What do a Rolls Royce, a Rolex, and a Louis Vuitton bag have in common?
Yeah…they’re all expensive. But they all symbolize wealth and status.
People don’t buy a Rolls Royce because it’s fuel efficient or because it’s safe. They buy it because it brings them status. And because people value status, they shell out hundreds of thousands of dollars just to get it.
Here’s why premium pricing is actually a good thing for you and your clients.
You Out-market the Competition
Fit Body Boot Camp, the fitness franchise I own, is relatively expensive to buy in to for a fitness studio.
Not only do we have a higher buy-in, but we charge monthly royalties to each of our franchisees.
What does that mean? We have more money to out-market the rest of the competition.
A couple of years ago, there was another fitness franchise that started before mine and had about 300 locations. At the time, they were offering a $5,000 buy-in while we offered a $10,000 buy-in plus royalties.
But when the royalties came in, I used the money for our online marketing. All of the sudden, I was outpacing them in ads 10-to-1, so for every ad prospects would see of that boot camp, they’d see 10 of mine.
Not to mention that we have the budget to send our franchisee prospects goodies that give us an edge when we go to sell them.
By the way, that boot camp is now out of business. We’re thriving and growing more than ever.
Your Can Multiply Your Income
I’ve talked about my old mentor, Jim Franco, a lot on here before.
One of the most important lessons he taught me was that people don’t buy your time. They pay you for the outcome you give them.
At the time, I was training him for an hour at a time. That was, until he gave me a great idea.
If I could get him the same results in 30 minutes, why not charge the same price for a 30 minute workout instead? That way, I could work with twice the amount of clients and make double the money.
Apply that same principle to your business. How can you deliver the same product or service faster and/or easier? Again, people care about the result more than how that result is delivered to them.
You Can Offer a True World-Class Experience
Let’s talk about Planet Fitness. They’re well known for selling $10-$20/month memberships. Our memberships are a lot higher in price (around $150/month on average).
But when you sign up with Planet Fitness, all you get is access to a crowded room full of haphazard equipment. There’s no customization, it’s literally “go and do your thing.”
Do people see results? Some, maybe. But if you know anything about fitness, you know that you keep the weight off when you make lasting changes to your lifestyle.
For that, you need a coach. That’s what we provide: coaches with extensive experience, who educate you on fitness, nutrition, and life.
That extra money we charge goes back into the business, and the quality of our clients’ boot camp experience gets better and better.
A low-priced gym? They won’t be able to afford that same level of service. It’s the sacrifice you pay when you price low, which leads me into the next section.
You Won’t Race to the Bottom
What happens when you price your product too low?
Say you’re selling something for $45. Your competition obviously doesn’t want to get left in the dust, so they undercut you and sell at $40. Then, you counter back and sell at $35.
Eventually you’ll both reach prices that are simply too low to be profitable.
It isn’t scary to price high when you know your product or service is worth what you’re asking for. Make what you sell worth what you’re selling it for.
Want to hear more pricing insight? Click here to check out the latest episode of the Empire Podcast that Craig and I just shot.