Home » Blog » BUSINESS » Price Strategy » How to Increase Prices for Services

If you find this blog post useful, please share it on your social profiles!

Facebook icon Facebook icon LinkedIn icon

MENU

The Absurd Theory that the Rich Pay Everything More than Its Actual Value


There’s a bewildering notion about pricing products or services.

Unfortunately, the idea that when the wealthy shop, price is the last thing they consider is widespread.

Following these flawed reasonings, we end up selling ordinary goods and services at exorbitant prices because someone taught us to do so.

I’ve lost count of pizzerias that opened, charging twice the normal price for a simple (and not even that good) Margherita, just because they wanted to be “the pizzeria for the rich.”

In Versilia, I could list pizzerias that opened with this intention and closed after a few months.

Guys, you have to stop thinking that the rich are fools and that they pay everything more than its value just because they have the money to do so.

If they have a lot of money, it means they’ve been prudent savers, smart investors, and unlikely to have ever overextended themselves.

The main proponent of this silly idea was – as usual – Dan Kennedy.

It’s him who, in his imaginative book “No B.S. Price Strategy,” states “When in doubt, add a zero,” referring to the price of our products.

It doesn’t work like that.

No one will pay twice the normal price for your bolts just because you start proclaiming to have become the hardware store for the rich.

While it’s true that price becomes a minor factor when dealing with wealthy individuals, there’s a whole series of motivations and actions to take before increasing prices.

Rich individuals aren’t foolish and wouldn’t spend a million dollars on a glass, for instance.

However, I can assure you that if there were a company producing glasses with a unique, captivating, and distinctive story to share, they could sell them for a million dollars each.

Simply designing glasses with a unique, modern, and appealing design and giving them to the top ten richest people on Forbes’ list in exchange for a video or photo review of how beautiful those glasses are and how important they feel owning them would be enough.

All the other wealthy individuals worldwide would do anything to emulate them and buy those million-dollar glasses.

Price increases should be the final step in a marketing strategy that aligns with the desires and expectations of our wealthiest customers.

I’ll show you everything in this blog post.


Ordinary Products at Staggering Prices


Do you sell ordinary products and want to increase prices to be accepted by your wealthiest market segment?

Okay, you can do that, but you need to be exclusive.

Without exclusivity, as I explained in the blog post about doing business with our wealthiest customers, no one will give you a dollar more than your competitors.

I’ll provide several examples of ordinary products that, in specific settings, are sold for nearly 30/40% more than average.

This will help you understand the strategy behind it more clearly.

Coffee

Is there a more widely consumed product with a more universally recognized price than coffee?

In Italy, in any bar, it costs 1.20 euros.

In Lugano, a coffee costs about 5 dollars (about 4.5 swiss francs), making it the most expensive city in Switzerland for coffee.

Let’s say that on average, a coffee in the world costs around 2.00 dollars.

However… Well, I often visit the Principality of Monaco; I love that place.

At the Hotel de Paris – perhaps the most luxurious and elegant hotel in the world – a coffee costs 10 euros.

The funny thing is, if you walk less than 2 km from the hotel, you’ll arrive at the McCafé in Monaco, where you’ll only pay 2€ for a coffee, which is cheaper than in Lugano.

The coffee is the same.

In fact, maybe the McCafé coffee is even better than that of the Hotel de Paris because you can pair it with a lot of junk food like donuts and cakes or instantly get diabetes by pouring thick caramel or chocolate into it.

The price difference isn’t in the taste; it’s in the place it’s sold.

Paying 10 euros for a coffee inside what is considered the most luxurious hotel in the world is entirely acceptable for the clientele.

The Hotel de Paris customers are happy to pay 10€ for a coffee because they know they’re not just paying for the coffee but also for the exclusivity of enjoying it in one of the most luxurious environments in the world, where very few people can afford to stay.

On the other hand, none of these individuals would ever dream of paying more than 2 euros for a coffee in a normal place full of screaming kids like McCafé.

Cars

Do we really want to discuss the cost of a Ferrari compared to the price, for example, of a Peugeot (a very popular compact car in Europe)?

They’re both modes of transportation, and the Peugeot has several advantages over the Ferrari:

  • It can accommodate five people, while the Ferrari can only carry two.
  • A full tank in the Peugeot lasts a week, while a full tank in the Ferrari is enough to get you out of your driveway.

“Yes, but the Ferrari is fast!”

That’s true, you’re right.

There’s no doubt it’s one of the fastest cars in the world (not the fastest, but one of the fastest).

But I’d like you to consider something: when you’re stuck in traffic in New York, Milan, or Sydney, I assure you no car will exceed 25 miles per hour unless you’re in GTA and want to unleash homicidal fury.

In Milan, on Via Porpora at noon, it takes twelve minutes to cover 400 meters, regardless of whether you’re driving a Ferrari or the foot-powered car from the Flintstones.

Most Ferrari and luxury sports car owners tint their windows just to avoid being seen by people and ridiculed while stuck in traffic (confession from a former client of mine who owned a Ferrari Portofino M).

Speed means nothing in that context.

In Switzerland, all drivers respect speed limits, even when there are no cars in front or behind them.

It’s not uncommon to see Ferraris, Porsches, and Lamborghinis calmly cruising along the lakeside in Lugano at an average of 50 km/h.

It’s not for speed that the Ferrari costs more than any other car.

The car itself means very little; what truly matters is what the brand communicates to its audience.

Ferrari communicates wealth and exclusivity, while Peugeot is simply a compact car that conveys the message that you can’t afford anything else.

I don’t want to be classist or seem presumptuous; I don’t have a Ferrari, so I’m not insinuating anything negative.

I care about all of you, whether you’re driving a Ferrari (I would genuinely be happy for you) or riding a bicycle.

I’m simply explaining how advanced-level strategic marketing works, allowing some exclusive companies to increase the prices of ordinary products.

Clothing

We all know the usual price range for men’s or women’s shirts.

On Amazon, you can get a decent shirt for about 50 or 60 dollars.

However, some shirts cost 100 times more than the normal price.

I’m not talking about top brands like Armani or Versace; no, I’m talking about the exact same shirt.

The price difference is because of the different location.

In fact, if you checked the price of the same shirt (believe me, it’s exactly the same) from By K in Monaco, you might be breathless.

The shirt is identical in color, fabric, brand, and size.

However, at By K, you’re not just buying the shirt; you’re also paying for the luxurious experience of being in the Principality of Monaco, just like for coffee at the Hotel de Paris.

Health

There are significant price differences even when it comes to healthcare.

In the home countries of princes, kings, sheiks, and prime ministers from around the world and any continent, healthcare is often provided for free.

They don’t even need to travel long distances for treatment because hospitals are usually located near their residences.

So why do these prominent figures go to great lengths, traveling with bodyguards and entourages, taking private international flights, spending hundreds of thousands of dollars to visit the Cleveland Clinic in Ohio?

Why do wealthy individuals worldwide choose to spend excessive amounts on products and services they could get for free?

It’s quite simple: because people’s choices are influenced by the pursuit of top-of-the-line products or services and social status rather than the product itself.

The expensive Cleveland Clinic has always catered to privileged and high-ranking individuals.

These people are willing to pay a considerable sum because they believe the Cleveland Clinic will provide them with the best healthcare available.

They know they won’t have to wait for appointments, and they know they won’t have to share a recovery room with the general public like the rest of us.


The Relationship Between Price, Profit, and Power


I wrote this blog post because when some readers email me for private advice, most of them firmly believe – and they’re unwavering about it – that a company’s market power and potential wealth come from the excellence of its product or service.

You wouldn’t believe how many people, including brilliant entrepreneurs, hold this belief.

We Italians are the first ones to pursue this mistaken idea.

Most Italians are artisans.

It’s well known that Italians excel in manual work rather than conceptual work.

If any of my fellow countrymen are listening, don’t get mad, unfortunately, that’s just how we are.

The average Italian focuses solely on the product they create and sell, convinced of the mistaken idea that “Italians do it better”.

Sure, this is just a popular saying that has comically spread worldwide, but it doesn’t reflect reality: Italians – apart from food and clothes – aren’t doing so well.

I’m Italian, and I know it all too well.

The truth is that as entrepreneurs, we Italians are rather ignorant.

We’re very proud of our products, and some of them, especially those in the food category, I must admit, are truly excellent.


In supermarkets around the world – even in remote islands near Antarctica – you’ll always find at least one brand of Italian pasta, along with a range of sauces and foods from Tuscany or Emilia Romagna.

We could have become a global economic power thanks to our food, but instead, we find ourselves one of the poorest and most troubled countries in the world.

Why is Italy in such a state of deterioration?

Because, in addition to completely incompetent and indifferent politicians, we lack marketing skills.

In fact, due to our poor business sense, it often happens that our products are copied and replicated worldwide with quality standards very similar to Italian ones, if not better.

I discovered on YouTube that there are companies copying Italian food and twisting the names of our most famous brands like Barilla or Ferrero to avoid copyright issues, selling them at a third of the price.

Not to mention clothing: our Chinese friends manage to reproduce Versace, Armani, and Gucci garments with such mastery and precision that, believe me, they look identical to the original pieces.

And they sell them at a fraction of the original price.

Market power doesn’t come from the ability to create a product or provide a service; if it did, Italy would be an economic powerhouse.

Market power instead comes from the perception people have of us as industry leaders.

If you examine the groundbreaking companies that have dominated their sectors, you’ll find that leadership is what they have in common.

The product is never the dominant factor; it’s the marketing.


The Primary Factor Influencing the Ability to Raise Prices


Let’s get practical and understand which businesses have the potential to increase prices – after significant marketing efforts to build and solidify their market authority.

One crucial factor influences this possibility more than anything else, even more crucial than continuous testimonials from wealthy individuals who have done business with you: the location of your business.

Unfortunately, not all businesses can raise prices, as this largely depends on their location.

In an area where there are three bars, it’s not possible for one of them to charge $10 for coffee if the other two bars only charge $2.

Nobody would go to the $10 bar.

To demonstrate this, I’ll show you two historic bars in Versilia where I used to live: the Merusi Bar and the Elio Bar.

Two bars located close to each other in Forte dei Marmi
The Merusi Bar and the Elio Bar, historic bars in Versilia, are situated just 2 meters apart from each other.
Source: Google Maps.

The coffees are very similar in taste, but the Elio Bar has always aimed to attract a more upscale clientele compared to the Merusi Bar, which is frequented by the typical morning workers with their scooters and Italian vans.

Yet, the coffees cost exactly the same because otherwise, the higher-end customers would feel foolish paying more when, just a few meters away, they could have the same coffee for much less.

If you happen to be in Versilia, feel free to stop by and try it for yourself.

Let the bartenders know I sent you.


So, if your competitors are just two meters away from you, your potential customers can compare your offers and turn to whoever offers the lowest price.

Shopping malls are a classic example of this situation.

In malls, jewelers cannot raise prices because there are 4-5 jewelers in each mall essentially selling the same things.

People can easily compare prices in the various stores just a few steps away and decide to go to the cheaper one.

This is the only case where even the wealthy would choose the least expensive option.

But this also applies online; think of Amazon.

Amazon is an example of an online store where price competition is intense.

All competing products are displayed on the page immediately below your products, and Amazon’s audience tends to buy based on who has the lowest price and the most reviews.

Where you work influences your ability to raise prices more than anything else.

Unfortunately, there is no solution unless you have the opportunity to move your entire operation to more exclusive locations.


“The Product Doesn’t Matter” is Just a Provocation… The Product Matters!


Dan Kennedy, the ringleader of business charlatans, claims in his book “Magnetic Marketing” that everything we know about marketing is wrong.

He particularly argues that product quality doesn’t matter when you have effective marketing because customers don’t understand much, making it easy to show them what we want.

So, according to this odd character, if you have a poor product but know how to market it, people will still buy it.

Please, don’t listen to him and avoid reading that book; it doesn’t add anything valuable to your knowledge of marketing and business.

The truth is that the product MATTERS A LOT in the business world.

And I’m not the one saying it, but Jeff Bezos in this YouTube video: Jeff Bezos: A great product matters more than great marketing.

Dan Kennedy

  • Occupation: Helps others become rich by selling information
  • Companies founded: 0
  • Money earned: Never disclosed financial statements
  • Theory: Marketing is more important than the product, and customers are fools whom you can easily deceive when you have a working marketing system.

Jeff Bezos

  • Occupation: Entrepreneur, Founder and CEO of a billion-dollar company
  • Companies founded: Amazon
  • Money earned: Over 100 billion dollars
  • Theory: To succeed, focus on the long term, obsessively put customers at the center of your world, and create a product of quality close to perfection.

If you allow me, I trust Jeff Bezos more.


The product quality must be excellent because if you follow Dan Kennedy’s example, you might sell several units, but then what would you have left?

Negative reviews, refund requests, and a charlatan label for life.

The product must be of superior quality to justify price increases.

That’s the foundation.

Then, the location is crucial, as I’ve shown you.

If you manage a bar inside the Hotel de Paris, you can charge €10 for your coffee.

If you have a bar in the outskirts of Milan, asking €1.50 for coffee is too much, and you wouldn’t have customers.

But in any case, it all starts with an excellent product and the obsessive willingness to give your best to your customers.

So first excellent product, then location.

Without a quality product, long-term success is unattainable.

Marketing can help sell a subpar product, but people aren’t stupid: how do you think they would react once they realize your product isn’t worth the high price you’re asking for?

What do you think they would say about you to their acquaintances?

How will you handle negative reviews and refund requests?

And the highly probable legal actions for fraud?

Wealthy individuals, in particular, don’t invest in mediocrity; they seek the premium version of everything.


Therefore, to stand out in your industry, it’s essential to offer products or services that approach perfection.

This means considering every detail, surpassing the competition, and getting closer and closer to the top.

My fundamental message on this blog remains the same: product quality is the foundation of success.

Marketing can amplify its value, but without a solid foundation, every effort is destined to collapse.

Investing in perfecting your product is the first step toward triumph in the business world.

An exemplary luxury company that offers a product of the highest value is Ferrari.

Ferrari is renowned for providing its customers with a range of benefits and experiences that go far beyond simply selling a vehicle.

Some of these services include:

  • Highly detailed customization programs: Ferrari offers customization programs that allow customers to create a bespoke car, with a wide range of colors, interior materials, finishes, and options. This process may involve personal meetings with Ferrari designers to ensure every detail reflects the customer’s preferences.
  • Exclusive events and Ferrari Experiences: Ferrari owners have the opportunity to participate in exclusive events, ranging from private presentations of new models to track days, organized trips to exotic locations, and the chance to participate in the Ferrari Challenge, a racing championship reserved for customers.
  • Ferrari Driving Course: Some purchases include access to sports driving courses led by professional drivers, to learn how to safely maximize the performance of their vehicle.
  • Premium customer service: Ferrari’s customer service goes beyond simple after-sales support, offering personalized assistance for every aspect of the Ferrari experience. This may include a concierge service for event or travel bookings.
  • Maintenance and assistance: Ferrari offers maintenance programs that ensure the car is always kept at peak performance, with highly specialized technicians and original parts.
  • Warranty extension programs: To provide long-term peace of mind, Ferrari offers warranty extensions that are among the longest in the luxury car industry.
  • Access to exclusive clubs: Owners can join official Ferrari clubs, which offer an additional level of camaraderie, exclusive events, and the opportunity to connect with other enthusiasts.

In contrast, when purchasing a mid-range or low-end car – about 90% of vehicles on the road – the only premium service included in the price is a bit of gas just to get home.

But it’s not always guaranteed.

A Unique Process

The price difference of the same product sold by a well-established brand (Tupperware) and a lesser-known brand
The price difference of the same product sold by a well-established brand (Tupperware) and a lesser-known brand.
Source: Amazon.

Along with excellent product, location, and a strong differentiating idea, another factor that significantly affects your ability to raise prices is the purchasing process.

You might be familiar with Tupperware, a company that sells airtight containers at prices well above the industry average.

One distinctive aspect of this company that contributes to its global success is the parties organized by its affiliates.

What do these parties entail?

Essentially, following the company’s approach, individuals invite various friends to their homes, where they arrange a buffet with unlimited food and drinks while showcasing the full range of airtight containers produced by Tupperware.

Now, what’s the clever strategy that Tupperware employs at these gatherings?

The truth is, none of us wishes to be remembered as the friend who attends a party, indulges in free food and drinks, and gives nothing in return.

Consequently, upon accepting the invitation – which clearly states that the airtight containers will be presented during the event – attendees are already aware that they will make a purchase, even if it’s just out of courtesy.

Yet, what should be a simple gesture of appreciation quickly transforms into a genuine trap.

You find yourself surrounded by Tupperware products, and in that moment, the only thing you can see is the Tupperware brand.


Upon returning home, you realize you’ve spent far more money than you initially anticipated.

This dynamic is facilitated by the purchasing process, which prevents “customers” (who, in this scenario, are essentially the affiliates’ friends) from encountering brands other than Tupperware.

Because, naturally, apart from the airtight containers, Tupperware offers an entire array of related products through upselling and cross-selling.

Consequently, people often leave these parties with large bags filled with Tupperware items and an assortment of airtight containers that they’ll probably never use, except perhaps as bowls for their pets’ water.

They end up making purchases multiple times more than initially planned (I don’t have precise statistical figures; I’m relying on testimonials), paying several times more for the products than they would in a conventional store.

The Tupperware team didn’t invent any groundbreaking techniques; instead, they capitalized on their marketing expertise to design a distinctive marketing process.

Another remarkable aspect of the Tupperware process is the establishment of a system that enables them to host a multitude of parties per event.

In fact, numerous party attendees decide to become Tupperware distributors themselves, thereby fueling an unending chain of revenue.

They intelligently obtain Referrals from their customers.

Within this company, a unique fusion of the location factor and the process factor emerges, ushering in an extraordinary potential for price increases and bestowing the company with substantial market influence.

If you find this blog post useful, please share it on your social profiles!

Facebook icon Facebook icon LinkedIn icon




STAY UPDATED FOR FREE


AWeber badgeGet free advice from top world's entrepreneurs on launching your business idea and promoting it through effective marketing strategies.

Join more than 100+ people from around the world by subscribing to my newsletter (see the badge on this page, awarded by AWeber to the first 100 members of my mailing list).

By entering your name and email address in the form at the bottom of this page, you will receive one lesson per day in a step-by-step sequence, ensuring thorough study at your own pace.

This content is constantly updated, almost daily.

They offer a step-by-step path in business, marketing, copywriting, passive income, sales techniques, and much more, ensuring comprehensive study at your own pace (if you don't want to wait, here's the link to the course with all the lessons: CLICK HERE).

You can unsubscribe anytime with a simple mouse click, no questions asked.

❌ No downloads. No requests for money. No books or courses to purchase.

✅ Just advanced and free business and marketing education.
Please enable JavaScript in your browser to complete this form.
Privacy