Are you up for a little math? I promise it won’t be hard, but it will open your eyes to the possibility of doubling your income by raising your prices and rates.
I’m sure you’ve heard that one of the best ways to double your income is to charge more for what you do. When we first start to work online, we tend to undervalue our worth. We are anxious to get clients or make those important first sales. Starting out on the low end is actually not a bad idea. Without experience, testimonials, and social proof, starting with low-end products and services is a great way to get a foot in the door. But it isn’t where you want to stay.
How do you know that it’s time to raise your prices? When you start to make quite a few sales. If you’re a service provider who’s constantly booked, you should be raising your prices. When you hear your customers rave about your products and share how much value they’ve gotten from them, it’s time to raise your prices.
But what do you do when you’re not there yet? It may sound counter intuitive, but the reason your sales pages aren’t converting may be that you’re not charging enough. Think about it. You come across a course on running an online business that offers a ton of content for $7. What’s your first thought? It’s probably that it can’t be very good if the person is selling for so little. Your customers and clients may feel the same way.
Often we’re reluctant to raise our prices because we think we’ll lose customers. While that can happen, it also opens a lot of doors. Other people may not even consider buying what you have to offer until they see a price that they associate with high-value. Plus, when you increase your profit margin, you don’t need to sell nearly as much as you did before.
Let’s dive into that math. Let’s say you have a product that you sell for $20. To keep the math simple, let’s say you sell 100 of them each month and that there’s no real cost associated with the product. With an information product like an eBook or course, there really isn’t and let’s ignore those pesky payment processor fees for this exercise. In that case, you’re making a $2,000 profit per month.
Now let’s say you go crazy and double your price. You start charging $40 for your product. Because it’s such a great value and because the higher price reflects that, you find you’re making just as many sales as before. By doubling your price, you’re doubling your profit. You’re not bringing home $4,000 per month.
But it doesn’t stop there. Because of the higher ticket price, an affiliate marketer becomes interested in promoting you. You set up a 50% commission and he sends an additional 100 customers your way. That’s another $2,000 in profits after you’ve paid the affiliate his or her share.
Don’t be afraid to raise your prices. You don’t have to double your rates if that seems like a bit much. Play around with the numbers. If it doesn’t work out how you’ve hoped, you can always go back down, bundle products at a lower price, or offer a coupon. Play around with pricing and find the sweet spot for your audience and your products that nets you the biggest profits.