Pricing your product or service is one of the thorniest marketing decisions you will make. Typically, you will consider the costs of producing and providing that product or service, distribution, advertising, and the competitive environment. And, of course, profit. Maybe there’s a little wiggle room to make more or less profit and still stay in business. And then you hold your breath and hope the market finds your pricing acceptable, and hope the competition doesn’t blindside you with an aggressive pricing strategy. There doesn’t have to be such angst.
Consider one of my favorite marketing principles: It’s never the price, it’s always the value. It’s never the price. It’s always the value.
This principle applies to all kinds of categories: automobiles, vacations, financial services, healthcare, membership organizations, telecommunication services, to name just a few. Whatever the category, people will pay more if they believe they are getting something more for their money. That “something more” can be physical features or benefits (bells and whistles) or it can be psychic benefits (emotional gratification, status, etc.). Some companies have different lines (with different brand names) that have different price points and different value propositions. It could be an upscale line with bells and whistles and psychic benefits; or it could be a “budget priced” line that is more “bare bones” for those who aren’t tempted by the bells and whistles, much less the psychic benefits. How can you incorporate this concept into your communications?
First, hold a brainstorming session, including product managers, marketing and communications managers and consultants. The outcome should be an articulation of your value proposition. What is the nature of the value you are giving your customers? Is it a physical feature or a psychic benefit? What reasons are you giving your customers to buy from you? If possible, hold a couple of focus groups to learn if your customers (either business or consumer) place as high a value on these value propositions as your brainstorm team did.
Once you’ve confirmed these positions, make sure you incorporate them into all of your marketing communications. Don’t forget to include all points of customer contact such as telemarketers and customer call-in lines in your implementation of these value propositions. Everyone in your organization should be aware of them and be prepared to feed them back to customers whenever and wherever necessary (e.g., trade shows, consumer shows).
If you keep in mind that people tend to buy things to satisfy needs of all kinds, and you give them reasons to buy from you, then your pricing strategy won’t be a problem. If you give your customers value they will happily pay the price.
Ann D. Middleman is Principal of ADM Marketing & Research Consulting, an independent practice whose mission is to help companies become knowledge driven, rather than assumption-driven, with respect to their marketing decisions. You can learn more about the company at http://www.admmarketing.com
