How much money is your niche able or willing to spend? Are you selling to bigger corporations or smaller ones? To the affluent or the almost broke?
You can accept as gospel that some of your prospects will think your prices are too high. In reality that has more to do with how well you communicate the benefits, but the market you choose to sell to will also influence how much you can charge. You can charge more money for a tailored product to a specific niche than you can for its generic version.
For example, let’s suppose you offer a time- management training program. As a generic one-day program, you’ll hit the price ceiling at around $99 per head to attend. But suppose we offer time management for sales representatives? Now we’re in the $200 per person range. Time management for pharmaceutical reps? More money. Time management for pharmaceutical territory managers? Even more.
You get the idea. The more that you can position your product or service as meeting the needs of a specific niche, the more that niche will be willing to pay for it. The reality is that there’s usually not a huge amount of difference between the generic Time Management for Everyone program and the others, but the perception is that “this is something that meets my unique needs.”
It would seem self-evident that you’re far better off selling to people who have money rather than those that don’t, but unfortunately many budding business owners don’t fully think this through when they’re selecting a niche. For example, many entrepreneurs target the very small business community as their niche. The reality is that micro-small-businesses usually have very little money. They may have a need for what you sell, but their ability to pay for it is likely to be another thing entirely. Sometimes you need to be a bit creative with finding the right niche that can afford your services. This is certainly the case for those who offer job search services to the laid-off or unemployed. Not surprisingly, this group has little money and is extremely frugal about spending what little they do have. However, the “outplacement” industry, which basically sells job-search assistance, owes its success to targeting a different niche than the out- of-work individual. With a bit of research, the industry discovered that they could sell outplacement services
to the corporate human resources department. Thus a service that was a bust in one niche (unemployed workers) became a huge success when marketed to a different one (the corporations laying off employees).
In a similar fashion, selling expensive products to students doesn’t make sense, but selling to their parents does. An example of this is a company called Creative Circus. Their niche market is creative types who haven’t settled on a career but don’t want a typical job.
Creative Circus offers a $45,000, two-year training program for people who want to be copywriters and graphic artists, which is well beyond the reach of these young adults. However, their parents are often able and willing to foot the bill, so the marketing is directed at them.
You also want to consider whether you want to sell to corporations or to individuals. Generally speaking, you can charge corporations more money; however, it usually takes longer to get paid. There’s also more bureaucracy to deal with, and the sales cycle is longer. However, once you secure a large corporation as a client, they may remain with you for many years.
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Mark Satterfield, Gentle Rain Marketing — Author , Marketing Consulting Expert, Lead Generation, Business Development, Marketing Strategy, Get More Clients, Increase Revenue — Click here for his Facebook Twitter LinkedIn YouTube