How Alex Hermosi RAISES PRICES Without Losing Sales

Start of Transcript:

In this video, I’m going to show you how to raise your prices. It’s one of the best ways you can increase profitability, your business and ultimately make more money and give you more spending power. Pay people better, provide better experience. All of the many benefits that go with raising your prices.

But one of the fears of raising your prices is – What if I don’t sell anyone? What if my sales team doesn’t have conviction? What if my market won’t bear that price?

99 times out of 100 – it’s purely in your head and in your sales team’s head.

Having now raised my prices in a number of different businesses, a number of different industries across different sales teams, I have a process that has worked very very well for me and I’d like to share with you, okay? So what I’ve written on the board here are different prices that I might be increasing. Going from one thousand two thousand. Two thousand to three thousand. Three Thousand to four thousand. Four to five. Six to eight. Ten to twelve.

These are common price increases that happen, and what I want to do is kind of walk you through the strategy in a real way, so that you can see what this equates to in a real business. Okay.

So, if we’re, if we’re going right, I’m trying to uh increase from let’s say 2k to 3k. The way that I do it is, I actually bump my my top price up by an additional uh percent, all right, and so I actually make the new price Four thousand dollars, which is the price anchor. This is what the sales people are going to say on the phone right and here’s what’s cool is that I say cool. You can pay this four thousand dollars in in 2k, you know, and 2k right. You can make that payment that way and the reason we do that is because 2k is their their emotional anchor. They’re used to getting two thousand dollars, and so i’m gonna say cool.

You still have that in your back pocket. You’re totally fine. It’s safe! It’s gonna be okay right, so we’re gonna say it’s four thousand dollars which they can either pay 2k and 2k (installment) or they can get some same day savings and pay 3k today. All right – and so by doing this, it allows them emotionally to have home base where they feel comfortable and safe, asking for two thousand dollars right, say: cool and the extra payment you can make in 30 days or if you want, you can just pre-pay it and pay 3k – so it actually gives the sales people a discount to get the price that is now higher for us. All right.

So, let’s walk through another one, because I think this is something that’s good to to walk through together. So let’s do this 4k one! So your 4000 you want to bump to 5000. All right, well again, we’re going to bump over to do we’re going to skip over that 5k and we’re going to jump straight to 6k. This is going to be our new price anchor and we’re going to say cool.

What I want to do is you, can either pay 4k today and then 2k in 30 days. Now notice that this is a disproportion slip. I prefer to do uneven splits personally, because I want to still keep more cash up front right and the reason this also is cool now check this out right. Remember this person always said 2k. Well, it’s like well shoot. I can either pay 2k now, 2k in a month or so, or just an extra thousand to get to the 3000. See how much easier this is to sell same thing happens here, right you’re at six thousand dollars, you say cool 4k remember this is home base. This is what our sales team is used to selling, so they have conviction around this number they’re comfortable, saying something they don’t get tongue tied around saying this number right, it’s like, or so you can pay 4k today and then 2k in 30 days, or you can just pay an extra thousand and get it all taken care of today.

Right? And so all of a sudden, you’re down selling this upsell. You’re down selling and making a discount compared to a price anchor which we introduced on the call. So it actually makes it easier for your sales team to sell now. This process that I just outlined is exactly how I raise prices because I’ve tried to just say: “Okay guys, you just got to deal with it. It’s just in your heads, but you know, as time has gone on and like i’ve become more weathered than this”.

It’s good to have a process, and so a couple of the takeaways that I want you to see from this is one. Is that they’re going to have an emotional comfort sailing around a certain price? You have to accept that right and there’s a reason that you’re the entrepreneur, because you tend to be a little bit more adaptable a little bit more flexible, a little bit more growth worries and that’s okay right. But you have to meet people where they’re at, and so if this is what they’re comfortable, then we still need to give that to them.

So they still have that and that’s what they can always ask for up front right and then the second thing that I want you to take from this so first is that you give them there so I’ll write numbers on this right first is that you give them their home base number one all right, number two is that the price that we are going to be anchoring is not the price that we’re actually trying to get to.

So if we want to get to 3000 from 2000, we’re actually going to talk about a 4000 price point which anchors high and then when we introduced number three, which is the prepayment discount, that is actually the number that we’re looking for all right. The fourth tidbit that I want you to take from this is noticing the discrepancy between what they can pay today versus what they’re going to pay over time.

All right, I prefer to have an uneven split, because a i’m going to have more cost of onboarding. I prefer to make more cash flow up front and the beautiful benefit of just the tiny, incremental increase from that one payment from for a 4k 2k split compared to just I just pay 5k today and be done with that, creates a very compelling offer all right.

Now, if I were to jump from, let’s say 10k to 12k, this is going to be a really really minor difference right.

I could do uh. Do this a couple of different ways? I could say you know 3 times 4k right or what I would probably prefer is something like 6 plus 3 plus 3 right. So I get a little bit more up front for the payment and then more over time now notice. If I do six super three, then it’s going to automatically encourage people far more to take this upfront prepayment discount right.

It’s like well for only an extra one, more thousand than what I would make on my second payment. I don’t have to make any more payments right and so you’re noticing. The four points that are that are going to be consistently used here right.

Is that one we’re going to try and give them home base as much as we can right?

Number two: we’re going to jump over the number that we’re planning on trying to price it at.

So we have a higher price anchor so that we can down, saw the prepayment discount, which is number three and noticing that the comfort price compared to the prepayment discount should only be marginal right and the reason we do that is because they’re, like oh man, it’s Just a little bit extra and I can pay that now, but what we accomplished through doing this and like that 4k, that uneven split is that now we’ve successfully raised the price.

We’ve gotten more people to prepay because of the way that we structured the pricing and we’ve done it in such a way that the sales team can feel confident and convicted about it, so they can sell consistently without any issues and i’ll give you one more pro tip before we go.

So if you’re ever going to raise your prices, always always always clear the pipe all right so clear, the pipeline so announce it always own your price increases. It’s one of the easiest ways to create true scarcity and urgency all right. So if your team knows that this is going to happen, then it gives them urgency to close more deals faster and clear out the pipeline.

So give them a heads up, say: “Hey, we’re going to increase the price next month. Hey, we’re gonna be increasing the price in the next two weeks” So it gives people this motivation to take action and not sit on the sidelines. It allows your team to squeeze uh their pipeline to get some extra cash now.

Here’s another side benefit of when you clear the pipeline. When you do this, it also gets around. You know some of those future people are, like, I heard a different price, etc. Well, it’s like well, we already gave you a heads up about it.

We told you we’re gonna click. We’re adding more more features, more benefits, blah blah to the thing we have more successes. We’re making it easier and faster for you, and so, as a result, the price is going to reflect that so get in now. Right and then you, as the business owner, get a nice boost of cash flow before you make the change so that you can weather, maybe a dip in cash flow during the adjustment period, which sometimes happens right. It’s just natural as part of the business all right. So this is how you raise prices in a tactical format. This is how I have learned to do.

It has worked very well for me. I hope it works well for you. The point of this channel is there’s a lot of people who are broke and I make these videos so that you are not one of them. I have nothing to sell. You keep being awesome.

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