Overcharging for Products and Services Is Killing Your Sales 🗼
Have you ever been accused of overcharging for products and services? If so, you’re not alone. Pricing is one of the toughest challenges small business owners face. Get it wrong, and customers walk. Price too low, and your business suffers. Price too high, and you risk losing trust. Telstra is feeling this heat right now.
>Download Now: Free PDF How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth
The Telstra Overcharging Allegations
Telstra has been criticised for charging significantly more than its competitors, especially in regional Australia. Others argue that Telstra’s higher prices are justified because it offers wider coverage, more reliable service, and continued investment in its network. Still, many customers see a $65 plan with 50GB as unfair when Optus offers 180GB for $62. So, is Telstra overcharging?
This debate isn’t just about Telstra—it’s about how every business prices its products or services. Service-based businesses like tradespeople, consultants, mechanics, and boutique retailers often face similar scrutiny. Are you truly providing more value than your competitors? Do customers see the difference? Or do they feel ripped off?
Why Small Businesses Are Prone to Issues of Overcharging for Products and Services
Small businesses often face scrutiny for overcharging for products and services. Here’s why:
1. Lack of Brand Recognition: Unlike big corporations, small businesses don’t have the trust factor that comes with well-known brands. Customers may question your pricing more because they’re unfamiliar with your reputation.
2. Cost Pressures: Small businesses often have higher costs due to limited economies of scale, leading to higher prices. Customers, however, only see the final price—not your behind-the-scenes expenses.
3. Miscommunication of Value: If customers don’t understand why your service costs more, they may assume you’re simply overcharging. Effective messaging is crucial to overcoming this perception.
4. Changing Market Expectations: If competitors introduce lower-cost alternatives, customers may suddenly perceive your pricing as excessive, even if your costs haven’t changed.
How to Properly Price Services or Products to Avoid Overcharging Customers
So, how do you charge what your service is worth without making customers feel they’re being taken for a ride? Here’s how:
1. Ensure High Prices Reflect High Value
Many business owners assume that if they charge more, customers will automatically see their product or service as a premium. But customers won’t just take your word for it. If they don’t understand why your offering is better, they’ll compare on price alone. That’s exactly why Telstra’s pricing is under fire—many consumers don’t see enough value to justify the cost.
Think about a local café charging $6 for a flat white when the place next door charges $4. If both use the same beans and offer similar services, why would customers pay more? Without clear differentiation—better ingredients, unique experience, or exceptional service—customers will feel they’re being overcharged.
2. Clearly Communicate the Value of Your Offering
Don’t assume customers know why you charge more. Show them. If you offer superior service, highlight customer stories and case studies. If your product is premium, demonstrate the difference. Think about how high-end restaurants justify their prices: top-quality ingredients, skilled chefs, and an exceptional dining experience.
3. Price for Perceived Value, Not Just Costs
Yes, cover your costs. But also think about what customers believe your service is worth. If people feel like they’re paying too much, reconsider whether your messaging and experience reflect the price tag.
4. Compete on Value, Not Just Price
Competing on price alone is a losing game. Instead, look at ways to add value—better customer service, exclusive perks, loyalty programs. If a competitor is cheaper, ask yourself: Can I differentiate instead of discounting?
5. Review Tendencies in Overcharging for Products and Services
Telstra’s reluctance to adjust its pricing in response to new competition is a lesson for all of us. Regularly review your pricing. If customers push back, listen. It might be time to refine your offer, improve communication, or introduce new options to meet different budgets.
>>> Setup A Meeting With An Expert <<<
Fair Pricing for Products and Services Instead of Overcharging
Overcharging isn’t just about price—it’s about perception. If customers don’t see the value, they’ll call it a rip-off. If they understand why your business is worth more, they’ll pay without hesitation.
So, take a moment to reflect. Are you justifying your prices well? Are you communicating value effectively? Get your pricing right, and customers won’t just pay—you’ll earn their trust and loyalty. And that’s worth more than any price tag.
Small tweaks in pricing strategy can greatly impact customer loyalty and long-term success. If you’re unsure, let’s talk. We help businesses like yours price with confidence—without scaring away customers.
For a comprehensive view of ensuring the continuous growth of your business, Download a complimentary brochure on How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth.
Are you a small or medium-sized business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?
If so, please call (+61) 2 8607 7001.
You can also email us at team@valueculture.com if you have any further questions.
