McDonalds has a lot to answer for, not least of which are their two-dollar burgers. You wouldn’t want to start a small burger restaurant and attempt to match McDonalds’ prices. Yet when starting a small business, that’s exactly what so many people do – they look around for the lowest price for what we’re selling, and try to match it.
This can be an expensive disaster that takes many years to recover from.
For small service businesses, competing on price can be the death knell. Putting your blood, sweat and tears into delivering exceptional service and a memorable experience at a low price comes with a high cost – stress, resentment and burnout.
In week two of my Hustle & Heart group coaching program, participants are given a challenge – to develop and launch a minimum viable product which is premium priced, before the program finishes. This is critical to the success of the program.
Small business owners are notoriously busy while also sitting on a goldmine of non-leveraged value. It’s likely that you already have resources which aren’t being properly utilised. It’s likely you already have value that you’ve created, which can be packaged into a premium product. And it’s likely that you already have clients who are waiting for you to launch this.
Premium products can make all the difference between just-getting-by and a booming business.
Why people leave our businesses
Because I’m a small (micro) business with a limited marketing budget, as are most of my clients, I’ve always been far more interested in retaining my existing clients than attracting new ones. Not least of which is because it costs at least five times more to attract new people than retain people.
Why do people leave businesses? The vast majority leave because of bad customer service. So if clients receive excellent service, why do loyal clients sometimes switch and leave?
Oftentimes this is due to being wooed by the bright and shiny newness of your competitors. Much like a romance, before you notice that your new lover farts in bed and has an annoying habits of leaving a trail of distraction around the house, your clients are wooed by the unfamiliar. Your competitors have fascinated your clients with offerings that appear to be more exciting, special or remarkable than yours.
Your clients leave because they believe they’ve gone as far as they can with your business.
This is one major appeal of the premium-priced offering – not only do they boost your profits – but they’re an opportunity for clients to go deeper and more fulfilling experience with your business. Premium offerings provide clients with a logical next step in your business and an exceptional experience, increasing word-of-mouth and the likelihood that your clients will stick around.
Smart experiments to reduce your risk
Self-employed people tend to be creative and energetic – which makes good ideas almost an inevitability. But one too many lacklustre launches and failed offerings can dent both your finances and self-confidence.
Enter, experiments. Experiments have a bad name for being unprofessional and risky. Too often, we believe that involving our clients in creating new offerings would expose us as unprofessional. But the opposite is true.
What’s risky is putting enormous effort into creating and launching a new offering, investing in branding, infrastructure, website, etc – with little or no input from existing clients, prospects or community. And, of course, marketing is left to last. It’s far more risky attempting to anticipate what people want rather than merely asking them.
Our businesses are here to solve problems, issues, pains or inconveniences for people – not to read people’s minds.
Another bonus of running experiments is you have a great reason to reach out to your best clients, show them that you’re interested in their opinions and care about their needs, while involving them in your business. All favourite clients will respond positively to that.
Pushing yourself to create something excellent
Another fortunate byproduct of creating a new, premium-priced offering is that it pushes you to explore the limits of your creativity, talent, and expertise.
It’s far easier to create a low- or mid-priced offering. It seems less risky, more obvious, less scary, more generous. But this keeps you stuck in the treadmill of high efforts and low profits.
When the price we’re considering charging scares us a little, it pushes us to create something truly amazing. In the process, we’re challenged to test assumptions, ask better questions, ignite our curiousity, explore and innovate.
All owners become complacent over time, regardless of whether or not you’re aware of this. The new offering challenge is a challenge to increase profits, better please our clients, but also to reignite our passion and drive that led us to starting our own businesses in the first place.
Are you ready to create more profit in your business with a premium-priced offering?