Here’s an interesting idea: if you are having problems selling a good product, don’t slash your prices, double them. People are more likely to respond to the perceived high value than a decrease value of the product.

I was just reading a great book, Influence – the Power of Persuasion. It is a great book with some good insights into the psychology of persuasions. I love books that explain human behavior, especially when it’s counter to what most people would expect.

Double The Price To Clear the Inventory

There was a story in the book that the author recounted about a friend who owned a jewellery store. The author had some turquoise pieces that she could not get rid of no matter what she did. She eventually got so frustrated with having the jewelery taking up space that she left a note for one of her employees before she left for vacation, asking her to sell everything for 1/2 price. Unfortunately, the employee misread the note and thought that the owner wanted to double the prices of the jewelery. But a strange thing happened – when the owner returned, all the inventory was gone.

The jewelery stored catered to tourists on vacation who didn’t know much about turquoise. They saw a high price on the jewelery and jumped to the conclusion that it must be high quality. They based their decision on the quality of the product by the price of it.

This is not an uncommon occurrence – it’s a shortcut that we humans take. Instead of learning all about turquoise jewelery – what is a normal price, what determines good quality, etc., people trust that an expensive price equals high value.

This Does Not Always Work

This doesn’t mean that you can go out and double the price of anything that you sell. For example, if you sell website hosting service and you tried to double your prices, you would lose a lot more revenue than you would gain. There are a few conditions that have to be in place for this to work:

1. Your product is not a well-known commodity. If you sell bread or milk or TVs, you won’t be able to increase your prices. Your product is almost identical to your competitors and your customers will know enough about the prices to realize that your prices are too expensive.
2. Your product is of good quality. Remember, the key is that consumers expect high quality for high prices. If you sell an obviously shoddy product (e.g. – obviously fake or bad turquoise), you will end up with an angry customer base. You might be able to make a few sales but this is not a business model that will last.

There are other benefits to doubling your price: You have less customers to deal with, which means less headaches and less overhead to deal with.

The real benefit, though, is that you can differentiate your product. The very fact that people will pay high prices, means that they stop seeing it as an everyday commodity – bingo! If you can differentiate it, you set the price level.

Have you sat behind the steering wheel without knowing where you are going? Sounds bizarre, right? What is more bizarre is that we do this every day in our professional lives without finding it disturbing! If you are smart (which I am sure you are and that is why you are reading this blog!), then you would have figured out that we are talking about GOALS which are important when we leave the house as well as when we go ahead in our personal, professional and business lives.

In fact, my take on this is that having a goal makes life easier by giving us a direction and sense of purpose. If you want to be successful, then one of the things which you need to do is set goals in everything you do.

So how do you SET goals?

Goals are usually things which we want to achieve in life. Personally, you might have a goal to lose weight, professionally it can be to increase turnover, employee productivity, customer satisfaction etc. Once you have a broad goal…you pretty much have a direction which then needs to be broken down into activities.

How do you DOCUMENT a goal?

You can have long term or short term goals and their categorization is dependent on the time frame it will take to achieve them. For example, you can give yourself two months to lose four pounds or twelve months to increase customer satisfaction. Once you categorize this, you need to backtrack a bit and break it down into activities which will lead you to the goal.

For example, activities to reach a place usually involve, starting the car, checking the route, driving, parking, etc. Similarly, you need to document steps which will help you get to this goal.

After documentation comes EXECUTION

This is actually the most difficult part of achieving your goal….you can only get it right if you execute the various steps correctly. This is the place where the difference between KNOWING and DOING can be understood well. Good planning makes it easy to reach a goal. Each step should be understood properly as that will influence till the overall quality of the goal you finally achieve. For example, well planned campaign for higher customer satisfaction is likely to get you close to 80% of your goal.

A goal is only as good as its metrics!

Metrics are nothing but numbers which can help you measure your goals and are as important as setting a goal in the first place. I have to lose weight is a meaningless goal if you don’t tie it with a number. Similarly, a goal to increase sales numbers is unlikely to be of any point if you don’t attach a number to it…let’s say a 30% increase from current levels. In fact, it is only with metrics that it makes sense to have goals in the first place.

The average Kenyan reads 0 books a month. It is what they say. Does this mean that bookshops in Kenya should close down?

No.

The truth is, the average is irrelevant. There are lots of people who buy 0 books a year. But then there are some who buy on or two books a month. Still, others buy hundreds of books a year. What do you think keeps mega bookshops like Text Book Centre in business?

When starting or running a business, it makes little sense to try and treat all your customers the same. As Mr Godin says, “When you can’t figure out the best way to treat all your customers, the best way to price things, the best thing to offer, realize that the problem is almost always this: you’re trying to treat everyone the same. Don’t. Break them into groups with similar attributes, and suddenly the path becomes a lot more clear.”

There are a lot of different business models out there that you can use as a foundation upon which to build a business. But creating a business requires more than just a formulaic model and a systematic approach. It also requires a lot of creativity, inspiration, hard work and individuality. You need to know your market and to be able to differentiate yourself and your product or service from everything else that is already out there on the market. You need to be unique.

You will want to start with something that you know you are good at, this is a really important aspect of creating your own business. One thing that you need to consider though, is how popular your craft is. For example, are there already a lot of people who are offering these services? If so, how successful are they? Do they have a corner on the market? Is there something about what they are offering that you can add to, or supplement?

You will also need to consider whether or not what you are good at is a viable basis for a business. Quite simply, it is more difficult to make money at some things than others. For example, you can make money in a commodity business, but the problem is that you can’t differentiate yourself. The only way you can succeed in this business is if you do your job extremely well and that is tough to do.

What you will need to do is to differentiate yourself in some way to the other businesses that already exist in your field. You can do this either through your marketing techniques, how you acquire customers, how you run your business, or the product itself. Your idea has to be something that not any other company or person can do. This is vital.

So, if you are trying to run some sort of an affiliate business or a web design firm, your problem is that you’re no different from the over 1 million people who do it today. Try to find something new that you can bring to the field that has not been done yet. It is so important that you don’t simply offer a copycat rendition of a business that is already out there and functioning. The already-functioning business will have many advantages over you as their competition. They will have a realized client base, experience in “weeding out the bugs” of the business and they will always be 10 steps ahead of your game. They’ve “ been there, done that“ and they have the t-shirt.

So, you need to go out there and get your own “t-shirt” as it were. Heck, get your own pair of jeans as well, while you are at it. Because when you offer something unique, something that is missing, it will open up a whole new market for your business, and you will reap the benefits.