Price right & reap your reward. Cartoon by Roger Stewart, Porthole Productions.
I have proposed a topic, “Best Practices in Pricing”, for ProductCamp Austin. If you’ve never been or ever heard of it, it’s a great day of free business information for product managers, business owners, and those thinking of starting a business. Attendees select the topics the day of the event so they get to hear what they are most interested in that day.
Although the session has sold out, there is a waiting list. I encourage you to get on it. For more information on Austin Product Camp, go to http://productcampaustin.org. For information on my session on Pricing and the 39 other great sessions, go to http://bit.ly/e6chc0.
If you can’t come or can’t wait, I thought I would provide some things to think about to sharpen your pricing skills. At least this will get people to reconsider their pricing strategy — hopefully they have one.
3 Wrong Ways to Price
- Blindly following the pricing of your competitors – they may or may not be right or right for you.
- Not knowing your “true total costs” before you price.
- Not including profit, contingency & hassle-factor in your price structure.
3 Right Ways to Price
- Match price to preferred positioning.
- Choose a price that does not exceed “flinch point” of your desired Platinum Profile customer. (See my earlier post on Platinum Profile customers at http://bit.ly/arxFwB
- Use value- based pricing rather than just cost-based pricing.
If I do the presentation, I will be talking more about best practices that I use and giving some examples of pricing problems I have addressed with clients. It is a Town Hall session so I will also be asking for attendees examples, questions and best practices. My goal is for us to learn from each other. I hope you’ll be there to share your experiences.
Do you have pricing issues, questions or examples of good or bad pricing practices? I want to hear from you. You don’t have to wait until Saturday.
If you are going to ProductCamp, I hope you’ll vote for my session. I really want to hear what experiences others have with pricing.
Some great advice for folks involved in pricing decisions. If I may, I’d put “price based on value” the number one issue. Figuring out the value you offer, especially to your Platinum Profile customers, is the first step in effective pricing. If businesses don’t think about this, they either end up underestimating their pricing power and severely limiting profits, or overestimating the worth of their invention (often the case with great technology of little actual value) and not selling anything.
Sorry I will be missing the talk at Product Camp. I’m sure it will be a great session.
Thanks, Reuben. I did not really put them in priority order but I agree figuring out your values is #1. I am looking forward to checking out your application. Here’s to your success.
My online consumer-service business is in a very competitive niche. I’ve realized that, if folks find us on page 1 of search engine results, they are not too price sensitive…they just want our help and are effusive with praise when they receive it.
However, if we are showing up on page 2 or 3 of the search engine results, the folks who eventually find us there are doing lots of research to find the absolute lowest cost. These folks are going to be very price conscious, often trying to bargain the price down even more and sometimes complaining at the slightest issue to seek more concessions.
I guess the moral is: Try hard to be on page 1 of Google, and don’t overemphasize low prices.
I think that’s a good moral to follow. I encourage people not to put in price at all unless it’s absolutely necessary. If low price is the only value that you offer and that your customer wants, then you have a bigger problem if you are a small business. You can never go lower and stay lower than your bigger competitors.
Thanks for the example.