How are you pricing your products and services? Are you charging enough?
As a marketer I strongly feel that the correct pricing strategy can make or break your business.
From my own experience pricing can make or break a product or service. Here are some examples:
Product pricing perception: Low prices equal poor quality?
In my first marketing job in Dubai I was responsible for a cosmetics brand called Mikyajy.
At the time they stocked BeYu,a great mid-range German make-up brand. BeYu was a high quality product at an incredibly affordable price. Only problem, it wasn’t selling.
We gathered in the boardroom to discuss a strategy to increase sales of the products. It was my first time in the boardroom and I was actually more interested in the coffee when I suggested that it was “too cheap“.
Heads turned. I had no idea that it hadn’t occurred to them that perhaps that was the problem. We raised the prices by 65% and within 2 weeks the products flew off the shelves and stores across the region were begging for more stock.
Consumers saw the low price tag as a reflection of poor quality. Raise the price and suddenly it sold.
Service pricing perception: Low prices target the wrong market
One of my first clients when I started my own marketing consultancy in Dubai was Mountain Extreme, an eco-tourism company that took corporate suits into the wilderness to find themselves. Only problem was that some of the signature packages like the Majlis Al Jinn Experience – a breakthrough event which involved abseiling 200m into the world’s second largest sky cave, wasn’t doing too well. Why?
You’ve guess it! It wasn’t priced high enough. There were other issues too. It was a full package involving training sessions and the breakthrough event.
The price point was attracting the wrong clients. There was some suspicion as to how great the event was because it just wasn’t expensive enough.
So how much did I raise the price by? Well, let’s say it cost 5 times as much as it originally did and it was always over subscribed.
Packaging is everything
So, I’ve discussed pricing. With Mountain Extreme there was another important factor; the packaging!
The packaging wasn’t quite right. It didn’t have the “Wow” factor. I broke the event into 3 parts; 2 separate training sessions (each one in itself was an experience) and the trip itself.
A price tag was attached to each part. Suddenly a market for part 1 (the training session) was born. It became an event in itself.
Whether it’s a product or a service how you package and price it will make all the difference.
Your pricing and packaging determines who you are speaking to.