While developing your pricing strategy, it is important to remember that
there is an implicit relationship between price and value. We expect to
pay more for gourmet food than for fast food and for a luxury car than
for an economy model. At the same time, value is a matter of opinion,
not fact. I prefer a new Subaru to a '95 Cadillac; my husband prefers
the opposite. His wardrobe is built around Dickies; my taste runs to
rather more eclectic (and non-synthetic) clothing. Given that there is a
relationship between price and value and that value is a matter of
opinion, I had always priced my products and services by triangulating
three factors: what I wanted or needed to earn, my costs, and what the
market would bear. That's what I had taught countless other people to
do, and it worked fine. All else being equal, quality, price, and market
generally reached a dynamic balance where prosperity and service
overlapped.
But, once came the day when something felt out of
synch in the way I used that marketing strategy, and I felt some
gritchiness around the prices of products I recommended. I kept
examining my assumptions, and everything seemed right. Still, the
feeling that something wasn't quite right persisted.
Never one to
ignore an itch, I kept scratching until this week I realized what the
problem is. I had been using quite different "markets" to assess what
the market would bear. That is, I'd been looking at markets that had
different values from the values of many of the people I attract. I
based my pricing strategy and marketing on the proven best practices of
other respected "info product" gurus, but those practices were designed
to address the values of people who didn't, and probably never would, be
attracted to my e-zine.
Readers of my e-zine were a special
case. From their emails and phone calls, I knew that they placed a high
value on authenticity, intelligence, and creativity. I knew they had
high standards for courtesy, honesty, and what I might call "finish."
They were tolerant of mistakes (assuming they were acknowledged). They
had a sense of humor, a hunger for spirit, and a fundamental commitment
to growth. At the same time they tended to be a frugal lot, willing to
pay for high quality, but unmoved by hype and positively turned off by
pressure tactics.
The generic information marketing model is
designed to address the needs of people for whom profit is an
over-riding value. These folks -- many of them good souls indeed --
thrive in the hyper-stimulating atmosphere of the motivational circuit:
loud, upbeat music, extravagant challenges to dare to be great and
simple formulas for achieving success. The more costly the package, the
more this customer tends to believe in its value. And I'm willing to
suppose that for the right person, that value can be substantial.
But
this model didn't fit me and it probably didn't fit my e-zine readers,
either. More than likely, they were past believing in "7 Steps to
Instant Gratification." They probably didn't believe in easy answers,
however much they might sometimes long for them. (Me, too.)
The
bottom line is that, in that case, so-called "best practices" just
didn't apply. The sophistication, values, and life experience of this
community constituted a different market, and we would just have to
develop our own best practices.
What would those practices look like? My hunch was:
Transparency:
No fake sales; any specials should be clearly linked to a business
purpose, and the regular retail price should always be fair so if you
miss a sale you can feel good about buying at another time for full
price.
-- Clarity: Accurate, no-hype descriptions of products and services.
-- Simplicity: Prices expressed in whole dollar amounts. Forget the "95 cents" gimmicks. We can round up!
-- Trust: Simple returns and exchanges.
I
evaluated the marketing and pricing strategy for my products and those
of affiliates, keeping asking the questions that gave birth to
"Authentic Promotion" in the first place: "What's bugging me about the
way I do (or think I have to do) business? What am I assuming? What is
the truth of this? What if the truth were not a problem?"
Goldilocks
tried three chairs, three bowls of porridge, and three beds before
finding the ones that were "just right." In much the same way, your
working toward "just right" prices and marketing methods will definitely
pay off, as it did for me. I believe this price-value matrix will help
you to find your "just right" price!
For example, my client
sells a course which is a comprehensive self-guided seminar that
transforms fears and resistance to marketing into grounded advocacy for
good work. It's a high value, if she does say so herself. Still, it has a
medium price because she is still working on way to convey to potential
purchasers the potency and efficacy of this course. One way she is
doing that is to develop a series of follow up emails that remind buyers
of key practices and principles, that ask powerful questions to help
them move forward, and that suggest specific sections of the program
that solve specific challenges. As she develops this support, she will
be able to charge -- and receive -- a higher price.
PRICE-VALUE MATRIX
HIGH VALUE -- LOW PRICE
Underpriced: value undercut by price. "What's wrong with this picture" pricing strategy.
HIGH VALUE -- MEDIUM PRICE
Attractive pricing: ideal for market penetration. "More for your money" pricing strategy.
HIGH VALUE -- HIGH PRICE
Premium pricing: prestige, prominence. "Connoisseur" pricing strategy.
MEDIUM VALUE -- LOW PRICE
True bargain: may be a temporary special to raise revenue or to move discontinued items. "Inventory sale" strategy.
MEDIUM VALUE -- MEDIUM PRICE
Price and value are in balance, exclusive of other factors. "Square deal" pricing strategy.
MEDIUM VALUE -- HIGH PRICE
Overpriced: informed buyers will stay away; sales may be made to unsophisticated market. "Infomercial" pricing strategy.
LOW VALUE -- LOW PRICE
Cheap stuff. Often sold with lots of "bonus" items or features. "Tourist trap" pricing strategy.
LOW VALUE -- MEDIUM PRICE
Turns sales into complaints. "Caveat emptor" pricing strategy. ("Let the buyer beware.")
LOW VALUE -- HIGH PRICE
Don't even think about it: the "Fleece 'em and run" pricing strategy.
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