How to Choose Products & Services Customers will Pay Premium Prices for

Linda Formichelli

Want to attract high-end customers? It's no wonder: Even though they may be more demanding, they're willing to pay more for that privilege. You can take on as many high-end customers as you want and earn more profits, or scale back on jobs and earn the same amount doing less work.

In last week's post and podcast, we gave an overview of premium product positioning, how to take your company to the next level, and how to charge premium prices—based on a customer who emailed us asking, 'How can I take my business to the next level?'

Now, let's talk about the next step: Choosing the products and services that will attract upscale customers.

Bonus: Prefer to listen instead of read? We have a podcast version of this post. You can either listen to it right here on this page, or download it to listen to on the device of your choice. Listen now!

What products and services do upscale customers want?

Here's how to select products and services that will attract high-end customers.

  1. Define "high end." Luxury products span from Starbucks coffee to custom-made cigar chests. Know where you want to fall on that range.
  2. Understand the luxury lifestyle. Affluent customers are interested in exclusivity, quality, brand image, and premium pricing—not DIY or discounts.
  3. Get to know your customers. Survey the customers in your target demographic, flip through upscale interior design magazines, and visit local high-end shops to see what sells.
  4. Niche down. Install and service a small range of pricier brands, or focus on an uncommon type of service.
  5. Go beyond the usual service agreements. Create service agreements that will take all your customers' troubles away—and price accordingly.

Read on for the details on each step.

Get to know the high-end customer.

Do you know what upscale customers want when it comes to cookers, fire alarms, light fixtures, or whatever it is your business sells, installs, maintains, and repairs? Here's the scoop.

Define "high end."

"Upscale" encompasses a huge range of customers, incomes, and desires. Business Insider has an infographic outlining the hierarchy or luxury brands around the world, showing that this category includes everything from "everyday luxuries" like Starbucks coffee to custom-made cigar trunks.

Where would you like to land in that range? Knowing this will help you decide exactly how high end your high-end products will be.

Learn the luxury lifestyle.

'You need an understanding of the luxury lifestyle from the customer's perspective,' says Dave Poulos, Director of Marketing at Pinnacle Advisory Group.

So when considering a product to offer, pretend you're the customer and money is no object. Would you buy that smart home system, tub, alarm, or boiler? And if so, how would you like it installed or maintained? For example, 'If I’m rich, don’t try to sell me on a do-it-yourself kit—I have people for that,' Poulos says.

Need some tips to get started? For regular customers price is a big factor, but for high-end customers these considerations are more important:

Upscale customers want...exclusivity.

According to the Business Insider article we mentioned earlier, 'High-net-worth consumers are particularly hungry for obscure luxury brands. [B]rands that become too accessible are less appealing to super-rich buyers. Louis Vuitton, for instance, is considered a "brand for secretaries" by many wealthy Chinese'. Even if you're not aiming for the super rich, appealing to wealthy consumers' desire for exclusivity can help you attract whatever demographic of high-end customers you want.

You don't make expensive handbags or sell rare wines, so how can you make this happen in your business? By selecting products from manufacturers that fulfill this need, like ultra-pricey cookers in custom colours, smart home systems that few installers can handle, or lighting fixtures from top designers.

Another idea is to try teaming up with a manufacturer to create products you can sell under your business's brand name, similar to how private label companies will create kitchen gadgets or shower gel to their clients' specifications.

Upscale customers want...quality.

Affluent customers are willing to pay for products that will last a lifetime. Think: Good materials, careful construction.

Upscale customers want...a brand image that enhances their personal identity.

We've all seen how people will pay premium prices for a product with a fancy logo on it. 'Consumers can use brands as a relevant mean of self- expression and also as a lifestyle "beacon,"' reports a study in the behavioural science journal Procedia.

Upscale customers want...pricing that speaks volumes.

'A brand shows its hand through its price,' says Mark Di Somma in Branding Strategy Insider. 'If it prices high, it tells the market that it backs itself to deliver greater perceived value and that it intends to depend on that superiority to achieve a sustainable premium. Premium priced brands believe in the quality and rarity of what they do[.]'

If you're in doubt, just take a look at this $200 (£152) grilled cheese sandwich (which people are actually ordering).

Keep these considerations in mind when you're deciding on your plumbing product selection, alarm or smart home systems, lighting offerings, or other products—so you'll be sure to select products that attract upscale customers to your business.

Send a survey.

If you have any customers right now who are in that demographic you're aiming for, consider sending them a survey to ask what products they'd like that you're not already offering. If you need help, check out our post on how to create a customer satisfaction survey that people will actually respond to. The tips there apply to any kind of survey.

Look through magazines that target your demographic.

To figure out what customers in your target market are looking for in home products, try this advice from Melina Palmer, founder of The Brainy Business and The Brainy Business Podcast: Flip through upscale architecture and home design magazines to see what colours, materials, brands, and functions are desirable right now. (Here are the top 50 interior design magazines in the UK.) Trade journals in your industry may also offer good insights.

Consider where your target market lives.

The products and styles that are to-die-for in one area of the country may be looked down on in another. Palmer recalls a real estate investor who had heard that gas stoves were a desirable feature in homes. He went to great expense to have his house outfitted for gas—only to discover that in his particular location, it actually decreased the value of the home.

So while looking through design magazines can be helpful, talking to your local customers is even more important. No local customers in your target demographic? Try visiting upscale interior design and home product stores in your area.

Niche down on the brands (and services) you offer.

Go to a deep-discount store and you'll find shelves and racks bursting with thousands of cheap products. Visit a high-end retailer and they may have just a couple dozen beautifully merchandised products.

You can do the same thing, no matter what industry your business is in. For example, you might install and service only pricier brands of boilers or AC systems, work on certain categories of products, or offer a small range of services (like emergency services).

Selecting only the most exclusive and high-quality products makes your business seem more exclusive and high quality—and working only with certain types of products shows you're interested in knowing your products inside and out, so you can be the very best at installing and servicing them.

'Being an electrician that's niched down into LED and energy, we're finding that if we say, "We only use a certain make of panel or a certain make of light", that sets us apart,' says Justin Dring, Senior Consultant at Perfect Sense Energy in Manchester. 'That's a good thing, because it scares off people who just want the cheap and cheerful, who just want the £10 light plus eight quid fitting. That's not the type of work we want.'

Offer service contracts that go beyond the ordinary.

The normal service agreement (which we covered in our post on efficient job schedules) might include an annual maintenance visit and repairs up to a certain price. It's a great way to help you level out your schedule to avoid feast-or-famine syndrome.

What can you do to turn a ho-hum, low-priced service contract info a premium offering that will attract upscale customers?

One idea is to offer a maintenance agreement or even a "club" where the customer is left with virtually no worries—and to price it accordingly. For example, Fairway Home Detailing, a home maintenance service in Raleigh, North Carolina, offers a package starting at $145 (£110) per month that includes unlimited house washings, bulb change-outs, gutter cleanings, roof washings, smoke alarm battery change-outs, upholstery cleanings, grout cleanings, and much more, plus a certain number of handyman services. The company offers this superior service to "a select group of loyal clients".

This type of service agreement appeals to customers who have more money than time, and who would love to hire out all the annoying tasks that go into maintaining a house. At the same time...how many roof washes, hardwood deep-cleanings, and granite sealings does one household need in a year?

If you price the package right you'll come out ahead—even with this insane number of services you're including in it—as long as you account for those few clients who will want more than the usual number of services. Think of it like an insurance program, where everyone pays in but not everyone uses it. 

Just be careful when deciding on which services you'll include in a package; research published in Harvard Business Review shows that when you add an inexpensive product to a bundle, people are less likely to buy it than without—even though they would save money. So, for example, including a bonus £100 worth of repairs to a £1,500 service contract may do more harm than good.

Like you, we want to offer service above and beyond the usual—so we also created an audio version of this article you can listen to right here, in your car, or on your morning walk. If you want to download the audio to play on the device of your choice, scroll past the video below for a download link.

 

 

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