Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

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Wednesday, July 19, 2017

Don’t mention the war

“Don’t mention the war!”

It’s a sentence that any Brit of a certain generation (mine) will immediately recognise – and chortle at. 

It comes from the classic episode of Fawlty Towers, where hotel owner Basil is warned not to mention the war to his German guests – and of course, can’t help hinting at it at every opportunity.

You can watch the classic clip here:

The point, of course, is that sometimes you just can’t help saying the very worst thing… You may even feel a compulsion to do so.

I was thinking about that recently, after writing my last few emails about how to raise your prices.

Because there’s a bit of a paradox at play here.

You see, if you are determined to charge what you’re worth, price is the very last thing you should discuss with potential clients. In fact, even if you’re not ready to raise your prices yet, you need to move the conversation away from price – right now.

For many businesses, pricing is front and centre of their marketing. “Best value-for-money”…. “Reasonably priced”….. “No one will beat us on price”.

They believe (mistakenly) that price differentiates them.

The problem is that when you put so much emphasis on price, that’s exactly what your customers will focus on, too. They’ll start asking you to justify what you’re charging and try and bargain you down.

You can’t win that way.  No matter what you’re charging, there will always be someone cheaper, who seems more reasonable or who seems to offer more for less. Often they’re just a click away online.

Focusing on price makes it virtually impossible to raise your prices, because as soon as you do, you need to explain yourself.

So what should you focus on instead? 

The quality of your service and the value you provide.

If you can make your prospects believe that you will solve their biggest problems and improve their lives, you’ll find they will be much less price-sensitive than they would otherwise.

Take Rolex for example. You’ll never see pricing mentioned on their website. All the focus is on the quality of the watches and the feeling of luxury you’ll get when you put on one of those beauties. People will pay enormous amounts for that.

But you don’t have to be a luxury brand with very wealthy customers for this approach to work.

I’m heavily involved in Talyllyn Railway, a historic narrow-gauge railway in the Welsh countryside. Many of the people who ride the train are young families, who are comparing our price to those of other local tourist attractions.

By that count, we are certainly not the cheapest day out. But the railway is loads of fun and can provide hours of entertainment for young children.

Parents will pay quite a bit to keep their children amused! 

Raising your prices, therefore, is as much a marketing challenge as anything else. 

Make sure you are providing a quality service for the top of the market – not the bottom, where price really does matter – and then talk about the incredible value that you provide.

Just don’t mention the war cost….

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