Are You Paying the Price?
At our recent business workshop we explored the important topic of pricing, and imagined ourselves in the somewhat uncomfortable scenario of a customer telling us we are “quite expensive” when we give them the price of our product or service. In this blog we consider the reservations and hesitations that can stop us from charging the price we ought.
the right price
What is the right price for your product or service? That’s a hard question to answer in a single blog! Pricing is a vast topic and there are many different approaches that a business can take. Of course, setting the right price is important - we all know it’s a key driver of profits in any business. But it’s also the best indicator to your customers that your product is for them. That’s why at Co- we really like the concept of ‘Pricing as a Product’. This approach is based on the premise that in any sector there are typically three price points that customers can choose from: premium, mid-range and economy. To ‘price as a product’, you think about your target customers and which price point will appeal to them. Then you set your price accordingly and tailor every part of your customer experience to communicate that you are a business at that price point.
value is your anchor
When a customer questions our price, it can be our instinct to make an apology as if we have done something wrong. In a way it makes sense - in business we put ourselves out on a limb, and a question over our price can really make us feel exposed. Our first thought might be to drop our price, especially in a competitive market where that’s the easiest way to sell. However, it’s rarely a sustainable option; not least because small businesses aren’t afforded the economies of scale that larger operations can achieve. Many of the businesses we support also have core values that are at odds with the cheapest price. Maybe that’s paying staff a living wage or environmental considerations that determine business choices. We need to stay true to our belief in the way we do business and the value of our products and services. We can empower ourselves by knowing the form of words we will use to communicate our value proposition to our customers, alongside our price
paying the price
Having worked with hundreds of businesses on their profitability we know that the number one reason why most small businesses are unprofitable is due to not charging enough. What is it that holds people back? In our experience, as well as there being fear of a reaction from customers, there can be something more fundamental. The internal voice that says “I’m only” and downplays their competence, skills and accomplishments. When it comes to price, those feelings of doubt and insecurity can leave them reluctant to charge more, believing that if they do they are simply ‘hoodwinking’ customers into paying more than something is worth. But the truth is that running your own business takes great nerve and rarely is a business owner in it to get the better of their customers. But by not charging enough, is your business getting the better of you? We need to believe firmly in the value of our products and services, and market them to the people who will pay the price for what we are offering.
