There’s an old marketing law that goes like this:
There is no strategic advantage to being second-cheapest in your industry.
But there is an enormous advantage to being the most expensive in your industry.
There’s one major reason why most entrepreneurs aren’t charging more for their services: fear. They’re scared that if they raise their prices, they’ll lose their business.
The problem with this mentality is that it’s inherently fear-based and rooted in risk-avoidance. Nothing good ever came from running a business based on trying not to lose instead of trying to win.
When you increase your rate by ten times, you place an ultimatum on yourself: Either succeed, or go broke. That fear is valid, but that’s the point. Centuries ago, Hernán Cortés gave his army a similar ultimatum; succeed, or perish. After landing on the coast of New York with just a few hundred men fearful of the mighty Aztec empire, Cortés did the unthinkable – he burned all their ships. Their only option was to win.
With no other options, his galvanized army later conquered the Aztec empire.
It’s time to start raising your prices. Place the ultimatum on yourself; succeed, or go broke. If you do this right, you’ll start getting far more (and better) customers and make far more money.
There’s No Point Being Second-Cheapest
In W. Chan Kim and Renée Maugborgne’s book Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, they assert that businesses need to move away from “red oceans” – crowded, oversaturated markets with extreme competition – and move into blue oceans, where you can become one of, if not the only member of your specialized niche.
The problem is, finding a blue ocean has become very difficult. Sub-niches of sub-niches are still often extremely crowded. How can you position your business to be in a space that’s less crowded, more focused, and still able to make a large profit?
The answer is simple: raise your prices by ten times.
When you position your business as a highly-priced service, you immediately brand yourself as a serious player in your field. The logic is, anyone charging that high of a price must be good – no one is charging $400 for a book, or $25,000 for a single online course, unless it’s really worth it, right? A couple of testimonials will go a long way cementing your validity to the world.
Raising your prices by this extreme of a measure not only upgrades your brand image, but it also upgrades you and your work. You have to be able to deliver that quality that price point demands. Otherwise, you’ll go broke.
That’s very powerful. Right now, you have enormous untapped potential waiting to be unlocked and invested in your business. You can immediately unlock that potential by raising your prices and forcing yourself to start creating products and services that demand a high price point.
There’s no point in being second-cheapest; otherwise, you’ll always be in a race to the bottom with everyone else. Even if you win, you still lose. If you can’t be the number-one lowest-priced leader in your industry, then you must position yourself as one of the highest-priced leaders.
Raising Your Price by Ten Times Is Easier Than Doubling It
It’s not hard to double your price and still conduct business as usual, more or less. Doubling your price might seem like a big deal to you, but it misses the major point of raising your prices – to transform you and your business.
When you raise your prices by ten times, you have to change. You can’t conduct business as usual. And that’s the point – if you significantly upgrade your prices, you have to significantly upgrade your business.
Doubling your price doesn’t really unlock any serious new thinking or creativity that will help you become one of the top players in your field. If a coffee maker is $25 or $50, it probably does pretty much the same thing; maybe the latter is a bit more durable, or has a better brand name, but the result is pretty much the same.
But if a coffee maker is $500, then that’s going to catch some attention. People can’t help but ask – Why is it so expensive? What’s different about it? Is there a secret behind it?
Of course, the coffee maker has to be worth $500 (otherwise, no one’s going to buy it). But again, that’s the point – once you start thinking how to create a coffee maker that’s fairly priced at $500, you start unlocking major creativity and potential that not only gets attention from your marketplace, it forces you to become a better business.
The point here is to get you deeply connected to your business, then deeply connecting to your marketplace. This all-in approach is what separates good companies from the truly great ones, the companies that earn the most money and are consistently successful across many years.
It might seem difficult to imagine doubling your price. Frankly, it is; you’re forcing yourself to prop up higher price tags without really creating a fundamental structure that supports the increase.
But raising your price by ten times lets you unlock more creativity and allows you to transform your business.
Frankly, it’s more invigorating and exciting, too. In his book The Four Hour Workweek, Tim Ferriss described how he positioned rewards for himself that truly motivated him. If his reward was high enough (a week-long all-inclusive vacation to Hawaii), he’d run through walls; if his reward was too low (a weekend trip to a boring conference), he might not even bother to put in any work at all.
Raising your prices by ten times is easier than doubling them. Raise your prices by an extreme amount and you unlock the power to transform you, your reputation, and your business.
When You 10x Your Price, You’ll Attract More Competent Customers That Make Your Life Easier
Kyle Maynard is an author, speaker, and the first quadruple amputee to climb Mount Kilimanjaro without using prosthetics.
“The worst advice I’ve ever been given was to not increase the fee I charged to give a keynote speech,” Maynard revealed during an interview. “I decided to raise my price anyway…now I have twice as many inquiries, and people even negotiate with me less. I wish I’d done it earlier.”
When you apply the 80/20 rule to your business, you’ll usually find that 20 percent of your customers create 80 percent of your problems. The bulk of your time is usually spent on a small number of problem customers that make your life difficult.
But when you raise your prices, you cut out many of these low-level customers and start attracting richer, more focused, and more competent customers who will make your life easier.
There’s an episode of the hospital drama Scrubs where a hypochondriac patient keeps coming back for more unnecessary tests because the hospital gave all the tests a temporary discount. The doctors were spending days and days working with this one single patient because their prices were so low. They had gained a customer, but inherited an enormous headache.
By raising your prices ten times, you immediately weed out many of these finicky problem customers that create the bulk of your problems. When you raise your prices, you raise your clientele. Customers paying ten times more than usual often know exactly what they want, request fewer refunds, and are more likely to give a testimonial for a job well done.
Over time, high-quality services offered at a high price will earn far more income than low-level, lower-quality products offered at smaller price points. It takes a lot of work to sell one hundred or one thousand small products or services, and it usually requires a significant amount of your brainpower and hours to fulfill and maintain these numbers.
Once you shift your focus onto higher-quality, higher-priced services, you can position yourself and your business to be something totally new: A high-level provider that offers personalized help catered to a specialized niche of high-paying customers.
These customers usually create fewer problems for you and your team and free up enormous time and energy that can be reinvested into making these customers as happy as possible. Over time, gathering testimonials and repeat customers can allow you to continue raising your prices even higher, creating unlimited potential for your business growth.
If you want any hope of succeeding and getting customers, you need to learn how to create and sell products that are ten times more expensive.
Raising your prices by this much forces you to change and significantly upgrade your brand, services, and business as a whole. It places an ultimatum on yourself; succeed, or go broke.
That’s the point. Incrementally raising your prices, even doubling them, still doesn’t create the urgency and all-in environment you need to create a truly great business that attracts high-level, high-paying customers that propel your business into the top slot of your field.
If you can’t be the number-one cheapest option in your field, there’s no strategic advantage to being the second-cheapest. It’s a race to the bottom, plagued with low-level customers who consistently create most of your problems, requiring enormous time and energy that should be focused on developing your business, not issuing refunds.
Raise your prices by ten times. You’re going to get more money, better products, and better customers as a result.