The Power of Pricing - How Higher Prices Lead to Happier Customers | #014

 


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: Adam@AdamErhart.com


 


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