Why Premium Pricing is Key for Service Businesses | Dr. Francis Jezek

Summary

The video script advises against following traditional marketing and sales advice for service businesses aiming for the premium market. It emphasizes avoiding the trap of low pricing and instead suggests raising prices while providing more value to clients. The speaker shares personal experience, warning against taking on clients seeking the cheapest option, as it often leads to dissatisfaction. The focus should be on premium services that differentiate from the competition and provide genuine value to clients, even if it means higher prices.

Takeaways

• 💼 Avoid conventional marketing and sales advice tailored for commoditized products or services.
• 🏆 Aim for the premium market where services and products are differentiated by more than just price.
• 💰 Contrary to common belief, do not lower your prices to attract more clients; instead, increase value to justify higher prices.
• 🔍 Spend more time understanding how to provide more value to clients, which will lead to their satisfaction and willingness to pay for quality.
• ❌ Be cautious of clients seeking the cheapest solution; they may not be the best fit for your premium service offerings.
• 🚫 Learn from past experiences and avoid taking on clients who have a history of dissatisfaction with premium services.
• 📈 Focus on marketing techniques suitable for premium products or services to differentiate yourself from the competition.
• 💡 Recognize that clients who are price-sensitive may not value the additional services you provide at a higher price point.
• 💎 Understand that a high price ticket does not necessarily mean a commoditized product; it signifies a premium service.
• 📊 Provide a premium service that is valuable to clients, even if it means simplifying solutions for those overwhelmed with stress and responsibilities.
• 🔑 The key is to avoid undesirable clients and selectively take on those who appreciate and value your premium offerings.

Q & A

Why should service businesses avoid traditional marketing and sales advice?

Traditional marketing and sales advice is often tailored for commoditized products or services where the only differentiator is price. Service businesses aiming for the premium market should not follow this advice as it can lead to undervaluing their unique offerings.

What is the trap that service providers might fall into when they follow the advice of lowering prices to attract more clients?

Lowering prices can lead service providers into a trap where they commoditize their services, potentially resenting their work and undervaluing the unique value they provide to clients.

What strategy is suggested instead of lowering prices to attract more clients?

The opposite strategy is suggested: raise prices and provide more value to clients. This can lead to higher client satisfaction and a more premium market positioning.

How can service providers find ways to provide more value to their clients?

By spending more time understanding their clients' needs, service providers can discover how to enhance the value of their services, leading to happier clients who see the worth in their investment.

What should a service provider do when a client insists on the cheapest solution?

The service provider should either decline the client or warn them that the cheapest solution may not be in their best interest, based on their experience and the value of premium services.

Why is it not advisable to take on clients who are only interested in the cheapest solution?

Clients seeking the cheapest solution may have unrealistic expectations and could become dissatisfied if they do not receive additional services they believe are standard at lower price points.

What is the difference between marketing techniques for commoditized products and premium products?

Marketing techniques for commoditized products focus on price competition, while premium product marketing emphasizes unique value, quality, and the benefits of a higher price point.

How can service providers differentiate themselves from the masses and avoid commoditization?

By focusing on premium pricing and delivering premium services, service providers can differentiate themselves, avoid being seen as low-priced, and not become commoditized.

What is the typical price range considered for high-priced ticket items in the premium market?

The high-priced ticket items in the premium market typically start from $500 to $1,100, indicating a significant investment in quality and service.

How can service providers ensure that their premium pricing is justified to clients?

Service providers must ensure that they provide a premium service that is valuable to clients, addressing their needs and offering solutions that make their lives easier and more stress-free.

What is the importance of avoiding clients that do not align with your service business's values?

Avoiding misaligned clients helps service providers maintain their premium market positioning, ensures client satisfaction, and allows for a more selective and rewarding client base.

Outlines

00:00

💼 Avoiding the Pitfalls of Commoditization in Service Business

This paragraph emphasizes the importance of not following traditional marketing and sales advice for service businesses aiming for the premium market. The speaker warns against the common misconception that lower prices lead to more clients, which can be a trap for service providers. Instead, the advice is to increase prices and provide more value to clients, which can be achieved by spending more time understanding their needs. The speaker also shares personal experiences with clients seeking the cheapest solution and the negative outcomes that followed, suggesting that it's better to avoid such clients altogether. The focus should be on premium pricing and service to differentiate from the competition and to ensure that clients perceive the value they are receiving, even if the price is higher than the market average.

Keywords

💡Service Business

A service business refers to an organization that provides intangible products or services to its customers, as opposed to a product business that offers physical goods. In the video, the speaker emphasizes the importance of differentiating a service business from commodity markets by offering premium services rather than competing on price alone.

💡Marketing and Sales Advice

This term refers to the strategies and recommendations given to businesses to promote their products or services and increase sales. The video script critiques traditional marketing and sales advice, suggesting that it may not be suitable for service businesses aiming for a premium market segment.

💡Commoditized Products/Services

Commoditized products or services are those that are largely indistinguishable from one another in the eyes of the customer, with price being the main differentiating factor. The speaker warns against following advice that caters to commoditized markets, as it can lead to a race to the bottom in terms of pricing and service quality.

💡Premium Market

The premium market refers to a segment of the economy where consumers are willing to pay higher prices for products or services that are perceived as superior in quality or offer additional value. The video encourages businesses to position themselves in this market by providing exceptional service and charging a premium price.

💡Price Point

Price point is the specific amount at which a product or service is sold to consumers. The video argues against the conventional wisdom that a lower price point will attract more clients, instead advocating for a higher price point that reflects the value of the service provided.

💡Value

Value, in the context of the video, refers to the worth or usefulness that a product or service provides to the customer. The speaker suggests that businesses should focus on adding value to their services to justify a higher price and to satisfy their clients.

💡Client Satisfaction

Client satisfaction is the degree to which a client's expectations are met or exceeded by the service provided. The video emphasizes that by providing more value and charging a premium price, businesses can achieve higher client satisfaction and loyalty.

💡Commodity Market

A commodity market is characterized by products that are interchangeable and sold primarily on the basis of price. The video warns against participating in the commodity market, as it can lead to a focus on price over quality and service.

💡Differentiation

Differentiation in marketing is the process of making a product or service stand out from competitors. The video script encourages businesses to differentiate themselves by offering premium services and not just focusing on being the cheapest option.

💡High-Price Ticket

A high-price ticket refers to a product or service that is sold at a significantly higher price point than similar offerings. The video suggests that businesses should aim for a high-price ticket to signal premium quality and service, and to avoid being seen as a low-cost, commoditized option.

💡Client Selection

Client selection involves choosing which clients to work with based on certain criteria. The video implies that by focusing on premium services and higher prices, businesses can selectively choose clients who value quality over cost, thus avoiding problematic clients who may not appreciate the value provided.

Highlights

Avoid conventional marketing and sales advice for service businesses aiming for the premium market.

Classical marketing strategies are designed for commoditized products and services, not for premium ones.

In the premium market, differentiation is key, not price competition.

Lowering prices can be a trap for service providers, leading to dissatisfaction.

Instead of lowering prices, businesses should raise prices and provide more value.

Investing more time can help find ways to deliver more value to clients.

Happy clients are more likely when they perceive their investment in a service as worthwhile.

Be cautious of clients seeking the cheapest solution; it may not align with premium service goals.

Experience suggests avoiding clients who only want the cheapest option can prevent negative outcomes.

Clients may not understand what they need, leading to dissatisfaction even with the right product.

Providing extra services can be expected by clients, even at a higher price point.

Avoid commoditization by focusing on premium pricing and service delivery.

When examining marketing techniques, differentiate between those for commoditized and premium products.

Seek insights and techniques for premium products to stand out in the market.

A high price ticket does not guarantee a premium service; ensure the service justifies the cost.

Some clients may be willing to pay less, misunderstanding the value of a premium service.

Happy clients appreciate simplicity and relief from stress, even at a higher price.

The goal is to avoid unwanted clients and focus on those who value premium service.

Transcripts

do you have a service business and want

to gain more more clients and more money

well don't listen to the marketing and

sales guys at least not to all of them

why well the classical marketing and

sales advice is actually made for the

product merchandise commoditized

products or services that means that all

the services and products are actually

the same and the only difference between

them is the price point you want to be

in the premium Market Market where not

every product and every service is the

same so don't listen to them because

they will tell you that the lower the

price the more money or the more clients

you will have that of course if you're a

service provider is a trap it's a big

trap that you will fall into and will

resent your life what you should do is

actually the opposite you should higher

the price and provide more value well

how do you provide more value well if

you spend more time on it you will

probably find out a way how you can

provide more value to the client and the

client will then obviously be happy that

he invested his money for that service

you actually wanted there will be times

when the client will say he wants the

cheapest solution either don't take the

client or warn them that this will not

be the best interest in their heart but

from my experience I never take these

clients any again why I have really

really bad experience like I said either

they don't want what they want to buy

and they are mad at you because you

didn't persuade them otherwise or they

actually don't know what they're doing

and they want this product and at the

end when you got to provide this product

or service they will be mad at you

because you didn't provide the extra

Services because therefore this is so

common that everybody's doing and no at

this price point I cannot but they

thinking yeah I I bought the best

product in my life I even gain a perfect

price so don't go into that that Market

Market Point use premium price and

deliver premium Services when you look

at marketing and sales techniques always

look at it whether it's a for a commod

dized or low priced item for a product

service or is it for a premium product

service because mostly you should look

for the insights and techniques and

methods for the premium products because

then you will diverse ify yourself from

the masses you will not become

commoditized low priced and you will

also not be seen as low priced by the

client even if you're selling I don't

know $10 instead of

$1 item it's still not going to be

commod IED you know but usually the high

price ticket starts with $500 to $11,000

but you should also provide enough

premium service so it will be valuable

to the clients as such I've seen clients

that are of course willing to pay really

low money because they think this low

solution will benefit them because they

will so save money but I've also seen

clients that were really really happy

with a simple solution and if you add an

extra for high high price ticket they

would really be grateful that you took

something off their plate because they

just had so much on their plate of diam

and stress that if you you know EAS dep

their life they're going to be really

happy so it's a matter of avoiding

clients you don't want to have and you

taking only clients that you want to

have but that's a different story