Find Your Best Customers and Double Your Prices

A really cool thing happened this week with one of my physical products brands. We were running low on inventory on one of our products. So we raised the price by about 30% to try to slow sales down. Seems logical that happens a lot, right? Except sales doubled as a result of the price going way up. Now I've been a fan for several years of about premium. Let me try to say that again. I have been a fan for several years of building premium brands. I think the market specifically on Amazon is ripe for high priced brands. I've said a couple years ago that we would see a market consolidation, meaning you would see a run to the bottom. You'd see people squeezing out profit margins. And that's exactly what happened because everybody was selling the exact same products to everybody and they were selling private label spatula and another private label spatula. Our spatula is cheaper, ours is better. And I think the market is now due, and I've said this for about a year, we're due for a reverse consolidation. And what that means is everybody has raced to the bottom. So there is this wide open market right now for high priced products. Because at the end of the day there's always going to be a selection of the marketplace that wants really premium products, that wants the most expensive products. Now you need to be able to justify why your product is charging twice the price of your competitors. And I'm going to go into exactly how to do that in my opinion. But just the clear takeaway right now, I think the market is due for high priced products to come from premium brands. And that can be you, whether that is an existing brand that releases a new line of products that is more premium or it's a brand new business because you've got the low priced business and now you're coming out with the high priced business just like you would have. Oh shoot. Trader Joe's is owned by another company that's seen as premium. Shoot. Anyway, so you've got, you know, your low end buyer and your high end buyer. You can own both companies or you could have two lines, which is what I've done in my businesses is have two lines of products that serve the same type of customers. But one is positioned as super expensive and premium and one is positioned as not as premium. So you can, you can do either one of those. Now how do you justify having a premium price? You do this based on who you target. And here's where this matters. Even to those of you who are in business, businesses that are not physical products brands, the more clear you are in the person that you are targeting, the higher the price you can charge. Because if you, you can have a monopoly on the type of person that, that you are targeting. And that was the case with this particular product. It was to a very, very specific audience, even though the product itself wasn't all that different from everything else in the marketplace. What was different was the marketing and the targeting of the person that was behind it. There is a phrase that I like to borrow which is take your product to its highest and best use. The highest and best use is who is the customer that is willing to pay the most for that product or that service. And if you can identify that person, then narrowing in on your highest Ms. Use and your highest margin becomes a lot easier. And if we can on the other side of this, look at what part of our business is the highest and best use, it frees up a tremendous amount of energy to be able to charge higher prices. So an example of this, for example, something a lot of you are familiar with, is Gary Vaynerchuk. Gary Vaynerchuk spends his personal brand time delivering value, creating content. He has this massive audience as a result. But Gary knows that it would be a mistake. It would not be his highest and best use to go sell info products to that audience. Instead, it's a higher and better use to use his audience to go get clients for VaynerMedia or to use his notoriety to buy companies, both of which he does. For example, if you look at when he launches a new brand, like right now, he's doing the 1:37pm that's one of his brands that he is launching right now. He's marketing that to the Gary Vaynerchuk audience, the Gary Vaynerjuck following. Because growing a company from being a $20 million company to a $40 million company is worth a lot more than selling an info product on social media to his audience. At the same time, if you look at the.

If you look at the strategy that VaynerMedia is using to grow their client base, their social media following is actually fairly limited. Not many people are following VaynerMedia. Gary is the one going out and building the audience and that's the asset. So if you think about all the things that you're doing in your business, if you think about all the different systems and processes as assets, you take those assets to where they are the highest and best use. That's where you can command the highest prices and also have the most energy in your business.

Another example of this, go back to the physical product. The physical product. If we can identify who is the high, what's the highest and best use of this product, who is the niche market, who is the type of person who's willing to pay the most this product, we could say the same thing in software. Could we take a piece of software instead of targeting a mass market of people, could we target specific businesses or specific enterprises that would like the same exact result, but are willing to pay a premium for this? I was working with a client about three weeks ago and he was using the products and the systems that he had developed and was going to market on kind of a mass market approach. And he had a certain. He had $500 was the mark that he had in mind of what he wanted to charge for this product. And I said, okay, who would we have to target for us to charge not $500, but $15,000? This was a thought exercise. I think he ended up raising the price to a few thousand dollars. It didn't go to 15,000, but he raised it a few thousand dollars. But that question of who would we have to target for this to be worth $15,000 got him to narrow in on the ideal person. So regardless of what you're selling, if you were to ask the question, what would you have to do? Who would you have to target if you wanted to double your price? And that's an easy way for us to narrow in on our highest and best use and our ideal customers. The 8020 rule applies to customers. It's not just about where we spend our time. The 80:20 rule applies to the people who are giving us money. And today at this table right here, I think C Money posted an insta story of it. We were having a meeting about one of our programs and we were identifying who are our best people and who are the people that aren't necessarily fit for this program. And based on the people who are the best fit, how would we have to restructure this part of the business to where it only attracted those really high level people that we love to serve and that we really create a lot of value for? What are the similarities among the customers that we love to serve versus the customers that drain us of energy? Because I don't know about you, where I am in my life, in my career is I'm much more protective of my energy and I pay more attention to what fuels me, what energizes me, because I know that in the long run I'll make more money if I focus on that. So if I can focus on fewer people. Even if I make less money in the short run, I think I'll make more in the long run because I'll have the energy to build the type of life I want and to build the type of company that I want. And that question of who would we have to target in order to double our prices is a nice guideline for us to find our highest and best use. It's true in physical products, it's true with software, it's true with consulting, it's true with all businesses. You have got a sweet spot of customers, and if you can identify that sweet spot of customers, even if it is simply changing the market that you're targeting, for example, going from fitness buffs to crossfitters, or going from.

Cooks to moms. Right. If we can target in on the exact audience that we're speaking to, we can often charge way more money because we can speak directly to that audience, know exactly what the pain points are of that audience, be able to offer solutions that even if they're the exact same as everybody else's, they're communicated in a way that speaks directly to the pain points of that audience. Many of you are sitting on the opportunity to double or triple your prices if you simply eliminate some of the customers that aren't your ideal. Because the people who are your ideal are your raving fans. And the people they hang out with are other people in that demographic who will spread the word for you. That's how you go out and get raving fans. It's how, oh, hey.

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