The Price is Wrong, BOB!

The “Price is Right” gameshow has been a fan favorite for many years.

I think Bob Barker was the host for like 100 years and Don Pardo the announcer would also
say “you could win fabulous prizes…If the price is right!”

What about you?

Are You Charging the Right Price?

A question we get asked all the time is “How do I know what to Charge”?

One of the hardest things that Small Business Owners have to is set
their price(s).  How much is enough, how much is too much?

It’s a pretty common dilemma.  The truth is that most businesses grossly
underestimate their price elasticity.

Most small business owners err on the side of lower prices, and far too
often service providers base their hourly rates on what they were
earning as employees. Neither of these methods is best…

Take for instance the average small business owner that Karry and I
run across.  They believe that they must charge the lowest prices in order
“compete” and attract customers. That seems logical, Wal-Mart sure does a lot of business.
But so does Nordstrom and Saks. 

You don’t have to be the cheapest price, but you do need to offer the best value
for your target market.

So by now you want to ask what everyone else asks “how do I know what to
charge”?

You research and test it!

First: Find out what your competitors are charging. And more importantly
find out what your target market will get from them for that price.  If
you are offering more value then you should price accordingly. If you are not
offering more value…brainstorm ways to give them more value.

NOTE: Competing on price and price alone is an expensive game to be in.  You want to avoid
every chance you get.

Second:  Determine what your target market expects.  If there is an expectation
for higher quality and better service, they probably already expect to pay
higher than average prices.  Cheap prices will likely just push them away like
bad perfume.

Third:  Examine whether you are attracting the right customers. Depending on
your product and/or service the wrong price brings the wrong customers.  The
last thing you want is to attract bargain hunters that take up more of your
time for less money.  This is a slippery slope…so be careful!

Fourth: Do you have enough business? If you are not reaching your sales goals,
and worse not being able to cover the bills.  Chances are your prices may be
too high.  However they could be too low, but you need to test it to know for sure.

Fifth and surely not the final: Do you have too much business?  If you are
dealing with more customers than you can handle then your price is way too
low.  Raising prices may be just what the Dr. ordered.

Follow this formula to find the honey spot for pricing your products or service…
(especially if you are a service provider and you charge by the hour)

Start at the lower end of the price range for a limited number of “X”.

Raise it up a little for the next number of “X”.

Keep doing that until you get consistent price resistance.  Once you see results lowering a
little, then back off the price 5% and you have your price.

Final thought…

Price can be a moving target.  You want to be careful, everytime you move the
target a little you want to make sure you have a good message to support it.

We have found that the majority of price resistence can be overcome through the
crafting of the value proposition.  It’s all in how you say it!

Working with a good direct response copywriter may be the best investment you
could ever make when you decide it is time to change your pricing.

Dedicated To Increasing Your Cash Flow

 

Chad & Karry

Franchise Giant Makes 2 Dumb Marketing Mistakes!

This morning I made the typical daily stop at McDonalds for my morning Diet Coke. 

Hey don’t judge… some drink coffee-I drink Diet Coke.

OK back to McDonald’s.

When I arrived at the window I was handed a little rewards card.  You know
the punch card type.

Being in the Marketing Biz, my natural instincts force me to view everything
through marketing goggles (my wife thinks it’s a curse). Anyway, I’m always on the
lookout for ideas that are new, unique, and effective to pass on to you and
our clients.
 

I noticed right away two very glaring problems. Read more

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