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john-jantsch

John Jantsch

Founder of Duct Tape Marketing

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Ready for More Revenue? Tier Your Offerings

March 31, 2016

How can you offer your customers more options but make it worthwhile for your business?

Small businesses don’t often start out with a range of products. Usually they start with one idea or product, then others eventually come as the business grows and matures. You may feel the pressure to give your customers more options, but with increased options come many different business considerations, such as the time needed to develop and manage different offerings.

How can you offer your customers more options but make it worthwhile for your business? The answer is to repackage your products or services with tiers.

Good, Better, Best 

One of the most common tier models is the “Good, Better, Best” trio. You see this all over the place. Whether you order small, medium, or large fries with your lunch or the 1-month, 3-month, or 6-month subscription to your favorite service, you see countless variations of this triumvirate everywhere you shop.

Why does this work so well? It plays well with human nature. Think of Goldilocks trying out the porridge in the home of the three bears. One bowl was too hot, one was too cold, but one was just right.

And this can extend beyond three tiers, but it is almost always an odd number. People tend to settle right in the middle. It’s the “just right” option. When building your product or service tiers, start with that middle offering- typically, that’s the one you’ll sell most.

Start with Better

It may seem strange starting in the middle, but since this is where most of your customers will fall, let’s focus on it first. 

Think of the “Better” tier as your main package, the option that brings both you and the customer the most return on investment. This is your basic offering, plus the few embellishments that make your business special.

For example, the popular haircut chain Sport Clips’ unique selling point is their hot-steamed towel. They wrap their customers in a hot towel while they shampoo to help them relax. They advertise this the most, so people coming in expect it and are looking forward to it. This feature is the main characteristic of their middle-tiered option.

Good is Good

The “Good” tier is simply the basic version of your product or service, delivered to the best of your abilities. Nothing more, nothing less. Here, the customer knows they are paying for the basic experience, so their expectations are limited.

If we return to the Sport Clips example, this is the basic haircut. No shampoo; no towel.

Best Your “Better”

For the “Best” package, you want to focus on adding value to your package without adding too much by way of headaches for you, the business owner. It’s important not to go overboard with features here; keep it simple and add value. You want the customer to be tempted by the “Best” package, but not get their expectations too high or make the “Better” package seem too insignificant in comparison.

With these three tiers of products, you’ll be better able to serve a wide range of customers, all while keeping your efforts focused on the bulk of your best customers.

This article originally appeared on Inc.

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