What’s your pricing costing you?
October 23, 2006‘Medium or large?’ the Polish Costa coffee girl asks in response to my request for a cappuccino at Paddington. ‘Er medium’ I blurt out, thinking that the large will have me making multiple visits to the loo for the rest of the day. As I make my way to the train I start to wonder what has happened to ‘small?’ The next occasion I travel that way I see they do small, medium and large coffees so I firmly ask for a small cappuccino ‘Medium or large?’ the girl demands.
Clearly the programming goes deep. ‘No small’ I reply. I am served a small and a scowl. I now understand that this is common practice in coffee shops in London. The sales strategy I mean, not necessarily the scowl. Manipulative marketing or just a sign of the times? You decide! But maybe it is time to question how well you present your prices in your sales process. Is it easy for your customers to make buying decisions or do they have to go through a pricing maze?
Pricing is a state of mind
There are many factors which determine what you charge for your products and services; the strength and proximity of competition, customer demand, surplus stock holdings and so on. On some occasions prices are even based on an accurate assessment of what the product or service actually costs to produce or provide. However, the state of your price book can also be effected by your background and state of mind. If your thinking is cluttered, then your pricing structure might lack clarity too. Marketers are more likely to create offers than accountants. If you are fearful (a common trait in most moribund owner managed businesses) then your prices are bound to be set to the lowest common denominator or in this case customer. With one client recently we simplified his prices created a couple of offers and raised them overall by around 20%. This resulted in absolutely no loss of business and a large gain on his bottom line. Pricing is a huge subject of which I will write more over the coming months. In the meantime how do you fix your prices and isn’t it time for a review?
