Are You Sure your Price Is Right?

Price is a very important factor that will determine your sales success, if your price is right. Making sure that your price is right is always tricky. It is something that all marketers need to juggle well. Price it too low, there is a danger of having your target audience perceiving it as an inferior product. Price it too high, and it may leave your potential customer staring with envy outside the display window. Some marketers believe that it is better to have a higher priced product than a low priced item.

Pricing decisions are important whether you are selling a tangible product or a service. Many times, people are afraid to charge a fair price for their products or services. But this is a dis-service, both to themselves and their customers. If you are discounting everything, your price might not be high enough to sustain your business. When you go out of business, you suffer. Your customers, who used to enjoy your products and/or services, suffer too. They now have to find a new vendor.

Yanik Silver’s 7 reasons aptly explained why marketers should charge more:

More profits
Better customers
Psychology of price works in the marketer’s flavour
Marketers can deliver more value
Some buyers will not buy low-priced item
Create big paydays
Marketer will own the marketplace

Charging a high price is nice. But the big questions you need to ask yourself would be: Do you provide enough substance to justify this high price? What happen if you charge top dollar, and then under deliver?

A higher price does not guarantee a better product. Usually, price is pegged to some measure of quality or quantity. In the case of the service industry, like a hospital, price is usually associated with the quality of the service. When we pay more, we expect more. However, there are times when such expectations are cruelly crushed when we realize that “high price” is certainly not equal to “good”.

I took half-a-day leave to bring my kid to a private eye clinic in a private hospital. Government run clinics are so much cheaper, but for the price, you have to endure long waits and have no choice of the doctor. I chose to pay the higher price. I thought I would spend less time waiting, more quality time with the doctor, and all in an environment that is more cozy and comfortable. I really hate to be proven wrong once again, after being so recently “unappreciated” at the electrical mall (see my earlier post Why Customer Service is Even More Important These Day?).

We were there 10 minutes early. After waiting for nearly an hour, we were told that the good doctor was performing an emergency surgical procedure, and would be back shortly. I raised my eyebrows in surprise, and my immediate thought was: “Why didn’t the clinic call to ask if I wanted to reschedule the appointment?” Time passed very slowly, more and more patients starting to fidget. By 4.40pm, my patience was wearing thin too. After all, we were here since 2.35pm. I approached the nurse and quietly asked if the doctor would be back soon. The nurse wasn’t rude but her attitude of nonchalance doesn’t quite help the situation. She said, “I don’t know. What to do, emergency case so you all got to wait.” I said no thanks and left.

It is legally, ethically and morally right for the doctor to put down everything to treat a patient who requires an immediate surgical procedure. However, those of us in the waiting room are also his patients; patients who are willing to pay more than double, or triple, the price of the subsidized government run clinic and hospital to see him. He also has a legal, ethical and moral obligation to serve us. He could have given instructions to have all appointments rescheduled if he is not back at a certain time. He could have given us a personal call. He could have done much more for charging high price to clients who are willing to pay his fee. He could be a good doctor but he failed to have a thoughtful and excellent overall service. For that, I can foresee he is losing a few patients. After all, there are lots of private clinics wooing private patients.

So before you go price yourself higher for your goods and service, do yourself a big favour by listing at least 5 reasons why you could and should charge top price. If you can honestly list down the answers specifically, objectively and rationally, by all means, go ahead. Otherwise, review your price. The basics of marketing (the 4P’s or whatever theory you subscribe to) still applies, and it is only wise to research, analyze, review, test, and if necessary, change the entire pricing strategy. Your clients will thank you by exchanging their monies for your goods and services.

In the end, whether your price is right, can only be answered by your paying customers.

Read These Popular Posts (and more filed under “Categories”):

How Much Should You Pay for A Logo Design?

How Much to Pay your Advertising Agency?

Does Pay by Performance works with an Advertising Agency?

How to use Pay by Performance with a Marketing Agency?

Is Your Advertising Agency Really So Lousy?

Or Get a Free Report on Successful Entrepreneurs:

Free Report on Successful Entrepreneurs

[tags]ad price, pricing, price strategy, how to price your products and services, why high price is good[/tags]