What if you could make no change to your product and make customers happy to pay more for it?

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James Hurman | 12 March 2019

 

Everyone’s always trying to grow their sales.

But hardly ever trying to put their prices up.

The reasons seem obvious enough.

Getting bigger is good.

And no one likes things getting more expensive.

But what if we looked at it another way?

All sales come with some kind of cost.

The cost of the goods, or the cost to provide the service.

Some of the money that comes from extra sales flows down to the bottom line.

And some of it doesn’t.

But when you put your price up, all of that money flows straight down to the bottom line.

If you increase your sales by 10%, you’re half as better off than if you increase your price by 10%.

So if you’re trying to maximise the amount of money your business makes, it makes more sense to try to put your price up.

But hang on, what if we lose customers?

Nobody likes things getting more expensive.

That’s true.

But it’s also true that we’re happy to pay more for something we believe is worth more.

In 2013, some researchers in Helsinki did an experiment.

They asked people how much they’d pay for a particular cosmetic product they’d never heard of before.

Half the group was told all about the product – what it was made of and what it did.

The other half were told about the product too.

But they were also told about the company behind the product.

That company’s history, what their values were, and why they made the product.

In other words, they learned about the product, and they also heard the brand’s story.

Then everyone was asked what they expected the product to cost.

The first group said they expected the product to cost 18 Euros.

The second group, who’d heard the story, expected the product to cost 29 Euros.

Because they’d heard the story, they’d concluded for themselves that the product was worth 60% more.

Then, everyone was told that the price of the product was actually 31 Euros.

They were asked whether they’d be willing to buy the product at that price.

50% of the first group said yes.

The other 50% said no.

The other group?

The one that had heard the story?

100% of them said they’d buy the product for 31 Euros.

The researchers’ experiment had created two completely different kinds of customer for the exact same product.

One who was happy to pay more.

And one who wasn’t.

The only difference?

Telling their story.

So which kind of customer are you creating?

 

James Hurman is the founder and CEO of Storytech

Storytech is a ‘brand strategy in a box’ digital product for start-ups and small businesses, allowing them to develop a world-class brand story, in a day, for $500. To learn more about Storytech visit www.storyte.ch

 
 
James Hurman