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Do You Have a Premium Version Of Your Product?

In all types of business you’ll find premium products.

These will be dressed up with exclusive sounding titles – “Executive service”,” Gold Standard” “Premier Club” etc.

So what is a premium product? Quite simply it is your standard product which you’ve added value to in some way. It may be that the packaging and presentation of the product has been upgraded or maybe the product is delivered extra quickly or perhaps it has more high quality ingredients in it.

A good example of premium products is currently being demonstrated by the supermarkets. They all have premium ranges these days. Sainsbury’s call it “Taste The Difference”, Tesco call their range “Finest” while Asda call their’s “Extra Special”.

Now I can’t claim to know the figures but while the cost price will be a little bit more, the margin will be significantly higher than the standard ranges.

The great thing about premium products is that they give you a really easy opportunity to upsell and increase your transaction size.

Now considering that we’re currently going through tough economic times, you might think that there is no place for premium products. But you’d be wrong. The fact is that something like 20% of consumers will regularly pay more for what they perceive to be a superior product. All you have to do is work out how you can add value to and upgrade your standard product so that you can offer it as a premium product.

I’ve been working with a removals company recently and have persuaded them to launch a premium removals service. The premium quality comes from the more robust packing cases they use, the fully comprehensive insurance they offer and the level of unpacking they do at the other end but the price is about 30% more and the margin about 40% more. And yes somewhere in the region of 20% of customers take it up.

The other thing about premium products is that it’s not a hard sell item. You simply make the customer aware that you have a premium product and the difference between it and the standard product and then leave them to choose. A classic example of this is Amazon and their delivery charges. You can pay one amount for standard delivery or a higher price for express delivery and you can bet that plenty of customers will opt for the express delivery.

So look closely at your own business and decide how you can dress up your product or service and offer it as a premium product. You may well be very surprised at the difference it makes to both your turnover and more importantly your profit.