|February 03, 2009||Volume 8 Number 03 Issue 215|
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Increase Your Profits With No Extra Work
by Jim Mr Idea Green
Well, almost no extra work. The trick to more profits is to increase your price, even slightly. Depending on your cost structure, a small price increase can mean a huge increase in profits because the entire increase goes to the bottom line. As an example, if you were selling a product for $40, and your product cost and all other expenses (utilities, payroll, delivery, insurance, web hosting, etc.) totalled $35, you would only need to increase your price by $2 (5%) to increase your net profit by 40%!
I know. I know. The first thing that comes to mind is, “I can't increase my prices in these tough times or I'll be out of business in a week!” This is simply not true.
A recent study showed that given a 15% price increase, many vendors will see an increase in sales - that’s right, an increase in sales. Most will see an increase in profits. Some of course will see a decrease in sales. Aha you say, “That'll be me.” Well, maybe, but keep this in mind, no one who increased their price by 15% experienced a decrease in profits.
Now you can't just jack up the price and expect results. You must provide your clients with better value. The trick is to increase the value without increasing your costs, or with minimal cost increases. Sometimes it is possible to visibly improve the product, but generally the way to increase value is by improving your total offer. There are quite a number of ways that you can do this. Some will work for one product, others for another. It is unlikely that you will be able to improve your offer in every way, but pick the ones that you can improve and that matter to your client.
Areas to consider are: delivery, deliverability, availability, support, selection, convenience, risk reversal (your guarantee), warranty, your business policies - return, refund, exchange, payment methods and terms, etc, included bonuses, quality of your product, perceived value or status of your product, your reputation, total ownership experience, exclusivity, and so on.
Don't be afraid to draw comparisons between your product features and the features of a related product. It doesn't have to be the same product, as long as you can define the area for comparison. Example: Most ebooks are meant to be read on the screen only and can be printed only with very large type. Not too useful if you want to read your ebook but don't have a computer handy. We include a version of our ebook that will print in normal size type, saving you paper and producing a handy sized copy you can read at your leisure without resorting to a computer.
Another very useful way to enhance the value of your product is to assign a dollar value to any services, materials, equipment, outside services, etc. Do the math for your clients. Show them in dollars and cents exactly what extra value you are providing, or how much you have saved them.
Free is always a good motivator. Shift the focus from the up front cost to the long-term savings your product will provide. Show exactly how the savings will pay for your product, and then earn your buyers a profit. Calculate the total return for the buyer of your product.
Spell It Out
Of course, none of these added value benefits will sell your product if you don't spell it out clearly to your potential buyers. Don't be afraid to combine information to create your copy. Assign a value to every benefit. Then show how the package is really free. And then close it out by combining everything to generate the total return on your buyer’s investment. Do make sure that you consider how you might use every item in the list I included earlier.
Remember, a tiny increase in price can translate into a large increase in profits.Final Notes
from Your Faithful Editor
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