How to Move Up Market to Gain Higher Margins With Your Product or Service

Nate Nead
December 23, 2022

It's a business owner's dream: high-end clients willing to pay a premium for your product or service. 

But, as the proverbial Pareto Principle would tell us, there is only a small contingency of companies on the margin who are able to maintain high-growth, high-margin, and high-profile, mid-market business. 

Experience and data inform us that small changes in direction can create large swings in both revenue and profitability as you land larger enterprise deals.

power law and bell curve
Actively having a goal to move up-market can be a game changing approach to growth within your organization, if approached with the right strategy.

Here are some tips on how business owners can move up market in a way that works best for their company's goals.

Know when to say no

There is a temptation, especially for startups, to chase revenue from nearly any source, including smaller customers. 

It's not desperation but more a situation of convenience and practicality. 

If someone's willing to pay for something and revenue is tight, you might be tempted to cave. 

But for a firm looking to move up-market, the discipline of knowing when to say no can be critical for both your time and your brand. 

There is a measurable opportunity cost of your time and resources.

And, if you want to be a premium brand that serves higher-end clients, you'll likely want to steer clear of the riff-raff. 

Having the discipline to say no to revenue can be difficult, especially when you might be desperate for more business. 

Firms that start with a niche-focused strategy face this challenge with regularity. 

And while the Gaussian Curve shown above tells us the curve has a tail and that we can charge more to more people, there will still be situations where discipline will be required. 

When it comes to moving up-market for a unique service offering, it will be more about saying no to negotiating down for your offering than it will be about saying no to a particular niche. 

Up-market movers don't JUST target specific niches; they target enterprise customers by their ability to pay and then offer a premium white-glove solution that solves a real-world problem.

Offer high-end services or products

Offering higher-end products or services isn't about just raising your prices. 

It's about adjusting your offering to match the level of value you provide to clients. In some cases, adding more or better features can help to create a viral tipping point for your brand. 

When this happens, it has a multiplier effect in that you can raise prices at the very moment demand spikes. A sales manager should be attuned to these market shifts and guide the sales team accordingly.

But, keep in mind, if your services are far superior to the competition (and even your upmarket customers know it), you may already have a premium offering.

In such a case, just raise prices. This approach can significantly increase your average contract value and refine your sales model to better target high-value clients.

Position your brand as a premium solution

High-end customers respond well to custom and flexible pricing options as they understand the value of what you're offering. 

Consider creating different packages or tiers of products, services, or price points that cater to higher-end enterprise buyers without sacrificing profits. 

One of the best business models where this can be implemented is in successful SaaS companies where customers can be both enterprise and entry-level. 

Enterprise buyers typically have longer sales cycles but often result in higher revenue per customer, making it worthwhile to focus on fewer customers with higher spending potential.

If people can charge stupid amounts for bottled water, you should be able to eek-out a bit more margin for your offering.

Invest in better marketing and advertising materials

By creating more sophisticated and visually appealing materials, you can demonstrate that your brand is one of quality and professionalism. 

This, in turn, will help attract higher-end customers who are looking for reliable and trustworthy products and professional services. 

If you are intent on charging more or getting in front of the right customer or client, you will need to invest in a marketing and sales process in the following ways:

  • Build out your customer persona
  • Build a marketing campaign strategy around the persona, matching all aspects of their pain point to your offer
  • Target them directly via marketing or a direct sales process with your sales reps
  • Effectively message your premium offering, discussing all the reasons there is more value than the price that is paid
  • Rinse and repeat for more enterprise sales

Get creative with your pricing

Create customer segments that legally allow you to charge more for similar products or services based on the target demographic. 

This could mean bifurcating and rebranding. In some cases, market segmentation could mean even higher margins for a larger bulk of the lower-end customers who pay less. 

It really depends on both your target market and your product or service offering. When it comes to strategy, however, the following graph shows better than I could tell:

Adjust your marketing strategy to move up-market based on both product/service and customer demographics.

Network with more affluent connections

Networking with more affluent connections is an essential step for any business looking to move up the market. To do so effectively, it's important to have a plan in place that will ensure success. 

First, identify the type of people you need to connect with to reach your target demographic. This could include industry leaders, key influencers, or other high-end connections in your niche. 

Once you have identified these people, find ways to build relationships with them that will help you establish trust and credibility. For example, attending exclusive events and having meaningful conversations can be a great way to network with more affluent connections and get your brand name out there.

Focus on the value and quality in your offering

It's not enough to just offer high-end products or services – you need to make sure that customers are aware of the value they will be getting from them.

Make sure that you communicate this value clearly as part of your enhanced marketing efforts.

The sales team plays a crucial role in this process, ensuring that the benefits are effectively conveyed to potential clients. Also, your product roadmap should reflect features and improvements that support your value proposition, reinforcing your product market fit.

Prioritizing this alignment across the company can drive the company's growth, even amidst competing priorities.

Develop exclusive (preferably high-profile) partnerships or collaborations

Developing exclusive partnerships is an effective way to move up the market by charging more for products or services. 

By partnering with other brands or businesses in the same industry, truly enterprise companies can leverage their connections and resources to create unique offerings that are tailored to higher-end customers. 

In today's connected world, social media is a great place to start.

Focus on innovating new features and capabilities

Differentiate yourself from the competition by providing a unique value-add. 

If you have a product offering, that product should have something that makes it different, unique, and better than comparable offerings. 

In some cases, your brand equity and innovation can be unique enough that you occupy a higher-margin value in the minds of consumers. 

Achieving that realm is all about the offering and perception. 

Either way, you should always be seeking to innovate, iterate and improve. If you don't, you not only won't be able to charge a higher margin, but your competitors will eat your lunch.

Create loyalty programs with rewards for customers

Not only do these programs help to increase customer loyalty, but they also serve as a way to incentivize large customers to keep coming back and buying from you. 

First, solve a real problem, and then give them a reason and incentive to return.

Leverage customer data to improve product design and packaging

Take input from your customers about how to improve everything from design to product features to post-purchase service. 

Implement changes that provide the added value customers expect, and they are more likely to pay more. 

Include changes and inputs into your CRM and marketing automation chains with your enterprise sales reps. 

And, as we've stated previously, so much of what is given as "value" is often in the perception. 

Customers and enterprise clients that can both have input and ownership in the process of design and feature sets are more likely to feel a sense of input and be willing to pay more.

Provide higher-quality customer service

Target higher-end customers by providing personalized, tailored services and solutions. 

This means going above and beyond the usual customer service approach of simply responding to queries and resolving issues. 

Instead, companies should strive to offer a more personalized experience that takes into account the individual needs of their customers. 

Microsoft has almost always played catch-up with Apple in many areas, but one of the biggest areas was customer service. 

Superior service and ownership of the entire value chain are the reasons Apple holds such impressive profit margins. 

Because of their higher margin offering, Apple continues to best nearly every retail statistic with the Apple retail concept. 

But Apple is only one high-profile example of how to provide value-added service as part of a premium offering.

Increase prices, but add more value

You are justified in simply increasing prices if:

  • Demand is too high for your time to fulfill all the service or product requests
  • You already have a superior offering
  • You add additional value to your offering that can justify the higher price

Adding more value via better service or improved features (and subsequently increasing prices) will, in most cases, increase your margins far above where they were previously. It has a multiplier effect.

Do hard things well

Amazon has a mantra coined by CEO Jeff Bezos:

Make Moves, Increase Profit Margins

The idea of moving up-market with your product or service can be intimidating, but it doesn't have to be. 

It is possible to increase the value you offer customers and charge more for your products or services without sacrificing quality or customer satisfaction. 

In short, it's about improving customer success to make more money and improve your own profit margin. 

Moving upmarket involves understanding what makes your customers tick and how they perceive value in the products and services you provide. 

Moving "up market" means more than just charging more.

It often means improvement and then crafting the right marketing message targeting your ideal customer persona for your brand. 

That's where we come in. We service numerous locations around the country.

Let us help you with your next marketing campaign.


Nate Nead

founder and CEO of Marketer

Nate Nead is the founder and CEO of Marketer, a distinguished digital marketing agency with a focus on enterprise digital consulting and strategy. For over 15 years, Nate and his team have helped service the digital marketing teams of some of the web's most well-recognized brands. As an industry veteran in all things digital, Nate has founded and grown more than a dozen local and national brands through his expertise in digital marketing. Nate and his team have worked with some of the most well-recognized brands on the Fortune 1000, scaling digital initiatives.