked if I wanted her to put the gluten on the side. That's when I knew she had no idea what I was talking about.
Find Me Gluten Free has reviews of nearby restaurants based on how well they accommodate gluten free diets. I'm much more likely to go to a restaurant if it's gotten good reviews from other people on the app. It's not worth the risk to go somewhere untested and then get sick afterwards.
The point is, people are willing to pay more and go out of our way based on a recommendation from someone they trust.
You might ask, "Okay, so how do I get recommended more often?" It's not just about improving the quality of your work (although that's important). What really helps is building relationships with people who also serve your potential clients.
That's what happened with the portrait photographer. She was recommended to me by my copywriter, who was helping me with my website. Without that recommendation, it would have been hard for me to pay 10x as much.
In summary, 10x'ing your prices requires:
Becoming more relevant to your clients
Using your prices to get better results; and
Being recommended by the right people.
Yes, it takes some work. But it's worth it.
If you want my support to increase your prices and grow your business, apply for a strategy session.
