The Tribune

By D'Arcy Rahming

Why is it that people will pay up to 10 times as much for the same product depending on where they buy it? For example, let’s say you have a thirst for an adult beverage. You could go down to your local liquor store and pay $2. Or you could go to your local pub and pay about $4. Now, if you went into a high-end hotel, you would pay $10. Yet this is the same adult beverage, and it will have the same affect on your body. An easy answer to this is that the environment changes the price. But in this article I want to dig a little deeper.

A mentor of mine always used to say the only difference between $1 and $1 million is the zeroes behind the one. I would later encounter this advice on a sales course I attended, where a person’s business was being analysed. The suggestion made by the presenter was that the price he was charging was too low. When asked how much he should charge, the answer was: ‘ Just add a zero’.

In other words, 10 times as much. I went away and tried this with a product I was selling online and, lo and behold, while my sales volume did not increase, the overall dollar value gained was far in excess of the fall-off in customers lost. Selling something for more begins with believing that someone will pay more for your product or service.

In martial arts, for example, when instructors price classes, they often base this on twhat they paid when they were a student. Many of these instructors learned 20 years ago, or in ‘free’ community programmes, so they cannot easily make the mental jump to creating a professional programme that they are properly compensated for. This has more to do with their belief system than the market. Even if they are providing great value, changing peoples’ lives through discipline and self-defense, they still want to mentally cling to old ideas. The only time they wake up is when they are forced to out of necessity.

The same is especially true of those offering other services. A haircut, for example, can range from $5 to $150. Your perceived skill, the setting, the products used, the neighbourhood you get the haircut in, all determine the difference in pricing. So believe in yourself and that you are adding value to your clients’ lives, because the greatest determining factor involves whether you believe the haircut is worth that or not. And this will drive all the other factors.

• NB: D’Arcy Rahming holds an MBA from the Kellogg School of Management at Northwestern University. A lecturer at the College of the Bahamas, Mr Rahming has clients in general insurance, the retail, health and medical fields, sports federations and financial services. He is also treasurer of the Bahamas Olympic Committee. To contact him he can be reached at DArcyRahmingsr@gmail.com.