Hey, it’s Sasha Evdakov and thanks for joining me here at Backstageincome.com, where I share with you how money is made behind the scenes in your business and also your life. In this week’s episode what I’ve really like to concentrate on is the Three Effects or the Three Things that can actually happen to your sales if you raise your prices.
I find that a lot of business owners are really scared in terms of raising their prices because what if I lose customers, what if I don’t get the sales that I need to survive in my business.
How raising your prices affects your business
There could be some other problems that happen when you raise your prices and many business owners are fearful of this effect or the things that can happen to their sales when they manipulate price because we’re always thinking about well competing on price or our competition has lower prices than us or higher prices than us.
How will this disturb the marketplace and although this video is not focused on the ways that you can compete, if you’re interested in watching my video about the different ways that you can compete in the marketplace then just click this thumbnail right here and you can watch the different ways that you can compete in your industry.
However, I want to break that myth or that spell in that mindset that you have about raising your prices. In fact, as we go through this lesson you’ll see and realize that it’s really not that bad when you raise your prices or at least the outcome that you get are really not that bad.
Sales and Revenue may go up
Alright so let’s jump into these three things that can happen is that actually, your sales and revenue can go up. So how is it that these sales and revenue can go up when you raise your prices? So how is it that these sales and revenue can actually go up when you raise your prices.
Well, the fact is that many people out there believe and perceive that the higher the price, the higher the quality of the product. So when you actually raise your prices, there’s going to be new people and new customers that go out and purchase your product or service because they believe its higher value.
That way you are sales actually increase because of that higher perception. That’s one thing that can happen.
Sales are consistent
The second thing that can happen when you raise your prices is that you are sales actually stayed the same.
Why is it that they would stay the same? Well because the current customers that you have more people that are interested in your product or service they may actually just believe it to be just fine and a slight increase in prices can say “ Hey, well that product or service is still really good so I’m still willing to pay for it”.
Now if they stay the same you’re still in a better position because you’re still making more revenue because your sales didn’t decrease your customer value still stayed the same but you raise your prices so now each time somebody makes a sale or purchase all of a sudden you’re making more money from that sale or purchase.
Sales may decrease…
The third and final outcome and you’ve probably guessed it, is that your customers can actually go down towards sales can actually go down and decrease the thing about this is that this is what most business owners are really fearful of.
They’re really scared of this number three effect is that if prices go up and my sales figure actually goes down this can be really problematic for me. Now the beauty behind this number three even if your sales go down they almost have to go down by about 20% for you to actually lose out.
The reason for that is because even if they go down slightly just a little bit you have to remember that you’re making almost a little bit extra from raising your prices, so you’re probably somewhere around that breakeven point anyway.
Even if you go down in terms of sales quantity your revenue model may still be really close to the same amount. Now if it goes down to something let’s say like 50 percent or 80 percent this could be really problematic and then, of course, you can always go back and lower your prices.
However, if they go down just a little bit, you’re still ahead of the game because you’ll be breaking even but you’ll have less work, you’ll have less work to fulfill the orders, you’ll have fewer works in terms of customers that you have to deal with and that means you save a little bit of time.
What to focus on
Looking at all three of these scenarios, really the only one you kind of have to worry about is this number three or when sales actually go down, and even if they go down by just a slight bit it’s really not that bad.
If they stay the same and your sales figures actually stay the same but you’ve to raise your prices you’re actually ahead because now you’re making more every time you’re making a sale.
On the flip side if sales actually increase and you’ve raised your prices because people perceive your product or service to be even better than now all of a sudden you’re way ahead because you’re getting more per item and you’re getting more sales because now the perception and value of your product and service is that much better.
You really only need to worry about if sales go down and even if they go down, you’ll need to worry about it going down about 20 to 30 percent or more because that’s really where that effect or problems may really start to occur and if they go down a quite heavily then you can go ahead lower your prices slightly and see how that plays out.
But as you can see between all three of these scenarios and situations raising your prices a slight bit is not going to be very damaging to your business.
Learn how to experiment
Start playing and experimenting with your pricing models, don’t go really crazy about you know changing your prices all the time everywhere because then customers really don’t get a sense of knowing and understanding where your products lie.
However, slight changes and adjustments from time to time playing in experimenting with certain customers will give you a chance and opportunity to really see where you can price beat or price match or even price increase some of your products and services.
Then in that way you can see am I going to get more sales are sales going to stay the same or sales going to decrease. If they stay the same that’s fantastic because now you’re getting more on a per sale basis and you have to allocate less time to shipping orders or catering to customers.
If they increase fantastic as well because now you’re making more for every sale and you’re getting ourselves.
Now if they decreased by how much, if it’s only one percent decrease if you had a hundred customers and you only lost one customer but you increase your prices then by all means you’re still way ahead of the game.
You’re still more in this number two or three if you only lost one customer, think about it this way when it comes to figuring out your pricing model it’s something you always have to you continue to experiment with on a slow basis to figure out where that appropriate price lies and what fits the needs of your business and also your customer.
Thanks for joining me in this video, I hope you found it helpful and insightful if you did you want to see more training videos like this one then click this link right over here and when you get there you can enter your name and email address and I’ll send you my other free training lessons along with some other webinars and training sessions that I do exclusively for my newsletter community.
If you want to see some of the other videos and training sessions I have available on my website then just go ahead click that link and you can browse my website and see some of the other video courses that I have available.
Thanks again for joining me. Remember to do what you love, contribute to others, but most importantly live life abundantly.
I’ll see you next time!