Summary
- Raising prices typically results in more money, although you may hear more 'no' responses.
- Many people fear increasing prices by 10% or 20%, but I’ve tested 4X to 5X price differences.
- You need the courage to handle more rejections when increasing prices.
- We experienced a 35% reduction in conversion rate, but doubling our price resulted in increased revenue.
- For example, if our cost was $500 and we sold the item for $11,000, we had a 50% profit margin.
- By doubling the price, we went from making $500 in profit to $1,500 in profit.
- Doubling the price with a one-third reduction in sales still resulted in doubled profit despite fewer customers.
Video
How To Take Action
Implementation Strategies
Raise Your Prices Boldly
I suggest implementing a small price increase to start, around 10% to 20%. Track how this impacts your sales and profit. If you notice only a slight dip in sales but a good jump in profit, consider doubling your price. Understand that a higher price may mean hearing "no" more often, but the additional revenue usually makes up for it.
Test Different Price Points
A good way to find the optimal price is to experiment. Try a few different price levels for your product or service. For example, if your current price is $100, test $200, or even $500. Yes, it's a big leap, but sometimes it can lead to big gains as well. Just be ready to handle some rejections along the way.
Monitor and Analyze Results
Always keep track of how price changes affect both your sales volume and revenue. For instance, if you sell a product for $500 and decide to raise it to $1,000, carefully measure how many units you sell and the overall profit. If your sales drop by one-third but your profit doubles, like in the example, you’re on the right track.
Build the Courage to Handle Rejections
You need the courage or the willingness to accept that you might hear "no" more often. This is part of the process. It’s key to stick with your decision and not revert to lower prices after a few rejections.
Simplify Your Cost and Profit Calculations
When considering price hikes, make sure you understand your cost and profit margins well. For instance, if your cost is $500 and you currently make a $500 profit at a $1,000 price, doubling the price to $2,000 and experiencing a one-third drop in sales could still double your profit. Always run these numbers to know the real impact.
By focusing on these low-cost and high-value strategies, you can make more informed decisions and potentially increase your revenue without a huge investment of time or money.
Full Transcript
raising prices almost always makes you more money but you hear no more often so a lot of people are like really afraid of like 10% or 20% increases like I'll test 4X 5x price differences but the thing that you have to have when you do this is the balls or the stomach to deal with more nose we had a 35% reduction in conversion percentage but we doubled the price and so we made more money in multiple ways so one we made more absolute Revenue we literally just made more Topline but the magic of this is that so let's say the cost of our thing was $500 and we sold the thing for $11,000 okay so we have 50% margins well if we double the price we go from making $500 in profit to $1,500 in profit me doubling the price with a one-third reduction in sales still doubled the profit in absolute amounts despite selling one-third fewer customers
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