Pricing your product at a premium can mean higher profits for you and better value for your customers.
In his book “Maverick Startup,” serial entrepreneur Yanik Silver lays out his “X Factors” for turning your big idea into a profitable business without taking on debt, partners or even a business plan. In the following excerpt, Silver guides readers through X-Factor No. 3, how and why to charge premium prices.
You have to charge a premium price so you can provide an extraordinary experience and value. People are banging their heads against the wall trying to undercut their competitors. I think that’s totally wrong.
If you boil down my biggest profit windfalls, they come down to selling premium products and services at premium prices. That’s how my business has leapfrogged from five figures to six figures to seven figures, and now multiple seven-figure gigs a year.
If you want to make an extra million this year, you’d have to sell 20,000 copies of your product at $50. Or 2,000 copies at $500. Or, better still, 200 copies at $5,000. It’s a lot easier dealing with 200 customers than 20,000.
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