Offering Premium Goods And Services

Premium Marketing For Higher Profits

(Photo by cumi&ciki)

If you’re looking to diversify your business menu of services (or products), consider offering premium services. It’s how airlines, hotels, restaurants, and clothiers generate additional income. It is often is a large profit center since for a big price increase, you don’t have a commensurate increase in costs.

Not all businesses are ripe for premium offerings. If you’re known for selling goods inexpensively, higher-priced goods are unlikely to be attractive to your prospective customers. If you’re already selling high-end services, offering an even-higher level of service is likely to create a backlash to your existing clientele. But if you’re selling a middle-of-the-road product, then a premium offering may make sense.

The key is to offer something that people want that’s a natural extension of your offerings: faster (quicker turnaround), more exclusive (better materials, one-of-a-kind products), more convenient (better hours, in-home/office meetings), and/or higher tolerances (higher quality finish, measurement, etc.) . If you offer technical support, then in-home service round-the-clock may be attractive to the right customer. If you offer administrative services, then rush services (three days instead of a week) may command an additional premium. When pricing premium offerings, make sure to account for the cost of the additional level of service (more time, more materials, more travel) to ensure that it’s premium income and premium service.

There’s a subtle secondary psychological benefit to offering premium services/goods. Let’s say you sell dresses that average $100. Now also offer a dress made from a premium material or special fittings for $400. People may initially think that your $100 dress is expensive. But in the face of a $400 dress, your $100 dress seems downright cheap. This “decoy pricing” is used in higher-aspirational stores: restaurants, auto showrooms, shoe stores, etc. and is proven to increase sales.

Treat all your clients wonderfully. Just offer “something extra” for those that are willing to pay for the privilege.

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