MBA1667 Should You Move Up Market? + Free Ride Friday

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Hey, today is Free Ride Friday, so make sure you hang on to the end of the episode to hear who won this week's Free ride. If you if you're new to the show, Free Ride Friday is our way to say thanks for showing us love on Apple Podcasts. Just leave us an Apple Podcast rating and review and you enter our weekly random draw we call Free Ride Friday. Listen in on Friday just like today to see if you won a free ride to one of our programs. We're giving away easy course, a 30 day course on how to build your own online course. It retails for $500 over at EasyCourse Co or you can win it for free. Just leave us a rating and review on Apple Podcasts and you enter our weekly random draw we call Freeride Friday. All right, let's jump into today's episode. Hey oh. Welcome to the Hundred Dollar MBA show, the business podcast that makes dollars and cents every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. Ever wonder what are the exact steps to building a successful business? To quit your 9 to 5? Stop wondering. Go ahead and download our breakout business Roadmap over at our website over at 100 MBA NET in today's episode, we discuss should you move up market? Many entrepreneurs, many businesses start by serving a certain market and often it's a lower end market. Your prices are lower, you're serving people where the barrier of entry is low. But in the course of your business's growth, you might decide to serve higher tiered customers, customers that have a higher budget. This is often called moving up market. Is this a smart move? What are the advantages? What are the disadvantages? What are some things you got to look out for? Moving up market can really help boost your revenue. But customers have different expectations for a premium product or service. If you've been around for a while, you might alienate some of your customer base. We get into all that and more in today's episode and get to the bottom if it's the right move for your business to move up market. So let's get into it. Let's get down to business. Moving a market can have a lot of advantages. It could mean increasing your overall revenue, your overall revenue per customer and your lifetime value per customer. Having less customers while making more money is also going to lower your costs. And higher priced customers or higher value customers are often less maintenance and less headaches than lower priced ones. So why don't we all go up market and why do we even start low market? Why don't we start with a high market? Well, there's a lot of reasons. It takes longer to build a business that attracts a higher market customer because it takes longer to build that kind of trust. If I'm charging $5,000 for, let's say a graphic design service, while some of my competitors charge, let's say 1,000 or even $500, it's a whole lot easier to convince somebody to pay $500 than 5,000. But if you've built credibility over time and you have a customer base that loves your work, then 5,000 is totally doable. This is why a lot of new entrepreneurs, when they start businesses, they start at the lower end of the market because it's easier to attract those kind of customers. They want to get some traction, they want to get some wins under their belt, and that's totally understandable. But eventually they want to start moving up market. They want to start charging more, earning more, attracting better customers. And my advice is to do this gradually. There's nothing wrong with increasing your rates or prices every year or every six months and start offering more value along the way, especially if your product has improved. You should definitely be raising your prices and moving up market intentionally. Now, many people think that the expectations of a customer that's paying more is higher than ones that pay less. That's simply just not true. Actually, we ran a pricing experiment recently at Webinar Ninja. We actually doubled our entry level price. And the customers that we've received have said that they're more satisfied with the product than customers before. Some people have said that this idea is a credit to the fact that higher priced products attract more serious buyers. Buyers that are actually going to use your product and get the most out of it. This is why you don't often see luxury brands going out of business. Whether it's Mercedes or Louis Vuitton or the Four Seasons Hotel. Even during recessions, people like and value expensive things. So moving up market is more of you deciding you want to serve that type of customer and be that type of business. Be a premium type of business. This is more of a challenge when you have an established business with an established customer base. Customers that are used to certain price points. So say for example, you've been in business for a couple years and half your business or half your customers are on the lowest priced tier of your service or product. If you remove that tier and you force them into the higher tier, they're going to have something to say because they're used to paying that much, they're used to getting that kind of deal or being in that price bracket. This doesn't mean you don't move up market because you have these customers. It just means that you're going to need to speak to these customers and handle this gracefully. Now one thing you could do is grandfather them in, keep them on the price point. But anybody new doesn't have that lower price point option. This is what we've done with our businesses and this really helped bridge that gap. Saying that hey, any new customer will be on the higher price and nobody's affected from the past or anybody who's currently a customer. That helps you retain the customers. It helps them feel like they got even a better deal. It also makes them understand that you believe in customer loyalty, which is really good. But some people will not grandfather their customers for economic reasons. There's just too much money at stake here. Sometimes you could just give them a heads up and say, hey, we are increasing prices or this plan or this price point is going away. You can give them what's called a grandfather discount where you can give them a discount to move to the next plan, or you can give them a grace period and say, hey, this plan is going away in six months. So they have a heads up. I know many companies have done this. One that comes to mind in particular is Carthook. If you want to Google them. They have a great blog post on this topic about how they changed prices a couple years ago and how they communicated that to their customers. They actually ran the numbers and they found out that even though they lost some customers, the overall revenue gain was tremendously beneficial. And you're going to lose customers whether you change prices or not. You got to do what's best for the company. So therefore you can continue to innovate and grow and do what's best for your customers. One of the reasons why you would want to actually make this decision to move up market is that you want to actually attract certain what's called logos or companies that you want to display on your website. This screams credibility on your sales pages when you could say, you know, these household names, these companies use our product, our software, our service. And if they're big time companies, they're going to want a premium product. Now one of the things you have to look out for when you're moving up market is that big clients, big contracts, up market type of clientele, they're going to want some customization. Sometimes they're going to want you to change the product just for them. And that's going to be costly. And you have to figure out if you want to do that. Even if you're a service, changing the way you do the service, where you deliver it, you have to think about how much you want to change your product or service to cater to each customer. And there's a danger in having huge clients because if you lose one, that's a lot of revenue out the door. A lot of companies have moved to market without sacrificing their own autonomy in the way they produce the product or service. Look for examples around you in products and services that you buy. For example, the iPhone, the Apple iPhone is an upmarket product. There are a ton of cheaper phones you can buy, but the most expensive iPhone is probably one of the most expensive phones you can buy. Mercedes or BMW or Lexus. These are brands that are upmarket. Walk into a Lexus showroom, walk into a Mercedes showroom. See the experience. It's totally different than going to a Kia showroom or a Hyundai showroom. The way the salespeople are dressed, they might even offer you a latte at their Mercedes showroom. They might even have the cars sitting on carpet. Okay? And that's because they understand that premium products require a premium experience. So think about that as you're moving up market. How are you going to be premium? How are you going to differentiate how you're going to treat your customers? Like royalty? I believe moving up market is a smart move if you want to do it. If you want to serve those types of customers, if you want to increase your prices. Some people like to play in the low market. They like volume, they like a lot of customers. There's a lot of successful examples of low market products. Google is one of them. All their products are pretty inexpensive. Netflix, Ikea, Walmart. You get the point. But know that the lower your prices, the more customers you have to get. You have to secure. That's not easy in a competitive marketplace. So contrary to what people think, having a more expensive product is actually a more sustainable way to keep your business going. It's a whole lot easier to pay your business's bills when you're just charging more. Hey Fidelity, Can I get a second opinion on stocks in the Fidelity app? With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then when you're ready, trade US stocks and ETFs with no commissions. That's right. I am always right.

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Gas Snacks tolls this trip is draining my wallet.

Yeah, but we'll be with family.

You're in a good mood. What's your deal?

What's my deal? I saved at Metro with no activation fees and I got one line of 5G for just $25 per month. Kept the phone I love and a 5 year price guarantee on my top.

Text and data detour to Metro.

Get that more for your money feeling.

Only at Metro by T Mobile just bring your number $30 first month and $25 after with autopay not available if with Metro or T Mobile in the past 180 days to wrap up today's lesson, I do want to say that for many people, moving up market is scary. Charging more is scary. Becoming a premium product seems daunting. So this is why I mentioned take it in steps. Whether it's increasing your prices and your premium type of products being your main products by 20% then 40% then 50%. This can help you ease yourself in. Remember, the more money you make, the more you can invest in your company, your website, your product or services to look really premium. This allows you to compete even more and be more of a powerhouse, sustainable business. Thank you so much for listening to the $100 MBA show. Today's episode's not over though. It's Free Ride Friday. Let's see who won this week's Free ride. And the winner is meows. That's the handle on Apple, Meow says. Very informative. This podcast is very interesting, short and to the point. Thanks Meows for the amazing review. You are our Free Ride Friday winner. Thank you so much for listening to the podcast. Your mission is to email me at omar@100mba net so I can hook you up with the Free ride to Easy Course our 500 course over at EasyCourse co. If you want to win a free ride, just leave us an Apple Podcast rating and review and you enter our weekly random draw we call Free Ride Friday. Listen in on Friday to see if you won. It's that easy. Thank you so much for listening and thank you in advance for leaving us a review on Apple Podcasts. Thank you. Before I go, I want to leave you with this business is about innovation. It's about change. It's about experimentation, is about growth. You can't keep doing the same thing over and over and expect different results. So sometimes that something different that you have to do is moving up market is changing who you serve slowly to hit the customers that really love what you offer. You might think your customers are perfect for your product now, but sometimes when you move up market you realize wow, there's a whole bunch of people here that didn't know I existed and they are super fans. They think they're getting the world and more from my product. Thank you so much for listening and I'll check you in Monday's episode. I'll see you then. Take care. Of. Gas, snacks, tolls. This trip is draining my wallet.

Yeah, but we'll be with family.

You're in a good mood. What's your deal?

What's my deal? I saved at Metro with no activation fees and I got 1 line of 5D for just $25 per month. Kept the phone I love and a 5 year price guarantee on my top.

Tuxt and data detour to Metro.

Get that more for your money feeling.

Only at Metro by T Mobile. Just bring your number. $30 first month and $25 after with autopay not available. If with Metro or T Mobile in the past 180 days.