ARTICLE:
5 Reasons Undercutting the Competition Can KILL Cash Flow
I'm against low-priced products. In a BIG way.
Not only can offering them steadily kill off your business and severely limit cash flow, doing so tends to invite a lot of hassle that could be avoided simply by offering higher end products. Here are five reasons to stop branding your
products with "flea market" prices and start charging what you're worth:
1. You attract fickle customers.
Bargain seekers are a disloyal bunch. They're looking for the company that offers the lowest prices. If that's you -- ALL the time -- you're okay. But should a competitor enter the market with lower prices than you, you have a problem.
You're forced to either undercut them -- slicing into your profit margin once again -- or deal with the fact that your customers, always hopping from the "cheapest" merchant to the next, are about to abandon you.
Or just won't shop with you to begin with.
2. If your prices jump higher, your customers jump ship.
This is different from the point above in that, now, we're talking about the consequences of suddenly deciding to start offering higher end products in a price range your EXISTING customer base isn't used to.
Your customers are coming to you now for a reason -- because you offer good quality products for cheap. Should you start trying to offer your products for premium prices, *some* of your customers will readily adapt, but the majority WILL leave you out to dry.
3. You'll attract newbies. A drove of 'em.
People who pay chump change for high-quality products tend to be newbies. Newbies who either don't have a lot of cash to spend (warning: shoestring budget ahead!) or who don't think they SHOULD spend it ... because "info on the Internet is supposed to be free."
This is a serious problem if you're not looking to attract the newbie market.
You'll find that more experienced (intermediate to advanced) marketers have conditioned themselves to ignore "cheap" products. They've been around long enough to know "you get what you pay for," and they're tired of paying for crap!
I know from my own personal experience in selling that, when you have a cheap product, the only higher profile marketers who'll try it out (read: buy it without you harassing them about it) are the ones who are ALREADY your loyal customers.
The others generally tend to assume that your product can't be worth much, else your price would reflect it.
4. You attract time leeches and bozos.
I had this experience all too often back when my products were cheaper.
Customers who give you $20 or $30 for a product tend to think that you're then their personal paid coach, or that they can treat you any way they please just because they parted with a dollar or two.
And THIS is a serious problem.
The same way "cheapskates" can tend to be unreasonable in the thinking that all info online should be free, they can also tend not to (want to) understand that you have other customers and responsibilities that don't allow you to sit around researching THEIR individual questions all day.
5. You could offer the SAME information for a HIGHER price.
Just because you increase your price doesn't always mean you have to first find ways to increase your product's perceived value. It could already BE valuable enough to fully support a price increase *without* you doing any extra work to add to its value.
For example, my second product, Yahoo! Secrets (a guide for getting a top listing on Yahoo.com), was released at a lowly $22.97 back in 2000. It got lots of sales at that price. But every so often, I'd test an increase in price to see if I could raise it without sacrificing profit.
I tried $24.97, $29.97, $49.97, $59.97 ... all without doing much if anything more to "add value".
And each time, it still sold.
Of course, over the years, I updated the product whenever Yahoo would significantly change the way they ranked their listings. But other than that, I did little if anything to ADD TO the package.
And yet, it still sold.
And increased my bottom line.
Today, the price is $87, and it still sells well without me even promoting it any more. And I didn't smother the product in bonuses. It sells simply because it's a good product -- and it's WORTH $87.
Is yours?
-*-
Are You Limiting YOUR Cash Flow By Underpricing Your Wares?
I sure hope not.
You could be putting *hundreds* more dollars in your pocket each month, just by raising your prices a mere $10 or $20.
Why not set up a test NOW, today, to see if you can get away with increasing your prices to MATCH your value? The rewards can mean a big jump in monthly profit.

