,

How to Charge A LOT More & Increase the Amount Each Customer is Worth

Shopping

Do you know what each customer is worth to you?

One of the biggest mistakes people make is focusing too much on customer acquisition cost and not enough on ​increasing the customer lifetime value.

Although lifetime value is important so is the value per transaction and the short term value so we’re going to show you a bunch of fundamental ways you can radically increase your profit, increase your allowable customer acquisition cost and decrease the number of customers you need to hit your financial goals.

Less customers required of course means less work required and a general improvement in your quality of life not to mention a simpler life.


The First Step is Pretty Underwhelming

The first secret we’ll share isn’t going to surprise you…or maybe it is for its simplicity.

This is a HUGE mistake new business owners in particular and small business owners in general make namely charging too little.

When working with companies, we can very often enter and immediately increase their prices by 10% - 100% without affecting sales much at all and thereby radically increase their profits.

To give you some idea if you had a 50% margin previously and we raised your prices by 10% this is the equivalent of increasing your sales by 20%. If you had 20% margins this is the equivalent of increasing your sales by 50%!

The problem for new business owners and this was true for me as well, is we’re used to thinking in terms of how much we make working a job ie. “someone else would pay me $20/hr. so I should charge slightly more than that”. When in truth, you should probably charge 3 times that much (yes those are real numbers).

To avoid under charging when you’re starting, out my general advice is to charge whatever the market is charging or just slightly under (to capture market share) or over either to capture premium value (where you should normally sit as a small business).

Discover what your competitors are charging and base your prices off of this then modify based on your learning.

Bottom line, the first thing to do is simply to blanket raise your prices and you’ll almost always make more money.

The one exception is on what are called “known value items” where there’s a high degree of price sensitivity on these. It pays to price a little lower as loss leaders to attract customers, in order to get them on your more expensive items where customers pay less attention to price.


Who You Sell to Matters

One of the best ways to increase your transaction size and profit per transaction, as well as lifetime value, is simply to target higher end customers.

Look, if you’re selling accounting services to a business in Serbia you’re going to charge MUCH less than if you’re selling the same services to a business in London England. So go sell to customers who will pay you more!

How do you know who will pay more?

Look for prospective customers who are already paying a lot more for what they are buying. In other words, you’re selling to less price sensitive buyers.

This principle doesn’t just go for where in the world, though this is a valuable part of the equation, it also concerns who will find the most value in what you’re offering. For example, enthusiasts vs a casual audience or a corporate client vs an individual or small business client, etc.

Obviously, they need the money, but they also need the mindset to spend the money.

​Not sure how to find these high value customers?  Download the Finding Your Ideal Customer Action Pack.


Where You Sell Matters

Not as easy as who you sell to, the sales environment makes a BIG difference.

Here’s a story to show the point.

A few years ago I was in Thailand where there’s knock off watches, bags, etc. everywhere.

As an exercise, my brothers and I thought it would be fun to go buy some then research on the internet how to tell the difference between the reals and the fakes.

Later, we decided to visit the stores of the authentic brands to see in person how the knock offs compared.

Many were awful but some looked good, felt good and here’s the thing…most buyers weren’t very sophisticated and couldn’t tell the difference anyway. They bought because of the brand but here’s the interesting thing, how did they know to trust the brand?

When buying the knock offs it would be some street vendors or little garage shacks crammed with merchandise from floor to ceiling in every corner on the side of a narrow street.

The big brands had beautiful stores in high end malls with few items on display surrounded by nice fixtures and well dressed staff.

It occurred to me that some of these street vendors could have been selling the real thing and no one would have believed them. While the big brands could have been selling high quality knock offs and no one would have questioned them.

It’s a powerful lesson about how the buying context affects the perception of value and in this case allows you to charge a lot more.

​The free download Find Your Ideal Customers will help you  determine optimal locations if you're struggling.


What More Can You Sell?

The next most popular way to increase the transaction size and consequently the profit is to ask “what else can I sell them?”

Then add-on, bundle it, whatever to increase the value of the sale.

The classic examples are at McDonald’s “would you like fries with that?” “would you like to make it a combo?” and “would you like to supersize it?”

Why is this so effective?

A big part of what erodes your profits is the customer acquisition cost but once someone is making a purchase you’ve already covered that cost so your margins on everything else you sell them are much higher.

In your business, what can you sell that’s complimentary? An add on? An upsell?

Along these lines can you offer a line of products with higher end versions to charge more?

Could you sell warrantees or some kind of support?

There’s almost always dozens more things you can sell to increase the value of each sale.


Bonus – Bigger Profit Not Bigger Sale

The final thing to do is to provide smaller quantities.

This is a great strategy employed by many successful businesses and billionaires.

Take the amount you were going to put into that container and reduce it thereby dropping your costs. Because the container is the same size, the perceived value remains the same so you sell for the same amount and make more profit.


​What's Next?

There are literally dozens of general strategies to increase the value of each customer and each transaction, which combine into hundreds of permutations for your business.

If you’d like more like this please check out our other articles, download our free content and consider engaging with us in one of the following ways:

  1. Take one of our training programs – if this is a simple free article you can imagine what kind of value we pack into a few week or few month extensive training program on subjects like Profitable Marketing, Getting Deals, Leveraging Team, Growing Impact, etc.

  2. Have us consult with you in a Rapid ROI Strategy session to get results toward your financial and business goals quickly. These are perfect for people who don’t necessarily need extensive training but have a quick question or challenge to solve that would be very valuable and give them a big edge.

  3. Apply to have us work with you in helping you build your wealth, your business, your marketing directing you on exactly what to do, tweaking your process to get the fastest results possible. We do this especially in helping you to Build a Profitable Sales & Marketing Machine. You can also request similar assistance with other areas.

If you liked this article and would like to receive more like this each time we post, enter your name and email address:

Readers like you were interested in these programs:

Your Breakthrough Marketing Review
Profitable Sales and Marketing Machine
Facebook Ad ROI Training
Campaign ROI

We offer personalized one on one assistance.
Want help?

I want help with marketing
I want help with team
I want general business help
I want help with investing
I want help with money management

Other Popular Programs:

The Greatest Business Course Ever
Scale ROI
Team ROI
How To Become Rich Mini Series