Is it about price or perception?
I’ve written a lot about pricing in my book Psychology in Marketing and Sales, as well as in previous blog posts and I’m often surprised when I hear small business owners (especially startups) ask how they can possibly charge for something when other people are offering similar services for free.
A recent example of this is when a customer of mine pointed out that his competitor is charging £25 for a webinar. “How can they do that”, I was asked, “when everyone is currently doing similar webinars for free?”... and from what we could see, the competitor is successfully selling these webinars.
The reason for the success comes down to what I like to refer to as the ‘Offer’ - the way that the product or service is positioned including the key message, the benefits and who is being targeted.
As well as the way the offer is positioned, the price itself can have a big impact on perception. Without knowing anything about jewellery, for example, a customer might assume that the higher-priced necklace or earring is better quality. The webinar or training course that has a higher price tag could be assumed to provide more valuable content.
Is it about pricing or perception?
The purpose of this blog post isn’t to give you specific actions or strategies for your business when it comes to product positioning and pricing.
The aim is to provide you with content to reflect on, and to help you think about how you can position your products better - and that’s why I’d like to share the following examples I came across recently (by the way, if you would like to have a review of your pricing strategy or how you position your offer then I provide a 90-minute one on one session that could make a huge difference to your business. Click here to find out more).
The apple story
I have come across this from multiple sources, and while I don’t know if it’s a true story, it’s still great to read…
An old man was selling apples. His price list reads:
1 apple = $3.00
3 apples = $10.00
A young man stopped and bought 3 apples individually - paying $3 for each.
As the young man was walking away he turned and said “Hey old man, do you realise I just bought 3 apples for $9, instead of $10? Maybe business is not your thing?”
The old man smiled and mumbled to himself “people are funny. Every time they buy 3 apples instead of 1, yet they keep trying to teach me how to do business.”
Comparing Apple, not apples
On the subject of apples, The iPhone (ok so a different type of Apple!) has been very successful over the years with a much higher price than many of its competitors.
We could get into an in-depth comparison on how good the iPhone has been over the years compared to other phones but, despite some phones being arguably better, having more features and being cheaper, they have not sold as well as the iPhone.
Why? Because Apple products have strong desirability. The brand has been built up over the years and the ‘Offer’ has been created and positioned in a way to make the iPhone a MUST HAVE product.
What’s your OFFER?
When it comes to selling and marketing your products and services, it’s not just about the price, or about the features. It’s about many elements that need to come together as a complete package. Success depends on creating the right offer and then communicating it effectively to the right audience.
The right offer consists of having the right product, with the right features and benefits at the right price, and that also needs to be communicated to the right target audience. That’s a lot of ‘rights’ but you get the idea.
If you need help with positioning your offer correctly and making it a success, let’s have a chat to see how I can help. Get in touch today.
The opinions in these blog posts are those of marketing expert and book author Darren Hignett.