Customers always want to pay as little as possible, right? Not so fast. Customers often willingly pay more for a product even when they can get a functionally similar (or even identical) product elsewhere for less. Here's why:
1. Your product is easier to buy.
Customers hate futzing around with complicated purchasing and payment options. Customers are usually willing to pay a bit more if you can streamline the process of buying from you, rather than elsewhere.
2. Your product arrives more quickly.
Customers, like everyone else, want immediate gratification, especially when they're spending money. If you can gratify your customer's desires sooner than the competition, they'll usually pay a premium.
3. Your product has a "must have" feature.
Customers sometimes fixated on a particular feature even if it's not that must use to them. I once saw a company pay a $100k extra for a publishing software that could snake text around the shape of a hand--a feature they'd needed exactly once in the past.
4. Your product burnishes the buyer's reputation.
Consumers buy fancy-branded luxury goods because it makes them look and feel wealthy. The same dynamic operates in the business world, which explains why companies are still buying high-priced, IT-intensive ERP systems.
5. Your product has a lower cost of ownership.
It's not all about price... it's about the time and money you spend after you purchase. For example, an iPad costs more than a Windows netbook but requires less maintenance, thereby making it cheaper in the long run.
6. Your customer service is more friendly.
Companies underestimate the anger (and even hatred) that business buyers feel when they experience horrible customer service. By contrast, customers will pay more when they know their problems are handled quickly and cheerfully.
7. The price difference isn't worth the hassle.
Customers will keep purchasing something that's higher priced if the difference between your price and the competitors price isn't large enough to get onto their financial radar. People don't worry about the cost of salt when they've got big fish to fry.
8. The customer likes you personally.
Customers are human and humans prefer doing business with their friends. That's one good reason that developing rapport is so crucial in customer relationships; it provides a buffer that keeps the competition at pay.
9. The customer wants something else from you.
A customer will generally pay more for your product if he or she is angling for a job in your company, or wants access to your business contacts, or is looking for, well, something more than "strictly" business relationship.
10. The customer is rapidly expanding.
Customers who are growing so fast that they're struggling to take advantage of all the opportunities usually don't have the mental bandwidth to worry about what everything costs.
When you’re starting a business, there’s no shortage of people eager to hand out advice. It seems that everyone, even someone you've just met, has an opinion on how you should be developing your product, running your marketing, handling your finances and much more.
7 years, 10 months ago