How to Convince Customers to Pay a Higher Price
I recently discovered a really interesting series that Buzzfeed does about money and lifestyle.
They look at the same product or service, at three different businesses with three different prices.
In this video they look at a hostel at $50/ night, a boutique hotel at $400/ night, and a two-story “sky villa” at the Palms resort in Las Vegas for up to $35,000/ night:
The first thing you notice is that while technically they each supply a bed and some amenities, that’s pretty much where the similarities end.
Each hotel offers a radically different experience, and that is what determines their price.
Just as important as what they offer, is who they target. The Palms’ target market is celebrities and tycoons. People for whom money is no object, and who want to have the absolute best at any price.
Podshare’s audience is totally different: students, interns, young backpackers, and startup people on a shoestring budget.
The Palms isn’t going to try to compete on price. Nor will it even bother to attract broke backpackers and startup wannabes. That would be unnecessary and would run counter to its carefully crafted image of absolute luxury.
In the next video, they compare tattoos: at $80, $400 and almost $900:
In this case, the product is much more comparable from vendor to vendor–they all produce a tattoo.
But the customer experience still varies widely.
The cheapest option, at $80, is a simple tattoo after a brief consultation with the artist. The next level up is a more complex design that takes longer to complete.
And the most expensive tattoo, at almost $900, is from an artist that probably makes the most impressive and stunning artwork of all.
Not only is the quality extremely high (if not the highest in the field), but he takes time to create an amazing experience for the client, from small details like the drinks when they arrive, to the very personal consultation session designed to create a tattoo concept very meaningful to the client.
Unlike the other two tattoo parlors, he does not work with just anyone. He takes his craft very seriously and wants to create something that is stunning and truly one-of-a-kind for each client.
It’s easy to see why his service is invitation-only, with a wait list up to a year long.
Definitely check out all the videos in this series (there might be one in your industry) and see how almost any price can be justified, as long as it’s presented with quality, uniqueness and the right niche.