Young Entrepreneur Council: Quit Blaming the Economy for Why You're Not Making Enough Money

What are some clever ways to charge more for a service or product to existing clients without getting "the economy" complaint?

The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the world's most promising young entrepreneurs. The YEC promotes entrepreneurship as a solution to unemployment and underemployment and provides entrepreneurs with access to tools, mentorship and resources that support each stage of their business's development and growth.

A: Add Something Worth Paying For

You shouldn't raise prices without giving more value to existing clients. Incorporate the features or benefits that current clients are asking for, and explain why this added value far outstrips the increase in price. -- Kelly Azevedo, She's Got Systems

A: Give a "Discount"

Start with a high initial price -- the actual value of your product or service -- and then discount it. You'll be able to enter the market with a low price, but will have set the expectation with clients that the discount is a limited-time offer. -- Bhavin Parikh, Magoosh, Inc.

A: Deal or No Deal?

Ask your customers questions on what types of things could you build to improve your product. Then ask them if they would pay more for those features. Only build the features they would pay more for, then charge them more for it. -- Rishi Shah, Flying Cart LLC

A: Let Them Opt-In

Don't make it mandatory for clients to pay more. Instead, offer optional upsells for clients who want to, and can spend more money. As an example, take a look at the domain name registration process for GoDaddy and see how they upsell value-added services each and every step of the way. -- Matt Mickiewicz, 99designs

A: Customer Service Is Priceless

If you charge more, clients will expect better treatment. Give it to them. Be personal, easy to access, and quick to respond to calls and emails. They'll be grateful and determine the extra price is worth it. Great service is always worth the price. -- Sam Davidson, Cool People Care, Inc.

A: Foresee a Profitable Future

You will never get the excuse about "the economy" when you can show a return on your investment. Prove that you can help your client make more money than you ask from them, and guarantee it. For example, I offer coaching services to startups and I guarantee the company will make more than the investment back in profits. I deliver for every client so the topic of "the economy" never comes up. -- Louis Lautman, Young Entrepreneur Society

A: Own Your Worth

It's not about finding a clever way to charge more; you don't have to be clever if you offer real value. When you believe in what you're selling -- including its worth -- you never have to worry about overcharging. -- Matt Cheuvront, Proof Branding

A: Measure Their ROI

It wouldn't be fair to propose higher prices without highlighting the other side of the coin for the client. What will be their return on such an investment? How long will it take? If you can't justify this for them, be honest and tell them it's not a cost-effective decision for them to make at this time. They'll appreciate it and undoubtedly come back to you when it is due to your honesty. -- Logan Lenz, Endagon

A: Make It Mutually Beneficial

Explain why price increases benefit your customer. Will the increase allow you to add additional services? WIll it enable you to provide more personalized attention? Will it put your services out of reach by their competition? If you can add value to the relationship by charging more, most business people will understand. If you charge more without adding value, you might be on the wrong track. -- Robert Sofia, Platinum Advisor Marketing Strategies, LLC

A: Pay for Performance

We typically charge a flat retainer every month to our clients, but we're also trying out a new pricing strategy -- a smaller retainer (base) and then a separate bill based on results. This can be more enticing for clients who aren't necessarily ready to pay for the all-inclusive monthly retainer at first, and shows them what we really can do for their company. -- Heather Huhman, Come Recommended

A: The Backward Approach

If you go in to your sales meeting with your highest priced package, you can always work backwards to find something that fits their budget and your margins. The customer is always going to try and talk the number down, so you might as well go in with the number already high and know you're going to end up somewhere in the middle. -- Lucas Sommer, Audimated

A: Screw the Economy!

The economy is irrelevant. It's all about value. If you create more value than you get, the client will be happy paying your prices. Think of it this way: if you undervalue your product or service now, what will you do when the economy improves? Charging more then will go over worse than charging more now. -- Brent Beshore, AdVentures

A: All Access Passes!

The best way to charge premium prices for just about anything is increased access. That's generally what people want most of the time. Whether it's heightened access to you or your team, more features to a product, or anything else with perceived exclusivity, people will still pay for access in a down economy. -- Sean Ogle, Location 180, LLC

 

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Comments

[SallyJay2000]

12:38 PM on 05/01/2012

It is true that a bad economy does not mean little profits. If you have the right thing, right place, people will come. What disturbs me is that everything now is geared for young people -- jobs, business, college, etc. I'm a baby boomer and have plenty of energyt o run successful businesses, but since the young generation has discriminated against me severely in jobs, I can't even get a loan. Remember you'll be old one day too.

[tolerantvoice]

11:08 AM on 04/30/2012

All good advice but until Congress requires products sold in the US be made with the same laws required of made in the US, manufacturing will continue to decline, unemployment will continue to increase and money available to small business will continue to shrink. It is insane of Congress to inflate domestic production costs but allow imports that are not subject to the same artificial expenses. In effect the US is imposing tariffs on domestic goods but not on imported goods. As always, tariffs impede trade. They certainly are impeding trade by the US domestic producers with US consumers. The result is the deficits the US and its state and local governments are enduring and certainly less money to be spent on small businesses.

[justappraisals]

12:47 AM on 05/01/2012

You do have a point, but it is much more complicated than what you say. It is not just Congress. It is the over all Governmental policy to restrict competivness. There are groups in this country that scream and yell of "Fair" occupational treatment, yet they say nothing or make an excuse to the comparing asian trade. Why? Because the law's there are so loose We will NEVER compete on the open market again. Not to mention that we have the Highest Corp tax along with the shackles that are upon us by the EPA,DOE,Unions and wall street bankers/lawyers. We are Ninth in the world, or is it higher now, of economic freedom. 9th? Even Canada is higher in economic freedom than the once free U.S.A.

[tolerantvoice]

08:31 AM on 05/01/2012

By requiring products SOLD in the US be made with the same rules as MADE in the US, any country that wants to sell in the US will be obligated to make the products with the same mandates required of domestic producers. This would mean a min. wage of $7.25/hr., complying with all the environmental, worker safety, overtime and child labor laws in effect in the US.
All the impediments to commerce you outlined were mostly in effect in the mid-90s. Until Clinton aggravated the free trade bandwagon with NAFTA, the US balance of trade was a paltry 31 Billion in 1991. With favored nation and other NAFTA like agreements, our trade deficit rose to 725 Billion by 2005. The laws governing domestic production and Corp. taxes, while troublesome, only hurt when products SOLD in the US are not required to be made with the same rules as MADE in the US. Only Congress can fix this impediment to the health of the US economy.

[garystartswithg]

12:26 AM on 04/28/2012

too many people are still trying to follow the corporate model that is seriously flawed. I don't know how you get them to pull a 180, and that is something that seriously needs to be addressed -- especially since too many are going to a for profit and ending up with lots of debt from it that could have gone into something productive. In general entrepreneurs raise entrepreneurs and drones raise drones.

[justappraisals]

12:52 AM on 05/01/2012

What is most flawed is the fact that the Government is interfering with business. When they did not hold business down, business grew, now they have their fingers in. Passing policy, aiding the company THEY approve of. Lobbying and pushing their agenda, To pick the winners and loosers, results in the end we all loose.

[garystartswithg]

04:58 AM on 05/01/2012

you are a bit out in ayn rand lala land there, bucky. you are slinging around the word business without any definition -- there are many kinds of businesses, and they function very differently.
govt doesn't hold business down as much as favors huge corporations and it lets huge corporations run wild and free. too big to fail, etc, etc.
i hear people complain about the loss of mom and pop stores, etc. if you don't shop there you are the problem as well, its not the govt not shopping there, its you. ironically there are lots of thriving mom and pop stores in urban areas where people are less liketly to shop walmart, and its also where land and taxes are the most pricey. walmart likes cheap land and low taxes. NYC has lots of mom and pops, no Walmart. Conversely go to red state heartland USA, all there is is Walmart. Did Walmart do that? No, the people that shop at Walmart did.