The Power of Pricing - How Higher Prices Lead to Happier Customers | #014
Modern Marketing Podcast · Adam Erhart
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Show Notes
Too much? Not enough? Just right? Some would favor having a few molars pulled over having to think about what price to put on the tags of their service or product.
Pricing is a topic worthy of controversial chatter and has the tendency to spark some serious debate.
Adam breaks down pricing strategies, practices his Latin, and explains why you should put the brakes on pricing too low.
Episode discussion:
- 3 different strategies to pricing
- The benefits of value-based pricing
- Adam's Latin: Ceteris Paribus
- Why focusing on undercutting competition is a race to the bottom
- The world's worst competitive advantage
- What kind of story your pricing is telling your customers
[02:07] 3 Different Ways to Price Products/Services
- Cost-based: prices based on how much it costs
- Competition-based: prices based on competition
[02:55] The major problem with competition-based pricing
[03:37]
- Value-based: assigns a number to the value you're providing
-Effectively articulate the value your service is providing
-Focus on the benefits and end results and not just the features of the product
04:56 Ceteris Paribus: When everything else is equal...
the defining consumer buying decision will be price.
-The solution is to not let everything else be equal
[06:05] Never let price be your businesses primary competitive advantage!
-Destroys your margins
-Destroys ability to properly service your customers
"When you start to destroy your prices, you automatically end up having to sell more just to get to where you were before"
[07:26] What your pricing strategy is conveying to your customers
- Higher pricing sends a message of higher quality
- If you're not charging enough, you won't be able to reinvest back into the business or give customers the level of service you want to deliver.
- Higher prices tend to attract higher quality customers
Those who are focused and appreciate the value you're providing.
[09:50] Takeaway: Focus on providing value, find some point of marketing differentiation, don't focus on competing on price.
Mentioned in this episode:
-Modern Marketing episode #4 –Marketing Differentiation
Contact Adam: [email protected]
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