Finding Business Owner Success by Creating Customer Value | Creative Ravens | Maryland Small Business Blog

Finding Business Owner Success by Creating Customer Value | Creative Ravens | Maryland Small Business Blog


Ok, friends!  It's time to get real! If you're a business owner, you know all of the expenses tied into running a legal business. There are taxes for this and for that, continuing education trainings, salaries, insurance, processing fees, vendor fees, consumables! It all adds up quickly, and without very little effort.  A potential client may hear your pricing and scoff, not realizing that time and research went into your pricing structure.  The numbers weren't pulled from thin air, and as much as they might think this, you're not trying to steal all of their money.  This is when it is imperative to put emphasis on customer value creation.

When deciding on your pricing, your costs of doing business (CODB) and costs of goods sold (COGS) should really be taken into consideration to make sure you are actually making a profit. When doing the math correctly, it typically becomes evident that your pricing needs to be higher than you ever thought it would need to be (and that's ok). You might even be what some clients would consider "expensive."  Gasp!
What a kick in the gut, huh?

Let me ask you this... is being expensive really a bad thing?  What is associated with expensive goods and services?  Let us take a moment to talk about the importance of customer value.  To the human brain, greater expense typically equates to higher value.  Someone who pays matinee pricing for a film screening is much more likely to skip out on the movie than someone who paid $20 for IMAX tickets.  Similarly, a client who invests several hundred (or thousand) dollars on family portraits is much more likely to show up on time (or show up at all), and be fully engaged in the experience than someone who bought a portrait deal on Groupon.  I'm in no way saying that being frugal is a bad thing, and paying low cost for those experiences is much better than not having those meaningful moments at all; however, there is definitely a difference in behavior and overall psyche when there is an actual investment involved.



The truth is, it's ok to not be cheap. Yes, I said it!  It's totally fine to be expensive!  I know that in all of the business aspirations I've ever had, being “cheap” has never been one of them.  Running a business that is legal, sustainable, and and pays a decent salary for a business owner isn't cheap either!

So, how do you get clients to see value in what you do when there are others in your field offering the same services for far less?  
  • Be fully confident, in love with, and proud of what you offer
  • Remember that "no" is sometimes a bit of a reflex and frequently a call for more information
  • Make sure that there is something about your business that sets you apart from others in your industry (an amazing experience, yummy treats, excellent customer service, room for customization)
  • Show off beautiful samples of what you do
  • Make sure that the people working with you (assistants, partners, interns, contractors) are just as amazing and excited as you are about your products
I hope this post helps as you complete the task of pricing your products and services accordingly.  Remember that you're good enough to charge what you need in order to live a wonderful life as a business owner!  There is value in what you do, and you're worth it!

P.S.

In case you need an extra bit of encouragement, remember that these jeans retailed for $258.  They are now sold out.

Comments

  1. Your blog is supported by brands such as Mercedes and Apple. Both are not the cheapest, but do fine in their industries.

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  2. The moment people see a large price tag, especially if it's more than they can afford, they immediately assume that this product or service is of a higher quality. If they say "no", it usually means "not right now". This shouldn't discourage you! They need more info about what it is that they're buying in order to make an educated decision on whether or not this investment is sound. That's fair for anyone. The more value you provide and the more excited you are about your products, the more excited they'll be about them, and THAT usually leads to a sale!

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  3. There is an old adage in sales that says something along the lines of Price is only an issue in the absence of value. Build value with your customers and price won't matter. Don't be a commodity.

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  4. I remember an old art teacher saying that you should never sell your work too cheaply. If you do, people think it's not as good as the more expensive pieces. He was right, nobody should undersell themselves.

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  5. With companies always try to undercut each other's prices, this is a good reminder that it's not a bad thing to not be the cheapest.

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  6. You do an excellent job of describing the balances of running a small business. I appreciate your posts with a value of the art that each creative business owner carries.

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  7. Great advice! Information I am striving to follow right now. I have been doing some ghostwriting, and I find that the field of writing is especially under valued. It is not uncommon to be approached by a potential client who wants a full length novel written, with a budget of $1000! People simply do not understand the amount of time that goes into such a project and often take books for granted! Thanks for the post.

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  8. I buy my firearms from a small/local business. Many times he sells them far cheaper than chain stores. I usually compare his prices to Cabelas, for example. There was one where he could barely manage to meet their price, which is rare. But the thing that I go back for is the value. Exactly what you talked about. It wouldn’t hurt my feelings to pay more because I’m putting money into a small local shop, I’m getting customer service. I know I can ask questions. I go back for many small things because I know his profit margin is likely higher in those instances.

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  9. This is a great post and yes it definitely is okay not to be cheap! When my husband and I first started our sandwich shop business we priced all of our handmade baked goods and pastries insanely cheap in the hopes that it would bring people in to try our goods. And although it did get customers through the door we soon realized that we had to increase our prices because, it's actually a lot of work to make those pastries and at the price we were charging, we were basically doing it for free!

    Now we've increased the price slightly and feel that we are getting compensated for our hard work. And customers still tell us we should be charging more!

    It is definitely important to cost your goods at a price that reflects your hardwork and expertise.

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  10. Customer is the king & success of any business depends on keeping them as the prime fucus.Nice post & can relate being a Marketing guy all my life.

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  11. I am an apostle of "If you do business with the poor, you will soon join them". People strive to get rich and shun everything that they survived on when they were poor. So, I'll rather wait for my clients at the "rich junction" instead of being their GPS in the land of the poor.

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  12. This post has loads of very valuable info . I am not a business owner, but am very interested to learn more because probably I have a hidden dream of being an entrepreneur one day.. But, even as a customer, I would love to assess the value for money while investing on a product or a service..And I know people are ready to pay for quality!

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  13. Great post and it is important to keep in mind your costs + time when coming up with a price to make a profit. I think that is one thing most people forget when shopping for handmade goods is that there was a lot of time put into it so the store owner needs to make a profit so not everything will cost just a few dollars.

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  14. i tottally agree, It's totally fine to be expensive if you deliver a great value and quality !!

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  15. What a wonderful point to stress. Sometimes we get so caught up in lowballing to get business, we don't think ahead to how hard it is to bring prices up once business is stable.

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  16. It is more than okay not to be cheap as long as you are delivering a product or service that is in demand. You have to know your target audience.

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  17. Everyone should know their worth! There is nothing wrong in asking to be compensated fairly!

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  18. It's always a struggle to find the balance, especially when first starting out in a field!

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  19. As an entrepreneur, I have definitely steighled with this. And still am. It's to want to be competitive with low prices forgetting that you actually invested real value in coming up with a product. This was really helpful. Thank you.

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