How to Raise Your Prices and Delight Your Customers (At The Same Time)
Many years ago, I started selling my handmade soap at craft shows and farmers markets for five dollars a bar. Like many soapmakers, I wasn't sure how to price my products.
I relied too heavily on looking at (what I thought was) the competition. My bar size was a bit smaller than average, so I was still making a profit. But it was just too slim. Duh, I needed to raise my prices!
It didn't take long for me to wisen up and revamp my pricing. With my previous experience running a service-based business, I knew what factors I needed to be looking at. And I gave myself a big ole slap in the face with reality!
Time and time again, we see soapmakers post in Next Level that they are concerned with raising their prices. Typically, the majority of the responses are soapmakers saying, "Just do it! I did, and no one noticed!"
After all, dairy farmers don't call us up and let us know that milk prices are going to skyrocket because half their herd died in a natural disaster or the cost of feed went up. My favorite brand of jeans doesn't send me an email to let me know that my go-to jeans are now $97 rather than $79. Instead, they just change the prices. That's how it works.
When I was writing Pricing for Profit, available exclusively to our Next Level members, I asked our Facebook group what their biggest objections were to raising their prices. A mix of the responses included being afraid of losing customers and not being able to compete with other soapmakers in their local area. So, if that's a concern for you, let's dish on how you can raise your prices and ensure that no one will blink an eye. In fact, the goal here is to not only boost your bottom line. At the same time, you want to delight your customers by increasing the value perception of your products.
Wait, hold up! What's value perception, anyways?
According to BusinessDictionary.com:
A customer’s opinion of a product’s value to him or her. It may have little or nothing to do with the product’s market price and depends on the product’s ability to satisfy his or her needs or requirements.
Perceived value is the reason why Chanel can sell $26 soap and Erno Laszlo gets away with $38 soap. (And these products are just the tip of the iceberg when it comes to skincare that goes for a premium. A quick pop on over to Sephora to oogle at the plethora of "soap" products will show you that they don't sell a single one for less than $10.)
It's rare, but sometimes a soapmaker raises their prices and does feel the burn. Usually, it's because the perceived value of their product doesn't justify the new price.
The thing about money is that it's relational to the value each individual person places on it and the things they spend it on. If you are someone who has an unhealthy relationship with money, you are going to feel super different about spending it (or getting it) than someone who doesn't. And each and every one of us is going to place a different value on different products.
We're going to dive into how to shape up the perceived value of your products. But first, let's take a detour into the importance of choosing the right target market. And I'll dish on the biggest mistake I see soapmakers make in that regard.
How your target market is steering your ship
More often than not, soapmakers jump into business for personal reasons. Tell me if any of these sound familiar for why you started your business:
- My friends and family kept asking me to sell, so I did.
- I was making so much soap, I had to sell it to justify making more.
- I already had goats/a farm, and it felt like a good supplemental product.
- My soap helped so-and-so's skin, so I wanted to help other people.
- I was bored and wanted something to do.
- I lost my job and needed to supplement my income.
- We had a baby, and I wanted to stay home with him/her.
Hey, I get it! I actually started my own soap company because I wanted to stay home with my first two daughters. I knew I didn't want to start another service based business (oh, how things change). Also, soapmaking was something I felt I had expertise in (many years of hobby soapmaking does that.)
Despite massive amounts of experience in related fields, I made the same mistakes other soapmakers make starting their business. I started a business for me, instead of for a specific group of consumers. So, identifying, understanding, and marketing to a specific target market came after a whole lot of things it shouldn't!
Your target market steers your ship, no matter how far in business you are. They will determine whether a logo works for your brand, whether your product photos are appealing, whether a show is a good fit, and if your price is appropriate. Unfortunately, if you don't define a target market yourself, the market does it for you. That often means becoming yet another handmade soap company selling a commodity. Commodities are extremely price sensitive. Consumers purchase them as a basic necessity, not a value-filled addition to their lives.
Since pricing is subjective to each individual, you have to be sure that you are chasing a target market that isn't price sensitive and doesn't view handcrafted soap as a commodity. Otherwise, they'll never see the value behind your products and will always feel any price too expensive.
How to increase your brand's value perception
In order to charge appropriately for your time, expertise, and costs, you must change the dynamic. You need to niche down to an appropriate target market that doesn't see your product as a commodity. You can help that along by increasing your value perception. Then, the people who buy your products feel the price is worth it. Here's a slew of different ways to raise your value perception...
Raise Your Prices
Alright, this one might be a no-brainer. But, it explains why so many soapmakers simply raised their prices and didn't see any issues! Simply by raising your prices, you increase your value perception on your products.
When a consumer doesn't have a preconceived notion of product value, a higher price signals higher quality.
Studies, offering the same product under the guise of different products with different price points, have shown this. Over and over, folks routinely select the higher priced item as being higher quality. It's that old adage of "you get what you pay for" at work.
The thing is that consumers don't just associate higher price with higher quality, they often experience higher quality, too. One instance, was a joint study between Stanford and Caltech. Students were given sampes of five different wines at varying price points. However, two of the wines were given twice - once with a low price tag and again with a high price tag.
Students reported that they distinctly tasted five different wines (even though there were only three). And they ranked those with higher price tags better (even when they were the same wines). Their brain activity even agreed! Activity increased when tasting what they thought were more expensive wines.
Simply put, sometimes, just a higher price tag is all that's needed.
Redefine the Experience
Worried about your customers reacting negatively to your price increase? Then you should know that upping your branding game is the easiest way to get folks on board!
A big misconception about branding is that it's simply a color choice and a logo. But, it's not. Branding is best defined as a nicely wrapped gift that you deliver to your people (customers), including the story your products tell, the experience you present, the values you champion, the specific people you serve, the emotions you evoke, and the choices you make as a business.
When it comes down to it, branding makes all the difference. In fact, in a study conducted in New Zealand, researchers recruited students with frequent headaches to take ibuprofen tablets labeled either as a brand name or a generic. In reality, half the tablets given under each label were placebos, which means they contained no actual painkillers. The researchers found that students who took placebos with a name brand attached experienced headache relief (despite there being no active ingredient) at the same rate as actual brand name ibuprofen tablets.
When consumers are exposed to effective branding, they buy into a story and experience with immense trust and emotional investment. So much so, that it can actually alter their experience and perception of the product! As such, many business owners look to rebrand their company or products when they raise their prices to solidify their position in the market and increase the value perception.
Rebrand Your Product Packaging
One way to do this is to change your packaging. Consumers often feel that fancier or larger packaging conveys a higher quality product than those that are more simplistic or smaller. A ton of soapmakers have used this to their advantage in their business effectively.
For example, Peggy of Amani Soaps took her business to the next level by bringing in beautiful custom printed packaging that helps tell her story, evoke an emotional response, and present the product more professionally. If you were offered these two products for the same price, would you think they were of equal value? Would you choose the bar of soap on the left or the right?
Peggy's soap is still the same great soap it always has been, but the showstopping soap box tells a much different story!
Here's two more fabulous examples, from Yocasta at Aromelle Apothecary and Caitlin of Revive Bath and Body. All three of these brands really upped their game in the packaging department to bring a whole new level of value perception into play.
Bring Delight to the Ordering Process
Another way to change up the product experience for your customers and bring a little extra value is to revamp your order fulfillment workflow. No matter how you process orders, you should look to bring your brand, personality, and customer service into play.
If you have an eCommerce store, you can ensure your checkout process is fast and easy. You can pop in and edit all of your transactional emails, like your order receipt and shipping notification, to make a customer feel prized and special.
When it comes to physically packing and shipping your products, bring in the brand love with marketing materials, on brand packaging, and more. We have a whole lot of tips for shipping your handmade soap and cosmetics, including vendor recommendations for tissue paper, stickers, and so much more.
Focus on Emotional Value
Even if you don't have the inclination, desire, or budget to revamp your packaging or have already done the work to personalize your shipping process, you might turn to your product descriptions and marketing materials and up your copywriting game. Most soapmakers fill up their product listings with features, which are factual statements about the product. Listing a product's size, ingredients, scent, and the like are all considered features.
To increase your value perception, you need to bring actual value to your customers! Soap shouldn't just be soap, it should be an olfactory experience, a physical experience, and/or an emotional experience. What greater value do your products bring to your customers? Is it five minutes of escape to a tropical island in their shower? Maybe it is a simplified skincare routine that lets them get on with their busy day. Or perhaps, it is falling in love with their sensuality and learning to appreciate their body in all its glorious beauty.
Figure out what makes your product different, amazing, and valuable, and then bring that magic to your product listings and marketing materials. Remember to keep relevant regulations in mind. If you are in the United States, that means no drug claims!
Simplify Consumer Choice
More often than not, soapmakers think that bringing more value means increasing the variety of their product line. That's bringing in more inventory and reducing your cash flow, not providing value!
In fact, too many choices are paralyzing for consumers. In yet another study (an infamous study at that), two psychologists set up two different displays of jam, offered samples to customers, and distributed a coupon for those who tried them. One display showcased a whopping twenty-four varieties of jam, and the other offered a slimmer picking of six varieties. And while the large display definitely garnered more attention and sampling, the small display dominated when it came to sales. How much did it dominate? It sold 10 times more jam. TEN TIMES.
Think about the jam study in context as a business owner, though. Not only did the small display sell more, but the large display *cost* more. Think about all those product samples resulting in no sales and all those varieties require their own ingredients and inventory. No, thank you!
You might be thinking that this study was a one off; it wasn't! The results have been duplicated a ton of times with various products, price points, and markets. If you carry a large variety of products, you might just need to take a long hard look at your offerings and slim it on down.
When a brand offers a select number of products, consumers trust the brand to have higher quality and expertise than a brand that offers everything but the kitchen sink. Plus, it helps them make a quick choice without getting trapped in never ending paralyzation that becomes overwhelming. Anything you can do to make it easier for your customers to buy is a value perception game changer!
Keep on providing more value after you raise your prices, too
The ideas mentioned above for increasing your value perception focus more on branding than anything else. So, what if you've already nailed these tips? Don't worry! There's tons more ways to bring value to your customers and keep them happy while bringing up your bottom line.
If you are selling online, the next step is to jumpstart your marketing with some value perception alchemy. You'll want to focus on how your website communicates with your customers, including your overall copywriting, your product descriptions, and more. Then, focus on bringing the value with your email newsletters and social media presence!
If you know that you desperately need to bump up your prices, but aren't sure how, joins us in Next Level and hit up Pricing for Profit and get started on pricing your products with a healthy, sustainable future in mind.
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