Since the birth of our daughter my wife and I have noticed how nearly everything we have bought or has been given to us for her is made in China. Probably 95% of the stuff has a “Made in China” label, regardless of the price, product, quality or the type of shop it was bought in. Some of the gifts came from high-end boutiques, very nicely wrapped and presented which I suspect cost quite a bit.
Everything bought for us and everything we have purchased so far we are happy with so this whole thing got me thinking about what a great example this was of a saying I have about sales: It’s not what you are selling, it’s how you sell it. In other words no matter what the product is and where it came from, even if it’s similar to something available elsewhere; if you dress it up and package it well enough (especially if it comes with a “story”) then you can add a premium price to it. In fact it goes beyond sales and can be applied to a whole business model.
About two years ago I noticed in the upmarket towns and neighborhoods in UK that I visited these Cupcake shops were springing up. My eldest daughter Lily dragged me into one and I couldn’t believe the different types of cupcakes they had and very elaborately decorated. I was impressed until I saw the prices, I could buy several boxes of cupcakes in a bakery or supermarket for the same price as one cupcake in this shop. I was now really impressed, not by the cakes but by the business model. They had taken something basic and already available, dressed it up, put it in a swanky shop in a posh part of town, added a stupid price and they had a queue out the door, brilliant.
Around the same time a few years ago I heard the term Gentrification for the first time and this sums up part of what the cupcake shops had done. They took something basic and almost common and made it look more exclusive, premium and desirable. And by gentrifying it they could add a more gentrified price too.
Starbucks is another great example of this, it’s really good coffee but I know other independent coffee houses that have great coffee at a fraction of the price of Starbucks and let’s face it it’s just a cup of coffee. Why is it worth so much more? Because they dress it up and say it is. Simple. It’s odd and if you really analyse it, it’s a bit crazy but it obviously works so don’t knock it; use their example and dress up your business idea or product you are selling so you can put a higher price on it.
When following this approach there is one key thing to remember: You have to believe in it for it to work, if you don’t then nobody else will buy into it. You have to convince yourself as well as others that you have an ultra premium product and it’s definitely worth the inflated price. Other things to remember are: Make sure you have something that stands out, nobody will accept something substandard as premium, it must at least be on a par with other good products out there. You might need to spend more on advertising, packaging and presentation (including the website, the whole shop or showroom in some cases) to give the whole illusion of quality and “premium”. I don’t want to play it down but in reality it’s just “smoke and mirrors” and a bit of a show but that’s often what people want. They want a culture, a story that goes with the things they buy and they want to feel special or feel entertained in some way during the buying process, whether that’s online or in the shopping center.
Some of you might think that during a recession it might be tough to pull off a business idea like this but I would argue that people want to be cheered up and feel special (as explained above) more than ever. I would also say that unlike many other businesses with tight profit margins this business model has huge margins which enable easy (and still profitable) 50% off or 3 for the price of 2 promotions which go down really well in hard times.
So just remember whatever you are selling: It’s not what you are selling, it’s how you sell it!
If you want to know more about how I came from a teenage homeless hostel and changed my life so I could become a successful entrepreneur, plus more of my advice on success, freedom. selling, entrepreneurship and how to make your own luck, have a look at my book How To Be Lucky.