Should you always charge the highest price?

October 6th, 2017 by Bob Bly

I recently told BL, a colleague, that I was pretty busy with
copywriting assignments (I usually am).

Like so many people, he immediately said, “You should raise your
prices!”

“Thanks, but no thanks,” I replied.

Like BL, many people say you should raise your prices when you
are so busy with orders at your current prices that you can’t
take on any more business.

The logic is that being so busy gives you leverage to make prices
higher, because if some customers balk at the new higher price
tags, you can afford to let them walk, being as busy and
successful as you are.

However, I don’t see being busy as an opportunity to charge more
… for 2 reasons.

First, it’s a form of price gouging.

Some of those who tell me to raise my prices, in particular BL
and other top people in my fields of copywriting and info
marketing, prefer to always extract as much money from every
client as they can.

They firmly believe you should always charge every customer as
much as you can — as much as they possibly can afford to pay.

I do not agree.

I prefer to charge a fair and reasonable price for the products
and services I provide.

But not more than that.

I know I don’t like it when a vendor — even one in high demand
and therefore arguably in a positon of power — squeezes me for
every last dime they can get.

If you don’t like when sellers charge you outrageously high fees,
rest assured your customers don’t like it either.

And I won’t do unto my clients what I don’t want others to do
unto me.

Even if it’s perfectly legal to do so, it is at best unkindly and
at worst morally reprehensible to take buyers for every last
nickel they have.

Like the pharmaceutical executive who overnight raised the price
of the life-saving drug, which only his firm could supply,
tenfold … so that many chronically ill people who needed it to
live could no longer afford to buy it.

In the lending industry, you can’t just charge any interest rates
you want. The rate is limited by law.

To make loans above the legal rate limit is called “usury” or
charging “usurious” rates.

And usury is actually a crime.

Second, charging prices that are affordable to your customers is
not only appreciated by them — it’s also good for your customer
retention rate, repeat business, referrals, reputation, and
reorders.

DM, another colleague, once said to me that if a freelance direct
response copywriter (which DM was) charged an outrageously high
fee … and the promotion she wrote was anything other than a
grand-slam home run …

… the client would resent the gouging, and never hire that
freelance writer again … which had in fact happened in the case
of the other writer we were discussing, who had just done this
with one of DM’s clients.

Years ago, GD, a pricing consultant, told me that in a service
business, you should charge a price in the middle of the top
third of providers.

His logic was as follows:

If your fee is in the bottom third, prospects assume you aren’t
any good.

After all, if you were any good, you would be charging more,
right?

GD also said that if you charged in the middle third, again you
would be viewed as midlevel in talent and skills — and prospects
want the best service provider, not a mediocre one.

So your price should be in the upper third of the cost spectrum.

But, if it’s at the extreme top of the upper third, your price is
then so high that you make difficult for clients to give you
repeat business.

Because your prices are so high, clients cringe whenever you
quote a fee … and begin looking for another good professional who
charges perhaps a bit less.

However, if your clients like you and your work, and you charge
in the middle of the top third, they will pay what you ask — and
not run every time you send an estimate to get other quotes.

And if you can get top dollar without losing clients by pricing
in the middle of the top third, there is no reason to lower your
fees to the bottom of the top third, right?

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This entry was posted on Friday, October 6th, 2017 at 9:39 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 responses about “Should you always charge the highest price?”

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  2. Sasha Drew said:

    I don’t see any problem in raising the prices. If you’re talented (and you definitely are) you deserve it. Anyway, you can leave the right of negotiation to your customer, so ask for more and you’ll receive the regular price. Read more about experiences of other writers, I think it’s not a crime if you’re self-employed.

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