Everyone overthinks pricing.
Don’t listen to economists. Pricing is not a science, it’s an art. Rational consumers don’t exist. Conventional wisdom tells you to look at your competition, sell it cheaper, build it better, or slap a more attractive package on it and The Market™ will crunch the numbers and buy from you.
In an age of supercompetition, there is a cheaper, better product around every corner. You need more than lower prices.
A premium pricing strategy is the best decision you can make for your business. When people think you can solve their problem, that price represents their salvation. If you plan to solve their problem, and you can solve it well, they will pay. The bottom portion of the market is overserved; confidence correlates with premium pricing.
The first step towards premium pricing is self-belief. You need to be your own mental point of origin: look ahead, not sideways. Fail to do so, and you become a commodity.
Commoditization is Poison To Your Brand
Commodities are replaceable; you can find them anywhere. They are a race to the bottom. A low price is a one-way ticket to the hamster wheel. Low prices are synonymous with low quality, low trust, low confidence, and low belief.
Self-doubt is chronic. There are millions of people waiting to tell you why you need to charge less. Only the brave and the delusional price their products well. Those who command a higher price signal self-belief; in their product and themselves – a high price says: pay attention, I am high value.
The higher the price, the better the margins, the greater the profit, the more investment in the business, the better the quality, the higher the price, the better the margins, the greater the profit, the more investment in the business, etc. – this is the virtuous cycle: upward momentum.
Raising Prices Is Easy, Don't Overthink It
The beauty of this strategy is that the instant you raise your prices, you begin to benefit from the premium effects. New customers won't know your history; to them, your price has always been this way. If you're in SaaS, existing customers will be thrilled to be grandfathered in at the old rate – they are saving a ton. If you're producing a finished good, the owners of your products will smile because their product has become more valuable overnight.
Nobody will tell you this: you can improve your prices without changing anything about your business. Pricing is a game. NFTs have proven once and for all that value is in the eye of the beholder. Premium prices communicate value. A cheapskate will view your price with the same disdain they feel for the cost of a newspaper: they are not your customer.
Raise your prices. 🥂