Charge What Your Products Are Worth

You probably already know that your website’s sales will go down if you’re charging too much for your products, but did you know that sales can also suffer if you charge too little?

I wish I could tell you how many times I’ve seen someone’s website go under because they weren’t making enough profit off of the products they were selling, but I can’t because I’ve lost track of the number.

It’s sad and I see it all of the time. Someone thinks that he’ll make more sales if he lowers his prices to keep up with the competition. He ends up undercutting the other guy, then the other guy undercuts him, then he undercuts back, and soon none of them are making money.

So what’s the answer? Before anyone says it, I’m not suggesting that the solution is industry wide price fixing. No, in actuality the answer is value.

You see, everything that is sold has a value of some sort. For example, you know about how much you’re going to pay for a cup of coffee, or a shirt, or a new car. And if the price is well below what the market expectations are, then sales will most likely suffer as a result because customers will wonder if they’re getting an inferior product.

But there are many industries, including the ones above, that have much more expensive high end products available. How do they get away with charging so much more for a shirt or a cup of coffee? By adding value to their products. Or at least by adding perceived value. (In some cases, the more expensive item won’t be any better than the cheap item, but that’s a conversation for another time.)

Remember, customers don’t always buy the thing they need, they buy the thing they want. And a lot of the time the thing they want is the thing that costs more and has greater value. I know that I’m willing to pay more for better quality and better customer service, and I know many other people who are as well. People who understand that the cheapest option isn’t always the best bargain.

Now I’m not saying that you should start gouging your customers and overcharging them. I’m talking about charging what your products are worth. And if you can increase the value of what you’re selling, then by all means increase the price accordingly.

I’ll give you an example from my own experience. One of my first websites, www.warrantydomain.com, was chugging along for a long time making very little profit. I couldn’t understand why I wasn’t making more sales since I felt like I had the best prices in the industry. I later came to realize that I was charging too little and that customers were hesitant to buy a warranty that they felt must be of poor quality to be priced so low.

Plus, my profit margin was pathetic. So I raised prices to be more in line with the market, and sales instantly shot up. And I was making more per sale. I didn’t even have to add any extras or bonuses or anything else. Just bringing prices in line with what the average customer expected did the trick.

This is even more true if you’re selling your own products, such as an ebook or a monthly membership, because now you have something for sale that no one else does. So why would you bother lowering prices to compete with no one but yourself? Even if you’re ebook is on the same subject as someone else’s, it’s still not the same product, so it can’t be purchased from anywhere else. So charge what you think it’s worth.

And I highly recommend adding as much value to it as possible to justify the higher price tag. Then let potential customers know how much they’ll be getting for their money, and show them how they’re really getting a great deal.

The fact of the matter is that you won’t be in business for long if you’re constantly engaged in a price war. You’ll only end up going broke and making yourself crazy. So charge what your products are worth. You’ll make more profit, and if you give good value, you’ll make more sales as well.