Case Study: Should you Raise Your Rates?

<p>You hear it all of the time from business coaches, you need to raise your rates. But if you do that without considering the needs of your market and their willingness and ability to pay a higher rate for your products and services, you may find that raising your rates decreases overall sales and negatively impacts your profits.</p><p>How do you price your products and what criteria do you use to select your pricing?</p><p>You can choose whatever price you want, from free to $1 to $100,000+ </p><p>Some people charge $250K for coaching services and they get them but they're established in a specific market and they also offer other, lower priced services and products.</p><p>One thing to remember in pricing – basic finance principle – the higher your price the smaller your available pool of buyers</p><p>Ferrari makes 8500 cars a year,   GM makes over 2 million - Ferrari knows that their buying market is very small because a $300,000+ car is not in everyone's budget.</p><p>Cannot price on value alone – doesn’t matter how much it’s ‘worth it’ to get the problem solved, if they can’t afford it, they can’t afford it</p><p>Is raising your prices or rates a viable and profitable cash flow strategy? Let’s look at the numbers in this case study.</p><p>Here are the details for this case study:</p><p>Subject is a course creation product marketer</p><p>During a webinar she revealed her Stripe sales data and I picked up on a few key metrics</p><p>During her first launch the program was priced at $997 and 75 people purchased</p><p> Facebook advertising spend around $500</p><p>The next launch doubled the program price to $1997 and doubled Facebook advertising to $1000 35 people purchased</p><p>So doubling the price resulted in 50% decrease in signups even with increased Facebook ad spend - this should have been the first red flag that her price was too high</p><p>If she had kept the price at $997 would she have doubled her signups?</p><p>Here’s a couple of other results of price doubling:</p><p>With the higher price at risk tr